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Randy: I think the individuals today have a much better understanding of what these sort of services are, and what they are is a content delivery system. It’s really all about keeping everyone interested until you can give them so more content that they can consume.

I think that’s a problem, I really do, because people will become bored with your content. I have a 70th level Night Elf Hunter on World of Warcraft, and I don’t play anymore. The reason I don’t play anymore is because I essentially can’t. My guild slowly grew from a friends and family guild to a raiding guild, and I couldn’t keep up. Now there’s this locked treadmill that I can’t stay on. I’ll get through one raid only to have the group already on a different encounter two tiers higher than my current equipment set.

Randy has a 70th level character on World of Warcraft that he no longer plays.

The end game is screwed up! At least from a casual player’s point of view. You really end up narrowing your audience to this core element and you continue producing content for this audience that will always hemorrhage.

Part of the problem is that a lot of the games, including World of Warcraft, did not take into proper account the management of the relationships between people. Guild tools are often anemic and the partying system – at least in the World of Warcraft – doesn’t provide real ways to find a party. They put in this big mechanism for creating parties, and no one uses it. Everyone simply uses the chat channels to get through and find people.

And then, at 70th level you also discover that the Hunter class is a horrible, horrible class to choose. No one wants a Hunter in a party. They want a tank, or a healer, or a mage, and taking a Hunter really turns into a big favor. But these people don’t often know you (because your guild has passed you by) and so they don’t trust you nor your pet.

All the reinforcement in the game really doesn’t prepare people for what they’re going to experience in the end game.

In essence, people are in a content production business for an ever narrowing audience, because they didn’t focus on the social component enough.

Chip: I think Randy hits on a lot there, and I’d like to hammer on the content production side of that as well. There’s also a problem in the idea that content production, in this type of environment, is ferociously expensive. You really have to amortize it over a very large user population in order to make the system sustainable.

Contrary to what Randy said, I’m not thoroughly convinced that the companies that are making the games know that they’re in the content production business. The traditional games business is all about putting the game in a box and shipping it out the door. In the online realm, you’re in this continuous, iterated relationship with your customers, and you can’t treat interaction with your customers as anything else but the main event.

That means that the operational systems that you use and the deployment system you have during the very initial conceptualization all the way to the point where the bits actually land on the customers computers must be streamlined and stripped down and made as cost efficient as possible.

I’m not sure – I’m not privy to the conversations that go on in the inner sanctum of places like Blizzard – but I’m not sure that the companies doing this even realize that this is the business that they’ve gotten themselves into.

Randy: *laughs* That’s honestly a question that’s too big for the time we have, but I can say that most of the items that are in “Habitat Redux” are already in our blog (Editor’s Note: You can find it here.) and people are more than welcome to read through the entries in there.

Randy: A lot of things have changed, especially in the last five years, which is the last time I was between jobs. That was the time that I did my contract work with Linden Labs and Second Life, and things have just changed. I took my job at Yahoo because I wanted a stable job environment for a little while and I knew I was going to have a big impact while I was there.

That whole experience actually turned out better than I thought it would, but five years ago was a difficult time. People really hadn’t bought into the user generated content phenomena, and those are the kinds of things that I specialize in. That’s different now.

With my departure from Yahoo, I’ve been overwhelmed with interest. And from what I told you earlier, gaming and social blending is absolutely happening right now. In the next wave of projects, you really can’t tell whether they’re games or social media. On top of that, there’s also a large corporate focus where a lot of people are looking into gaming and social media in the corporate environment.

I actually am overwhelmed with interest from traditional gaming companies to more socially minded companies like Yahoo. It’s a very good time to look at a lot of options.

Chip: I think what Randy said is consistent with what’s happening to me as well. There’s really some asymmetry between the interest Randy is getting and the interest I’m getting, because our relative areas of specialization are slightly different. He’s a social media guru and I’m the technologist.

The thing about technology is that there are lots and lots of companies that know they want technology. That’s something they can wrap their heads around almost immediately. There are lots and lots of companies looking to see if there’s a niche for me somewhere that will let me push the envelope.

This raises some interesting challenges because the companies that are interested in the technological things that I'm interested in and have the resources to spend on doing something hard typically aren’t involved in the kind of product space that I’m interested in. However, the companies that are doing the product things that I’m interested in don’t have the resources to undertake the sort of technology initiatives I want to explore.

So I really haven’t found that “sweet spot” yet, but there are a lot of companies out there that are interested. A lot of them. It’s been a wild month since we parted ways with Yahoo.

What are we going to do next? I have no idea, but I’m sure it’s going to be interesting.

Chip: Wow. I don’t get to play games any more because my kids are always on the computer.

Chip: Seriously!

Chip: I’ve been trying to get into World of Warcraft, but I’ve got a 10th level character that’s just been sitting there because every time I turn around my kids are on the computer. If I would stop being such a cheapskate I’d go and buy another computer. I have tons of old computers from earlier companies I've worked, but none of them actually have the horsepower necessary to run a game like WoW.

Unfortunately, as trite as it sounds, I’m not actually playing anything. So really I’ve been spending my time with technology experimentation and doing some writing.

Randy: And I am currently retired from the World of Warcraft, but I have been dabbling with Pirates of the Caribbean Online to do some research and see what it’s like. Their play for free model is very interesting, and it definitely gets your interest up. It’s a nice fun mix of activities as well. You go from fighting things with a sword to some massive ship battles in your first hour of play.

And I think a lot of the online games are realizing that they want to show you their really best stuff right up front so that it catches your interest. Killing rats for a few levels just isn’t as interesting, and showing your best gameplay is much more effective at grabbing the casual player.

Of course, I’m also playing around with Metaplace.

If you’d like to read Part One of the interview, click here! If not, let us know what you think of Randy and Chip’s prognosis of the industry by discussing it on our forums!