This is NCsoft's 10th anniversary. Does the company have anything special planned to celebrate the occasion?
Robert Garriott: In addition to having a big party? [laughs] The 10 years has been an amazing time for us, and we think back and NCsoft started publishing Lineage at almost the same time Ultima Online was released back in 1997. Back in '97, everyone thought that the online game market was minuscule, unimportant and would never get anywhere. I believe the biggest competition to UO when UO released had 15,000 subscribers and everyone thought "man, that's big." When UO came out, people thought, "Well, maybe it can do about that, maybe something a little more" but no one envisioned the kind of numbers we would have today. From that, it's history... right now Lineage has 67 million subscribers or customers around the world... some paying in different types of ways, but it's become giant.
World of Warcraft has done well, so has City of Heroes, so now suddenly it's growing into this business which is multifaceted business with lots of different genres. And it has truly reached in Asia a level where one out of every 5 people have a Lineage account, and that's truly mass market. So the question is in the U.S. is, "Are we ever going to be able to reach that?" I'm not sure we're going to get one out of every five people. We have a long way to go, and even with the success of products like World of Warcraft or City of Heroes or EverQuest or UO... all of those products are just scratching the surface of where the business can get to. So were very excited about NCsoft being in the business from the very start, back when it was in its infancy, though we still think there's a long way to go. So I guess we're just celebrating that.
As one of the pioneers of the MMO genre you've witnessed a lot of changes in this space over the last decade or so. How would you assess the evolution of the MMO market?
Ten years ago, when UO came out and Lineage came out it was interesting because... and even until very recently if you put an online game, an MMP, versus a console game and you put those two on a screen... five years ago, you could be across the room and point out which one was the online game and which one was the console game. The visual differences were so striking that everyone enjoyed the depth of the online game, but they thought that the graphics sucked, the interface sucked... it was nothing compared to the ease of getting into and the visual stimulation that a console game provides. That was one of the reasons why the players were so segmented. You had the people who liked the console games, you had people that liked the depth of the online games but they really didn't overlap. I think one of the exciting things is how this has changed over the past 5 years. Today, if you put the top online games, Lineage II or World of Warcraft, on a screen versus the top console games and you go back across the room. Now you can't really tell. The graphic quality of online games have come up to the same sort of level, the user interfaces have come up to... well not quite the same sort of level, but they're getting there where the ease of play is better.
It used to be that we would say, particularly with Lineage I, you have to suffer through the first 20 levels to get to where you're the champion and then you start to really enjoy the game in the next 20 levels. American gamers and console gamers... they're not willing to suffer through 20 levels to get into the game. The changes that have been occurring in the new style games: the interface is easy to get into, as is the game style. The new games all have a characteristic that I like to describe as one where you come into the game, you're given a quest, you go out on a quest, you are not killed, you come back and get a pat on the back and get told what a great person you are and you're given another quest.
All of that has to happen in about 15 to 20 minutes, and if it doesn't happen in the first 15 to 20 minutes, it's a design flaw and if you die during that time it's a design flaw. And so, those are the same sort of things people expect and want to see in console games: ease of use, quickly being able to get into them and have fun. So I think the differences are getting smaller and smaller and because of that the market for online games is getting larger and larger. It used to be that they were very segmented, but now they're starting to blend and you're seeing console games are going online. Some of the popular console games are getting many more multiplayer aspects to them and you're seeing that the markets are blending, that they're blurring together and you're seeing online games get many more console aspects. I think that's been the trend, particularly over the past 5 years, and I think it's been very good for the online game space and very good for the console space.
NCsoft Austin has been a hotbed for different pricing models and has paved the way for the future of MMOs. As an MMO maverick, can you tell us about which MMO game just isn't very good and why?
[laughs] No, I think that each game has tried and has pushed the limit in certain areas and because of that every game has taught us, even if we didn't produce it; we've learned something from every game and it's helped us make the next games better. So as we look at our games and as we look at our competitors' games we can say, "Hey maybe that wasn't so good and we didn't get the subscribers we were looking for." But that's been feedback. It's funny, because I very rarely kill a product. Some people talk about how in the single-player games space people are constantly saying "Ok, you start with 50 products then you pare it down to 25 then you pare it down to 10, then you ship the 10."
The problem in the online game space is that they take a long time to develop and you really have to train your team and you don't learn if you kill a product; the team never learns. You have to learn a lot about the customer and about the product by shipping products. Even if they're not quite as successful financially as other ones, I think the experience and knowledge you gain, even from failures, is quite dramatic. So almost any product you look at and say "Hey, this product was a failure for some reason," I think there are a lot of really good lessons as an industry we've learned from those.
It seems as though an increasing number of people are getting tired of fantasy MMOs. Yet, at the same time, developers often argue that sci-fi games tend to be difficult for average players to engage with. How will Tabula Rasa (a sci-fi mmo) overcome this issue? What are your thoughts on the deluge of fantasy MMOs?
