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Funcom OECD Working Party of the Information Economy Digital Broadband Content Panel Paris, 3Rd June 2004

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Funcom OECD Working Party of the Information Economy Digital Broadband Content Panel Paris, 3Rd June 2004 Funcom OECD Working Party of the Information Economy Digital Broadband Content Panel Paris, 3rd June 2004 June 2004 Gaute Godager AgendaAgenda 1) Funcom highlights 2) Online market and business models 3) Online players, who are they? 4) Summary FuncomFuncom atat aa glanceglance • Developer and publisher of online games • Founded in 1993 • 95 employees, 63 in development • Offices in Oslo, Norway and in Durham, North Carolina • Me: Game Director. In Funcom since 1993. Educated Psychologist. FuncomFuncom hashas longlong experienceexperience fromfrom developingdeveloping worldworld classclass gamesgames • 2004: 3 Games in production / development: Anarchy-Online, ”Alien Invasion” + The Longest Journey 2: ”Dreamfall” & ”secret online project” • 2003: Shadowlands – AO Expansion pack • 2002: Anarchy Online Special Edition and Booster Pack • 2001: Anarchy Online, PC – ”Online Game of the year” PC Gamer US • 2000: The Longest Journey, PC ~ 400.000 copies sold – ”Adventure game of the year” – ”Christmas gift of the year” – New York Times, Amazon • 1999: Speed Freaks, Playstation ~ 500.000 copies sold – ”Better than Mario Cart” • 1999: CMX, Playstation ~ 600.000 copies sold • 1997: Pocahontas, Sega Genesis ~ 400.000 copies sold • 1996: Casper (the friendly ghost) ~1.000.000 copies sold • 1993-1996: – NBA Hangtime, Wintergold etc etc AnarchyAnarchy OnlineOnline –– GameGame overviewoverview • World leading Massively Online Multiplayer Game – among 5 biggest in WW • More than 120 million hours of entertainment – roughly 60 million movie tickets or 6 million books? • 720 thousand players since launch • Groundbreaking graphics and sound and first MMOG with Sci Fi setting • The most Massive of all MMOGs - 140.000 different items, 5000 different monsters, 480.000.000 square meter territory, 4000 spells etc etc - More players in one dimension than any other MMOG • Large number of unique game play features - Flying - Landcontrol with revolutionary PVP gameplay - Dynamically tailored content and dungeons - Unparalleled character customization system etc etc - Deep and involving back story – Dante’s Inferno • Highly acclaimed • “MMOG of the year”, PC Gamer 2002 • “Editors Choice Award”, IGN.com • “Expansion of the Year”, CGW March 2003 HighlightsHighlights ofof gaminggaming industryindustry The market • World wide, gaming revenues surpass 25 billion euros • Electronic Arts (EA), the worlds largest gaming publisher, is valued at 80 billion NOK and is the world’s 4th largest software company after Microsoft, Oracle and SAP. EA has a return on invested capital of 42% • In the US, video game sales revenue is higher than Movie Box Office revenue • 100% of the college students in the US has played video games, 70% play regularly Online game segment • Online gaming is by far the fastest growing segment, with a growth rate of 50-100% • Everquest, the western world’s largest massive online game, has 450.000 players and revenues of 8-9 million euros per month • NC Soft, the only pure online publisher, has revenues of 120 million euros per year, and profits of more than 60 million euros per year • Only game type without any piracy Source: Fortune, Analysis reports GamingGaming isis bigbig -- andand onlineonline gaminggaming isis thethe fastestfastest growinggrowing segmentsegment inin thethe industryindustry Online game revenue Main growth drivers USDm (excl. advertising) 3500 3000 Flatrate access 2500 Consoles going online 2000 1500 PCs more powerful and integrated network cards 1000 Growth in online population 500 0 Broadband 0 2 3 4 5 6 0 0 0 0 0 00 20 2001 20 20 20 2 20 Source: Broker estimates MassiveMassive OnlineOnline Games:Games: LimitedLimited CompetitionCompetition TOP 5 GAMES IN WESTERN WORLD: Competitor:Company Game: Game ReleaseRel Date date: Status:Numbers Sony Everquest March 1999 440.000 customers Lucas Arts Star Wars Galaxies July 2003 200.000 customers Mythic Dark Age of Camelot Oct 2001 220.000 customers Electronic Arts Ultima Online 1997 200.000 customers UbiSoft Shadowbane 2003 30-40.000 customers Asia: NC Soft Lineage 1998 2.000.000 customers TheThe PayPay--toto--playplay rationalerationale Business model Recurring revenues Purchase of the game: US$20-50 Monthly subscription: US$15 Discounted subscription fees by Direct ownership of customer paying up front for 3 or 6 months But what do you actually do in a MMO? • Develops our ”characters” / ”avatars” • Socializing •Exploring • Go on adventure • Defend our ”homeland” or PvP What is fun about an MMO? • Everything fun is social – To be the best: competition and status – To control and master: to be seen as competetent by you and others. – To own: gathering the best possible equipment. – To be useful: ”class interdependence” – Building positive relations • Friends, Team, ”Guild” / Organization, Side – Believing in something ”bigger” • ”Player vs. Player” , political struggles. – Creating your own meaning with others: • Stories and narratives What do we know of the AO Player? •Average Age: 27 • 85 % Males, 15% Females (40% Female Characters!) • 3 million characters on 750 player accounts. • Average playing time – 3 – three hours per day. • Average timespan about a year • 85% have characters from more than one ”side”. • En karakter: ”50% achiever, 30% explorer, 15% PvP, 15% socializer” (gridfeed_04 video) MMO culture and language • Their own language: – ”W00t, in l337 5p33k, ph4t l3wt, w8 4 m3!” • Their own cultural rules – ”Nerf” <-> ”Reversenerf” (wedding video) – ”Twink”, ”uber”, ”phat l00t” • Their own creations – Long stories, Role-Playing focus • Their own ethics – Advisors of Rubi-Ka, testers • Message boards, fan sider, lore, radio stream, comics etc • Manchester United fans? Online Gaming Challenges •Inflated R&D cost – Korea & Canada offering targeted R&D tax breaks. • 60% of R&D cost tax deductable • Extremely hard to do: $50 million US for high profile games? 50+ people for 3 years? • Uneven broadband penetration – Scandinavian success stories, a conincidence? • Lack of entertainement investments • Content stagnation = burned out customers? Summary • Fastest growing type of game, 50-100% per year. • Solid earnings per customer • Fun and involving •The future of gaming? • Thank you very much! [email protected] www.funcom.com www.anarchy-online.com.
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