[Transcript] Lecture at Yonsei University last month

Underwood Global Forum<o:p></o:p>

<st1:place w:st="on"><st1:placename w:st="on">Yonsei</st1:placename> <st1:placetype w:st="on">University</st1:placetype></st1:place><o:p></o:p>

<st1:date year="2007" day="12" month="7" w:st="on">July 12, 2007</st1:date><o:p></o:p>

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<st1:place w:st="on"><st1:country-region w:st="on">Korea</st1:country-region></st1:place>’s Place in the Virtual World<o:p></o:p>

Erik Bethke<o:p></o:p>

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Erik Bethke: Thank you guys very much. My name is Erik Bethke. I have been making games for about 12 years now. I’ve run my own game company for the last eight or nine years. I absolutely love games. Before I was an aerospace engineer and I used to work at a jet proportion laboratory and I actually worked on the Galileo and Voyager Missions. I was really excited about space, but then I found out that the <st1:place w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place> government moves very slowly. So I wanted to pay a lot more attention to the game industries. Nowadays, I am building a game called GoPets, it’s about fluffy pets that wander around the whole world visiting other people when you are online. When they are offline they go around visiting people introducing themselves. In a sense, we’re building a truly viable beautiful virtual world, a dawning part of the 21th century, where people can meet each other. <o:p></o:p>

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How many of you guys have played any MMO (Massively Multiplayer Online) games before? Anybody playing WOW, World of Warcraft? Anybody playing Lineage? Ok --- come on guys, What do you guys do? What games do you guys play? (Tetris) Tetris? You play Tetris? Great! (Counterstrike) You play Counterstrike! Counterstrike online? Here in the PC rooms? How long have you been doing that? Three years? That’s pretty long time to play a game. Has anybody else played any online game before? You’ve got one counterstrike player here in this young group? Do you guys download music? How many of you download music? So how many of you downloaded mp3 and have not paid for it? How many of you felt truly bad about that? Did you wake up in the morning and say “Ahhh, I am a bad guy!”? You? You felt bad? There’s one nice girl here. How many of you copied movies or TV shows? <o:p></o:p>

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These are really important issues. I am going to go through this in my talk today. First thing I talk about is what’s wrong with the Packaged Goods Model. What’s wrong with buying CDs at the store? What’s wrong with buying DVDs at the store? There are a lot of things that’s wrong with it. The reason why you’re downloading music and the reason why you’re copying movies is that the current distribution model is wrong. So actually all of you guys downloaded music and didn’t feel bad about it? You’re right. And the one girl who felt bad about it, she’s actually wrong. <o:p></o:p>

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So I’m going to talk about <st1:country-region w:st="on"><st1:place w:st="on">Korea</st1:place></st1:country-region>’s role in this. <st1:place w:st="on"><st1:country-region w:st="on">Korea</st1:country-region></st1:place>’s actually central into what’s changing about the Packaged Goods Model into the Service Based Model for music, movies, and for games. I’ll talk about how the Subscription Model solved some of the problems that the Packaged Goods have and then I am going to talk more about the Item Based Model. Have you ever heard about what the item based model is before? <st1:place w:st="on"><st1:country-region w:st="on">Korea</st1:country-region></st1:place> is absolutely famous for it. It scares North American publishers. So we’ll talk about that. I’ll talk about different items that can be sold online. I’ll talk about fairness, gameplay, and some esoteric stuff. I’ll talk a little bit about what we do and then I will have some questions and answers. <o:p></o:p>

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Now, you guys are all undergrads? Cool. And how many are freshmen and sophomores? Juniors and seniors? Ok, so we’ve got a lot more juniors and seniors. Normally I give these talks to people who work in the game industry. I usually breeze through things very quickly. But none of you guys are formally in the game industry so I will very quickly describe to you how games get made.<o:p></o:p>