Medieval fantasy has been a great genre for many, many years. The reason for that is because it's been easy for customers, people, game players to understand. They quickly relate to Robin Hood and the ideas and concepts of medieval fantasy and a lot of them played Dungeons & Dragons. So the concepts are all very quick and easy, and because of that, that's generally where people have gone. And, unfortunately, our industry is very much into "follow the success" so "Hey, you've got a successful game here, lets see what we can do in the same genre, how can we recreate that success?" What we're starting to see now is our industry broaden out. NCsoft is actually the largest manufacturer and producer of medieval fantasy role-playing games, but still that's not what we need to do to broaden the market.
Therefore, we're looking at other interesting genres, genres which are very popular in the single player area, like sci-fi. People are familiar with those genres, they just haven't figured out how to make them as intriguing and interesting from a multiplayer sense. So what we're trying to do is that we've taken a look at all the successful single-player genres and we've said, "How can we take that experience and move it into the mutiplayer world?"
And it's because of that that we have products like City of Heroes, which is like a comic book game, and Tabula Rasa, which is a sci-fi game. We've got about 10-12 MMPs in development right now, about half in Korea and half in the U.S. So we're doing lots of MMP development and we've tried to target specific genres that we know are successful and can be successful, but we're trying to interpret them in a way that they will be successful from an MMP standpoint and that's why we're so excited about Tabula Rasa.
It's been hinted that Tabula Rasa will be doing away with (or at least overhauling) the traditional leveling system. Can you please provide some more details on what your approach will be?
We've worked on reducing some of the grind of other MMOs. What I've found is that the game style is so easy to get into, it's easy to group with other people. The thing that gets me excited about Tabula Rasa is that, normally with MMPs, I think they're somewhat boring. So, compare that to a shooter; I'm horrible at playing any shooter but when I'm walking through the office at night, most of our people are playing shooters. So I'll stand over their shoulder and what I'm watching is exciting; I'm horrible at it, but it's so fun to watch. Tabula Rasa is a game where you get the excitement of the shooter, with things happening all the time, lots of stuff blowing up, and there's whole teams of good guys on your side going out on missions. You can team up with NPCs who can help you to do missions, and there's teams of bad guys doing missions, and all these things are happening right around you and you can be a part of that. So even when you're by yourself, it feels like a shooter but the interface is easy and so the interface and the story development is much more like an MMP. So it has a lot of the depth, it has the missions, it has the team play and with easy ways to group together.
From my standpoint, it brings together the good aspects of the shooters, which to me is the excitement, intensity, and feel along with the depth and style of play of an MMP. Instead of a typical MMP, where you stand in front of something and go "I'm going to hit you and you're going to hit me," the combat in Tabula Rasa features much more of an ability to hide behind things; the enemy uses different tactics against you, and depending on if they're close together or spread apart, there's different sorts of weapons you can use. There are things called shield drones wandering around the map, and if they're close to some enemies the drones will protect them, so you'll have to destroy the shield drone to get at the enemies and you might sacrifice one of your players in order to do that. So the tactics of the gameplay are much different than games we or our competitors have done... So, relating to your original question, the "experience" you would get from killing bad guy isn't that much. It's really about completing missions, doing team things, and getting through the storyline of the game; that's really what advances you.
Does it seem inevitable that MMO publishers and developers will need to support real-world marketplaces for virtual items (e.g. Sony's Station Exchange)? Although Acclaim does something similar with their free MMOs, will there come a time where developers will create items, game currency, high level characters, or even character classes for the sole purpose of selling on these marketplaces - as an additional means of revenue?
I think all of these revenue opportunities are interesting and exciting to look at and I definitely support what Sony is doing in terms of trying to build that type of business. There are legal issues associated with that and there's some danger in going in those areas, but that will all be worked out, and ultimately it will come down to what the customer wants. Some people don't want to be playing in a game where all you have to do is spend a lot of money and it gives you a big advantage over someone who doesn't. Some people don't mind it, and as a matter of fact, they think that's something positive that they can get in and buy a high level character or a giant sword.
I think different people will find themselves attracted to different styles of games. How it breaks out in terms of the market I don't really know, and that's one of the reasons at NCsoft we're trying to do so many different business models.
It's because we don't know what the right business model is going to be for any market. We know micropayments are really big in Asia. Are they going to be really big in the U.S.? I don't know, but we have a system that allows for micropayments, the NC Coin system that does microtransactions. We have a game that's going to launch in the next month or so called Exteel, which is a microtransaction game. We also have a game called Dungeon Runners, which I've played a lot of and enjoy. It's basically a game you can play for free for as long as you want, but if you'd like higher level items and powers, you want to be a member. You don't have to, but if you want to advance quicker through the game, you can pay $5 a month and you get the upper level game content. What were trying to do is find different models that appeal to different customers. I don't know what the 'winner' is going to be from that, but we do know we can make money with $15 a month subscription, but that's not the only way. We also have Guild Wars, which is pay us once and play for the rest of your life. That's a tough model; not everyone can afford that but we've found a way to make money with it. So we're trying everything.
