Innovation management in the Massively Multiplayer Online game industry Master Thesis Copenhagen Business School 2013 CM – SOL Strategy, Organization and Leadership Hand in date: 14.10.13 STU 180.009 Pages: 85 Supervisor: Niels Bjorn Andersen Thorkell Olafur Arnason _________________________________ 1 Abstract The video game industry had its start in the 1970s where it began as few amateur programmers creating video games over the span of several weeks. Today this industry has revenues of billions of dollars in the United States alone and its projects are larger and create more revenue than the movie industry. The consumers are no longer boys in their teens but rather men and women in their 30s. One part of the video game industry is a different from the rest, with games focusing on team-work and socializing in a persistent world. This is the Massively Multiplayer Online game or MMO. Millions of people pay subscription to play these games, to access the world of the game. But as these games are ever changing the developers must continually iterate on these games and innovate in order to keep the player interested. In this industry I look for an answer to the question: “How does a Massively Multiplayer Online game company manage the innovation of a product?”. To answer this question I begin by applying Van de ven et al.’s Process Model to the innovation process of a new MMO. This new MMO is Dust 514, the latest game from CCP Games, the developers and publishers of EVE Online, an MMO that came out in 2003 and is still growing every year, with 500.000 players in 2013. I conducted interviews with some of the most important decision makers for the game and compare their stories to the findings of Van de Ven et al. (1999) and to the common practices in video game development. From the analysis I hypothesize that there are 5 Critical Success Factors in managing the innovation of an MMO: Manage Scope, Shorten Period of Ambiguity, Openness to Innovation, Balance Leadership Roles and Reduce Outside Dependence. I conclude that what is most important in managing the innovation process of an MMO is to retain the decision-making power over the entire process by minimizing outside dependence. 2 Table of Contents 1.0 Introduction .................................................................................................................................... 5 1.1 Taxonomy of games ................................................................................................................... 6 2.0 Methodology .................................................................................................................................. 8 2.1 Research setting.......................................................................................................................... 8 2.2 Data gathering ............................................................................................................................ 8 2.3 Meta-positioning ...................................................................................................................... 11 2.4 Contribution ............................................................................................................................. 12 2.5 Limitations ............................................................................................................................... 13 3.0 Theory .......................................................................................................................................... 13 3.1 Theoretical basis....................................................................................................................... 13 3.2 Literature review ...................................................................................................................... 14 3.3 Learning during innovation ...................................................................................................... 16 3.4 Leadership during innovation................................................................................................... 18 3.5 The Process Model ................................................................................................................... 21 4.0 Company Profile .......................................................................................................................... 31 4.1 History of CCP ......................................................................................................................... 31 4.2 What is EVE Online? ............................................................................................................... 33 4.3 Learning from EVE .................................................................................................................. 34 4.3.1 Empowerment .................................................................................................................... 35 4.3.2 Project Management .......................................................................................................... 36 4.3.3 World-Wide ....................................................................................................................... 36 4.3.4 Change ............................................................................................................................... 37 4.4 What is Dust 514? .................................................................................................................... 38 4.5 How is Dust 514 different? ...................................................................................................... 39 5.0 Analysis........................................................................................................................................ 40 5.1 The Process Model of Dust 514 ............................................................................................... 40 5.2 Initiation Period ........................................................................................................................ 40 5.2.1 Gestation................................................................................................................................ 40 5.2.2 Shock ..................................................................................................................................... 41 5.2.3 Plans ...................................................................................................................................... 42 5.3 Developmental Period .............................................................................................................. 44 3 5.3.1 Proliferation ....................................................................................................................... 44 5.3.2 Setbacks Occur Frequently ................................................................................................ 46 5.3.3 Shifting Innovation Performance Criteria ......................................................................... 48 5.3.4 Fluid Participation of Innovation Personnel ...................................................................... 49 5.3.5 Top Management Involvement and Roles ......................................................................... 50 5.3.6 Relationships Frequently Altered ...................................................................................... 52 5.3.7 Industry Team Playing....................................................................................................... 53 5.4 Implementation/Termination Period ........................................................................................ 54 5.4.1 Adoption ............................................................................................................................ 54 5.4.2 Termination........................................................................................................................ 55 6.0 Critical Success Factors ............................................................................................................... 55 6.1 Manage Scope .......................................................................................................................... 56 6.2 Shorten Period of Ambiguity ................................................................................................... 57 6.3 Openness to Innovation ............................................................................................................ 59 6.4 Balance Leadership Roles ........................................................................................................ 61 6.5 Reduce outside dependence ..................................................................................................... 63 6.6 Critical success factor’s model................................................................................................. 66 6.7 Discussion ................................................................................................................................ 68 6.8 Conclusion................................................................................................................................ 72 7.0 Bibliography................................................................................................................................. 78 8.0 List of interviews ......................................................................................................................... 86 4 1.0 Introduction Video games are a big