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Usually it’s bunch of passionate young people, such as college students --- they get together and know each other, start going into computer science classes, and they try to make some games independently and they don’t have enough money to do a good job so they do some kind of crappy games. And then eventually they will find some game company, find somebody at a game company and they’ll show them their crappy game and that will get them a job at the game company. They’ll work at the game company for a little while and rise up the ranks. That’s how people get into the industry. How games are actually being made is that usually third party game companies will put together a proposal. They’ll say “Here’s this wonderful game. We’re going to make a first person shooter game that looks very realistic and we’re gonna have lots of blood, we’re gonna have a capture of fly dynamics to it and in a very rapid phase, even if you die, you’ll be dead for 10 or 15 seconds like in Counterstrike. So they’ll put together this proposal and they’ll make a Demo and they’ll show it to the publisher and the publisher will say “absolutely no way, we’re not gonna pay for it.” So the developer will go to the next publisher, to the next publisher, to the next publisher… How many of you guys have heard of doom or quake? 10 publishers will say ‘no’ to those games before they get published. <o:p></o:p>

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It looks like the audience spends most of their time figuring out music. If you ever read about musicians’ histories and their early career, they got turned down by the music record companies all the time. In the end, there’s really no right, wrong reason to figuring out how the individual deals get struck. It’s usually that something random happens. But the point I am making is that these independent groups spend a lot of their own money and a lot of their own time. And they barely get a deal with a publisher. The publisher starts spending some money. On a milestone basis, they’re starting to get paid to complete the project. It’s actually similar to a construction project, like constructing a building. For those phases, you get paid money as you complete each phase. That’s the role of a publisher and the role of a developer. Now when the game is done, it goes to what’s called distributor and distributors are very large publishers like ACT Vision, Electronic Arts, or Microsoft. Those distributors will aggregate contents from smaller publishers. Those distributors in turn go talk to major retailers. They would go to Best Buy or Wal-Mart in <st1:place w:st="on">North America</st1:place>. And there’s Wal-Mart or Best Buy. If you think about it, as a passionate game developer, between you and the person who’s going to buy the game, there’re a lot of people, the publisher, the distributor, and retailer. <o:p></o:p>

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You’re young, passionate people and you can’t quite appreciate what that means. But as you get older and more cynical, you work harder to find out that you don’t make games for the consumers to play, you make games that you think the publisher would pay the milestone for. Or you would make games that you think Best Buy would like or Wal-Mart would like. So the big market distortion. It’s very depressing. The other problem is retail stores. Their shelf space is incredibly expensive. North American supermarkets at this point are such that they don’t even have the workers to put the food on their own shelves. If you’re a pickle guy and you want to sell your pickles at a supermarket, you gotta send your own truck driver in there and put pickles on the shelf at the market that you want to sell your pickles. If your pickles don’t sell, you have to come back and pick up your pickles. Sucks. Retail is very tough. <o:p></o:p>

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I have a friend of mine who wanted to start a game company in the <st1:country-region w:st="on">Philippines</st1:country-region>, previously he had been very successful doing a call center in the <st1:place w:st="on"><st1:country-region w:st="on">Philippines</st1:country-region></st1:place>. As you know English is the national language in the <st1:country-region w:st="on">Philippines</st1:country-region> so he was like, “it is a great idea, I will set up a call center, I’ll do the credit card stuff with <st1:place w:st="on">North America</st1:place>.” The guy really made millions of dollars very quickly. But frankly, call centers are boring. Who wants to say I work at a call center? So he wanted to get involved in games. So he started getting into that but then he found out after he got started and after he raised a few millions of dollars working on it, that the Philippines has 3000 different islands. It’s incredibly difficult to get games shipped out to 3000 different islands. It’s also incredibly difficult to get money back from the 3000 different islands. It’s a huge pain in the ass dealing with physical goods and it’s a big pain in the ass to figure out how many to build and where to ship them to and hoping people would buy them. Very very inefficient. <o:p></o:p>

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So, in the end, there’s only very few retails in North America. <st1:place w:st="on">North America</st1:place> is really the biggest market in the world for games in one spot. But you’re talking about Electronics Boutique, Gamestop, Best Buy and Wal-Mart. Those four buyers, there’s going to be 4 people who make decisions on how many of your games they will buy. 4 individuals. They’ll decide whether it’s going to be couple of hundred thousands, they’ll start for zero or ten thousand. So that’s a cartel. And they’ll even talk to each other. Buyers know each other. <o:p></o:p>