Along those same lines, with NCsoft coming out with such a diverse line of games, will the company be exploring options for multi-title access subscriptions?
Absolutely. We're hoping to have that up in a couple months. I'm not sure exactly what we're going to call it, but we're leaning towards "NC All." We have some debate on that, but basically it'll be an account where, for one price, you can play absolutely everything that NCsoft has to offer. We're trying to integrate all of our products through a launcher system, which says if you install one of our products, the NCsoft launcher will keep that product updated all the time in the background. It will allow you to see and load all of our products automatically if you want that to be done. It will allow you to pay for any products you've decided to buy, even all the products through NC All at one time and then surf through the whole thing at your leisure. So we're trying to integrate all of our products in a very positive way that provides more content to customers that do want that.
Are you at all envious of all the success World of Warcraft has had? And do you think Blizzard's game has benefited MMOs in general by raising their profile in the mainstream?
I don't know the exact definition of "envy" but clearly we look at that and say, "Wow, that's an incredible success." So if you consider that envy, sure. They've done an amazing thing and we're very happy that they've done that. Someday in the future, we hope that we have more products with that sort of success. But it's interesting to note that Lineage I and Lineage II are larger than World of Warcraft, so we also have our own products that we're very proud of. World of Warcraft is a spectacular product and what we are excited about is that we do think it is growing the market dramatically, particularly in the U.S. and Europe, which had not grown as much as Asia had. Before World of Warcraft five years ago, no one thought online games were mass market in the U.S. and Europe. Then they started looking at Asia and going "Well, they're mass market with Lineage, but that's still just an Asian phenomenon." World of Warcraft showed that it's not just an Asian phenomenon, but it can become mass market, or larger—we still haven't reached mass market—but larger in the U.S. and Europe too.
So I think it's been great. It's shown the way for gaming and the interesting thing is, since World of Warcraft came out, all of our products have grown. It's not been detrimental to any of our products, so we think it's very good. We think that growing the overall market is very important. What we love is other good games, because we think if there's another good game in the market, people come in, play that game and have a good time. Then they go, "
You know what, I want to check out other good online games." What hurts our business is bad games. If there's a bad game, people come in and play it and they go, "That really sucked, I don't want to play these MMP games." So it's very important that we release good games that people enjoy and lead them on to other online experiences and World of Warcraft does that. So I'm very excited for them, but I'm also very excited for the industry. It's a leader for taking us into new areas.
Do you guys ever get the craving to make a non-MMO, say a traditional RPG or action/adventure title?
It's funny, because I've been in the business about 25 years and for about 20, I was doing single player games. One of the things that we noticed when we got into this space with online games is we loved it, because it was so new an exciting and we were so tired of doing single player games. We believe it's a real value to our company that we focus online. Everything we do is online; that's all we're interested in. We specialize in it; we're building a business online, and we really think that's the wave of the future. So pretty much anything online we're interested in; if it's not online, we're pretty much not, and I'm really glad that we're not. It's a hard business. There are a lot of companies that do that very well. They don't need another company like us doing it. We think we can innovate and do new and exciting things in the online space. So that's where we're playing.
We've yet to see a huge MMO hit in the console space. When do you think that'll happen and is NCsoft going to lead that charge?
I think you'll be hearing some news from us in the console space before too long. I'm not sure when you'll see the next hit, but we will definitely be there and I hope you do see it from NCsoft.
What are your thoughts on potentially creating an MMO on mobile phones? Is that something that interests you or that you think could succeed?
We have looked a lot at mobile stuff. I think initial ways people are getting into mobile are companions to the online game and everyone is sort of looking at that. The interesting this is that the mobile phone market is very fragmented. There's like 600 different types of handsets and graphics standards and everything else. Because of that, profitability is very difficult. Until it standardizes, maybe around Windows or CE, with graphics, drivers, and interfaces, I really don't think it's going to grow very dramatically in terms of profitability. But I do think over time we will see that standardization and when that happens, I think you'll see a lot more happen in the game space online on phones. Until then, you'll see stuff, even exciting things, but it's just not going to be the size business that I think standardization will bring.
Garriott also took a moment to update us on the company's fiscal situation in the U.S. "For 2006, we were the largest retail sell through in terms of companies in the MMP space," he said. "We're pretty proud of that; we went from three years ago with zero to 38 percent of the sales in MMPs. We're excited to see the growth and hopefully we're going to continue that."