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Another huge problem is --- young people in Korea have no idea about this, but in the United States and Japan, you go to the store and you buy the games in a box that are like 50 bucks or 60 bucks. A Korean would never pay 50 or 60 bucks for a game. They just won’t. When I first came to <st1:place w:st="on"><st1:country-region w:st="on">Korea</st1:country-region></st1:place>, I had my guys work really hard and overtime and then they came to me “hey, you know, with the overtime, we’d like to have an X-box and a Playstation, too.” At the time, it was few years ago. I was like, “Oh, sure, no problem, yeah, I’ll get you guys X-Box and Playstation, too.” I said, “How many games do you want me to buy?” They said, “Don’t worry about the games, we’ll take care of the games. Just get us boxes.” We bought the boxes and the very next day, up to my waist, there were hundreds and hundreds of copies of Xbox and Playstation titles. I wasn’t mad or anything and I was just like “wow, that’s pretty cool.” In the States, a consumer has to walk in the BestBuy, they have to pick up a box, they have to look at the marketing messages on the box, maybe their friends talk about this game, maybe they saw an advertisement or something. Somehow they have to go, “Hmm, I am gonna pay for 50 bucks and then I am gonna take it home, and I am gonna install it or stick it to my console and then I am gonna find out if it’s fun.” That’s really crazy. At least with music, you can hear it on the radio for a little bit or your friend can share with you, copy the mp3 or something, you can get the sample. If you really love it, maybe you’ll buy it. Probably not these days. But it’s not that difficult to make a decision. But 50 dollar decision point, it’s a huge huddle. Like movies, they’re 6 to 10 dollars. Still someone can tell you “Oh, well, Spider 3 was just okay.” You still might go and spend the money, you might go see it just for the hell of it. “I just want to see that big special effects.” But 50 bucks is a serious price barrier. <o:p></o:p>

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Another problem is DVDs and MP3s, they work on any machine you like. But X Box only works on X box. Playstation only works on Playstaion. These are propriety formats. There’s no other place in our world economy where propriety formats succeed. Like the current console market. Honestly, I think it’s falling pretty rapidly. There’s no appreciable real console market in <st1:country-region w:st="on">Korea</st1:country-region> or <st1:country-region w:st="on">Taiwan</st1:country-region> or <st1:place w:st="on"><st1:country-region w:st="on">China</st1:country-region></st1:place>. If you look at the world total game players, the world total game players have rejected the console model. That’s really sobering things in companies like Sony. <o:p></o:p>

I talked about it before, but this line down here, the second to last line here is what I am most passionate about. When I make a game for a publisher’s conception of what the contract‘s milestone agreement looks like, I have no longer found any love path to the actual player. That’ll be like writing a novel and you submit chapter by chapter to an editor, and you ask “did you like this particular chapter?” Yes, or no, backup go forward. There’s no romance to it. And again, I talked about how much easier we sell the games. If someone is able to play a game for free, saying, “You know, I really like this game. Ok, now I’ll pay for it.” Right? <o:p></o:p>

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So actually <st1:country-region w:st="on"><st1:place w:st="on">Korea</st1:place></st1:country-region> solved all these problems. And it did it in the hard way. It wasn’t like Koreans just woke up and say “you know let’s think this through. This is bad, let’s do this right from the start.” It didn’t happen that way. Instead, of course, Starcraft came over here, Starcraft with packaged goods game. There were a million Starcraft clones being made. There’s millions of RPG clones… bunches of stuff were cloned and made and sold in boxes. I have a bunch of friends of mine in the Korean game industry. They can just show me their old boxes that were never sold. But far faster than in <st1:place w:st="on">North America</st1:place>, they found out that Koreans would not buy other Korean games. They’ll just copy them. Now, at the same time, I meet America publishers that come out from time to time, they keep clicking their tongue “tsk tsk… Koreans just copy stuff. When is the government going to crack down on this?” That’s not the solution. It’s not going to change. I mean, all of you raised your hands and said you don’t feel bad about copying games so you can’t go around and sue consumers all day long even if you think you can like in the music industry. There’s only very few titles that are actually sold in boxes. That’d probably be Blizzard. Blizzard is the only game people can sell in boxes in <st1:place w:st="on"><st1:country-region w:st="on">Korea</st1:country-region></st1:place>, mostly out of nostalgia. But I would argue if you actually look at the true number of people who play games and then you look at the boxes that are selling, they are still not sell the boxes they should be selling. So guys like Jay Kim in Nexon and others started making online games. They started making MMOs where you have a username and login. You log into the internet site and start killing some virtual monsters and take in their virtual crap. What’s good about that is you had to log in. With a login, magically everything is so much better. “With a login, I can’t actually copy the game, I can’t give it to my buddy and he can’t log in with my username. I don’t want to screw up my character. So I’ll tell him, go get your account dude. This is where those websites are and go pay for it.” <o:p></o:p>

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It flipped around completely. Now as game publishers and game developers, you are really excited people copy your client and pass it out. That’s free distribution. You don’t have to figure out the 3000 Philippino islands problem. Let the people do that. It works for you. So these guys start making these big online MMORPGs. It’s all basically the same stuff. You’ve got a Help bar, you got a Menu bar, you cast bells at them, you kill them, and maybe sometimes kill each other. It’s great fun. I do it all the time. I love it. <o:p></o:p>

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How long have you guys been in <st1:country-region w:st="on"><st1:place w:st="on">Korea</st1:place></st1:country-region>? Have you guys been in <st1:place w:st="on"><st1:country-region w:st="on">Korea</st1:country-region></st1:place> four years or more? No? How many of you guys have been to a Boardgame Café? When I first got here, three and a half or four years ago, boarding cafes were everywhere --- more than convenient stores. They’re just all over the place. If you think about it, boardgame cafes, this is great. I just buy a retail joint, buy some table, buy boxes like Monopoly, I stick them out and charge 2 dollars per person who’s there. It’s just a great thing. You don’t have to buy raw materials for food, you don’t have to buy expensive computers. It’s such a brilliantly simple business. So of course what happens is over-saturation. They make something like 6000 boardgame cafes in <st1:place w:st="on"><st1:city w:st="on">Seoul</st1:city></st1:place> pretty rapidly. And there’s natural contraction when there’s too much competition. Same thing happened with online games. Everybody started making online 3D MMORPGs. So what happens when you have too many of them, well, you have your open beta, you play “come play my games” people would come and check it out and then you try to charge and people run away. They would go play the next open beta game. It’s called beta tribe. They would just move from one big free game beta to the next free beta. So to counteract that, game publishers start to make open beta game not two months long but six months long. And out of aspiration, some made it twelve months long. They figured “if I was to open beta for twelve months, I’ll get few million of people to play and then I will start charging. I gotta keep at least 4% of those guys or something. Right? That’s just a sheer desperation. They’re giving away their contents for a year just hoping that they can hold on to small percentage of people after they went commercial. This is where the online subscription model broke in <st1:place w:st="on"><st1:country-region w:st="on">Korea</st1:country-region></st1:place>. About 2001, 2002, 2003. It started at two ends at the same time. They started on the casual game site like Hangame or little puzzle card games. And it also started in the high-end 3D MMORPGs. I remember reading a game magazine where one after another, just week after week, it started saying “totally free 3D online MMO” “totally free, free, free, free!” What they really meant was “Just come on in and just play.” And they had to find a new way to make money. And they had to figure out in order to make money not just for big sorts of fantasies, they had to figure out how to make money for Pangya Golf or free sized basketball, all these casual games. And the answer was in items. You come to the website, you look at the game, do you like it? Sure. Download it. Play it. You’re playing for awhile. You find another’s guy’s character jumps higher than you in basketball. Why do they jump better? Because they have better shoes. How much do those shoes cost? 500 Won. Okay, for 500 won, I can do it with 500 won. Right? So you buy it. 50 cents, 2 bucks, something like that. It really eases people in to a payment system. It’s not 50 dollars. It’s 500 won. Because of this, <st1:place w:st="on"><st1:country-region w:st="on">Korea</st1:country-region></st1:place> has been able to be number one exporter of online games into all these difficult countries around the world. The Chinese government is putting up anti-trade regulation to slow down Korean games. The <st1:place w:st="on"><st1:country-region w:st="on">Philippines</st1:country-region></st1:place> and Thai governments are materially and financially subsidizing little tiny local game industries, to encourage them to try to emulate the Korean model so they can make their own native online games. <st1:place w:st="on"><st1:country-region w:st="on">Japan</st1:country-region></st1:place> is happily slurping down Korean online games. And as I said earlier the American, big North American publishers are scared to death that their online item-based models will come to <st1:place w:st="on">North America</st1:place>. I argue that <st1:country-region w:st="on">Korea</st1:country-region> is at least 5 years ahead of the <st1:place w:st="on"><st1:country-region w:st="on">US</st1:country-region></st1:place> in figuring this out. I’m not sure what your other speakers are, what your other topics are in your class but this is not, I would say, a phenomenon that has to do only with online games. I don’t think this is a weird quirk. I think this really has to do with the Korean temperament to find a path to succeed no matter what. They just would push and they’ll figure out. To me, it’s really beautiful when I walk around the streets in <st1:place w:st="on"><st1:city w:st="on">Seoul</st1:city></st1:place>, I see all different family-owned restaurants. And I see all these different businesses around here. All these people are trying to make it happen whereas in the <st1:place w:st="on"><st1:country-region w:st="on">US</st1:country-region></st1:place>, people kind of relax now. If you go to malls in US, it’s all like Cheesecake Factory, PF Chang’s, big corporate chain stores and chain restaurants, there’s no romantic entrepreneurism in my opinion. In the <st1:place w:st="on">Silicon Valley</st1:place>, of course, there are people who want to make things like cool new internet sites. That’s nice. But society- wide, it’s kind of relaxation in the <st1:place w:st="on"><st1:country-region w:st="on">U.S.</st1:country-region></st1:place> that I don’t like. <o:p></o:p>

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These are actually really big businesses. There’s a bunch of stats here and I am not gonna stand here and read numbers to you because I hate that when people do that. If you’re interested in these slides, you can contact your department, they have copies of these slides and you can have those numbers. But the point is, these Korean companies are making 50 million dollars a year to 400 million dollars a year, 500 million dollars a year selling nothing. They’re just selling virtual items for your virtual characters in a virtual world. They’re not small businesses. World of Warcraft is one online game, it’s gonna grow just under a billion dollars this year. A billion dollars is 5 % of the size of the North American television industry. For one game. One twentieth of the television industry. That’s huge. These games are huge, huge businesses. If you haven’t seen a Shopping page, this is what one looks like on different games. There’s a couple of things that are actually good about package games. We should talk about that. They’re expensive to make and they’re very expensive to distribute and you can only put top 10 or 5 titles on the shelf. So why is that good? Well, if you are in electronic arts, it’s fantastic. Electronic arts puts 300 to 400 people on a single game to make. The new Lord of the Ring concert title, they have 400 people on one game. That’s a project. That’s a team. That’s a team that is much bigger than a small company, that’s a medium sized company on one game. They’ll spend at minimum 40, 50 million dollars and up to 100 million dollars making a game. There really isn’t that many entities in the planet that have the authority to spend 50 million dollars on a creative entertainment work that may or may not succeed, or even has a 20 % chance to succeed. That’s a huge barrier to entry. In fact, all the people who work at electronic arts arguably from the very top to the very bottom, their whole skill set isn’t in this current package goods model. They don’t have anybody in their organization who knows how to talk to a game player and ask them “Do they like this particular Counterstrike map? What’s wrong with this Counterstrike map?” They don’t have anybody in the building who can do that. So if they switch over the Korean based model, all of them have to go get new jobs. Or get retrained or retooled. That’s why they’re deathly afraid. They have existential problems. I like this quote once I heard before which is “kill your own industry before somebody else kills it for you.” If you’re young people and you’re studying in <st1:place w:st="on"><st1:country-region w:st="on">Korea</st1:country-region></st1:place>, that must mean you come from diverse background, different countries, I don’t even know where all of you come from, what you’re doing. But you’re all strange in some degree by going to school here like Yonsei’s <st1:place w:st="on"><st1:placename w:st="on">Underwood</st1:placename> <st1:placename w:st="on">International</st1:placename> <st1:placetype w:st="on">College</st1:placetype></st1:place>. So that would mean, if you’re strange in that way, you should be attracted to destroying industries. So think about that in the future. <o:p></o:p>

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I spent a long time talking in the beginning about packaged goods and I was too light on a subscription. The subscription is in between item based model and package goods model. The subscription has people paying monthly to stay with the service. What’s really good about that is it changes from a package good and makes it into a service. That’s really good. What’s really bad about it is that it forces everybody to pay the same amount of money. Imagine if you went into a clothing shop and you had to pay 10,000 Won per month to go into this clothing shop and every time you walk in, they’re like “ok you can get three shirts a month here.” You’re like “well, I’d like to buy 5.” But they’re like “oh no.” or “I’d like to buy one.” “No.” Why does the subscription based model make sense? If you think about in that way, it makes no sense at all. I talked through these things fast.<o:p></o:p>

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So what kind of items can be sold? You can sell items that change your appearance. Those are the most obvious ones. You can have sunglasses or things like that. You can have items that change your game playing experiences. Some of the earliest items that were sold were faster recovery times after dying. So if you want to spend less time being dead, you pay some money. Some items are permanent like you can’t loose them. And some items are consumable like a potion and some of them are even rental. A lot of Korean companies use rental system especially Nexon uses rental system very aggressively. <o:p></o:p>

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Rarity is hugely important. People like rare things. There’s an old game where 10 years ago the developer accidentally released some clothing items that were just all black and they’re missing their texture. There are like only 5 of these items. But they’re the most valuable items you can buy in an open online system or eBay or secondary markets. People just like really rare stuff. <o:p></o:p>

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So if you add these things all together and think about it, the least valuable thing would be common, easy to get, temporary-appearance affecting things. And the things that are coolest to get would be unique permanent game-playing affecting things. What’s really funny is if you go look at American develop experiments in the online item based model right now, like MTV’s Laguna Beach and you look at new stuffs at New York pets and you look at these new feeble attempts in the United States to copy Korea. All they’re doing is what is common to get, temporary appearance generating things. And they’re not doing anything that has true gameplaying effects for the players. There is not anything that’s unique or has real good appeal to these players. And that’s another indication they’re playing catch-up. We’re talking about people in these organizations that have never played these games first hand. They don’t understand it. <o:p></o:p>

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Usually I get these talks about stages, there are bunch of people in the American game development audience, they’re actually very agitated and they’re very upset. American game developers really want things to be fair. Fairness is very important. They believe in very balanced games. It’s very awkward with so few of you playing online games but American game developers get into arguments about whether or not this kind of fireball is realistic or whether the amount of damage with the fireball is realistic or the range or how far you can shoot that fireball. And they can get angry at each other. I’ve seen people yell at each other and spit at each other and hate each other in a hallway talking about game design issues. That’s strange. At the same time with Korean or Asian online games, you see a lot broader and freer interpretation of what’s fun. Webzen had a game called MU. It’s been around for lots of years. The big thing about MU was that it came about completely, fantastic armor with a really whimsical amount of special effects. It was like ripping off those Chinese Kungfu shows where those guys are like flying in the air forever moving back and forth. That’s where the themes and ideas came from. But for American designers, we look at them like “Umm, that’s not a realistic armor. We won’t do that. … Purple sparks.. what is that? That’s not real.” There’s a very strong dramatic sense in American developers about things being fair and simulated correctly. Asians are not hampered by it whatsoever. Asians are perfectly happy, thinking “cool I bought the blue super armor now I do damage.” And they want to show it off “look at my cool stuff!” It’s extremely similar. I walk around <st1:place w:st="on"><st1:city w:st="on">Seoul</st1:city></st1:place>. Korean people like to dress up “look at me, I’ve got some cook stuff!” Again this is perversely really intensely interesting to me because in the <st1:place w:st="on"><st1:country-region w:st="on">United States</st1:country-region></st1:place>, we’ve got Egos, the Statue of Liberty, and Freedom, and we got really pissed off by the British and Freedom. We’re capitalists and we sell crap all over the world. Why wouldn’t Americans be the developers of item based model? Why wouldn’t we sell people how much they want to buy? Very strange. I think it comes from that strange Protestant Lutheran fairness: heavy-handed stone-working stuff. I believe that while subscription models are good models over packaged goods games, I call subscription models communist models because they equip everybody with the same thing and I think it’s just an awful idea. For GoPets, our primary market is actually North America and our primary market, despite having cute little fluffy dogs, our biggest paying users are women from twenty five to forty five. And we have some paying users in their fifties and sixties. And we have about six users who spend over 15 hundred dollars playing GoPets. And we have bunch of users who spend 100, 200, 300, 500 dollars. These are Americans that pull out their credit cards. They just keep buying shells to buy more stuff on our game world. So what I’d love to say at the American game development conferences, “you professional game developers, you guys suck. And you’re stuck in this fairness concept but consumers are cool with it.” They’re online buying gold in the World of Warcraft for the gold farmers. They don’t worry about it. They’re online downloading music and movies, they don’t care. There’s something I want, I’ll buy it. Or I’ll copy it if I can get away with that. So going back to GoPets, we do actually have a subscription system in GoPets and it makes money for us. But we call it more of a premium service. What we do is once a month we make a unique item that will never be made again. First one was a tropical oasis where any pet can buy and take a drink of water and you’ll get paid 5 green shells from any pet from the drinking oasis. Now this oasis was never made again, never sold in another store and there’s only one oasis that’s ever made for every subscriber of that month. So now these oasises have huge values. I fully embrace the idea that these users -when I sell them crap believe that the crap its theirs and that they should be able to sell that crap again to somebody else. And so these oasises are sold for 150, 180, sometimes for 200 dollars. That goes back to the rarity. So what we did was that we didn’t put a gate saying you have pay X dollars to have the access to the site but instead we said for X dollars a month we’re gonna give you a custom item maker, we’re gonna give you a gold fortune cookie everyday, we’re gonna give you limited additional items for each month. <o:p></o:p>

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When I talk about this to you guys, I think your school’s format about exposing you to different trends and different ways that <st1:country-region w:st="on"><st1:place w:st="on">Korea</st1:place></st1:country-region> could be leading the world is extremely valid, extremely relevant. I’ll tell you that all the Southeast countries really are directly studying the other ministries here in <st1:place w:st="on"><st1:country-region w:st="on">Korea</st1:country-region></st1:place> and they’re studying the university programs and they’re trying to figure out how do we stimulate game development in our country? The fantastic thing about game development is you get 10 guys, 20 guys, you buy them some PCs and you get some of them visual studios, C+++, some electricity, some internet access, and time and you could get yourself enduring online game that makes money all the time. And that can be exported globally. For country like <st1:country-region w:st="on">Thailand</st1:country-region> or <st1:place w:st="on"><st1:country-region w:st="on">Vietnam</st1:country-region></st1:place>, that’s incredibly great. You don’t have to go and build a capital intensive shipyard or something like that. You can have a couple thousand of these small medium enterprises making intellectual property. That’s very exciting and even more exciting than music or movies because music or movies because they are just linear strains of entertainment. They’re just bits. You can copy those bits, there’s no service. So I firmly believe that music, movies, and TVs are all dead and dying industries. I believe in the future we’re all going to be on the net in different virtual worlds of different looks and different art styles. But we’ll be pulling in the content we like into these worlds. How many of you guys look at videos on the net? It’s quite a bit. I like it a lot. I like watching YouTube, I like watching people fall off their skateboards, jump off a building or stupid stuffs like that. I think that’s what the future is going to be like. I think we’re going to be inside our online spaces, with our online friends talking to our little online communities, and our friends are going to be pointing out to us “here is cool video, here is cool music.” That’s what we’re gonna be. Because the only way you can monotize is by wrapping a service. So if you really want to figure out something really cool, you should think about what could possible be the business model after item base. And it’s really tough to figure this out, honestly. Here is a site on the net that consumers spend no money upfront, they download the game. They try the game as long as they like, they rip off their mobile phones and they buy little bits of virtual currency and they buy just what they want to buy. What could possible be more market efficient than that? Or is the item base model going to be the last game business model that game developers will have for the next thousands of years? Not likely. There has to be one more model coming, what could it be? Alright. That was my lecture. <o:p></o:p>

Originally posted on LiveJournal