In the beginning was EverQuest, and it was good.

OK, maybe EverQuest wasn’t exactly the beginning. Ultima Online deserves a lot of credit. And we wouldn’t be where we are today without Meridian 59 or MUD or even Dungeons & Dragons.

But the point is, before World of Warcraft, Sony Online Entertainment made a lot of money dealing Evercrack to the fans. And as any street hustler can tell you, once you’ve had a taste of the good life, you want it back. Just ask Tony Montana.

Last year, SOE made a move that barely caused a ripple in the game business. But like most really clever business maneuvers, your competitors don’t see it coming until it’s too late. And what they did was this:

Sony Online Entertainment bought a company, a little company, a little company in Denver no one had heard of. This was a little company in the middle of gaming nowhere that, gasp, carved its niche making online versions of collectable trading card games (TCGs). Played The Lord of the Rings Trading Card Game Online? OK, maybe you didn’t. But a lot of people did, and they spent a lot of money for the privilege of buying digital cards.

Like a commando strike team, last fall, the suits at SOE swooped into the third floor of a building that overlooked what could kindly be called “Crack Alley” and cleared out Worlds Apart Productions with a flurry of tactical contract offers, buyout clauses and promises of bigger better things.

Since the acquisition, the new Sony Online Denver has cranked out a digital version of the Pirates! Constructible Strategy Game and a TCG based on Stargate.

This, I assure you, is only the beginning.

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Forget Second Life and black market WoW trades. The future of digital property looks more like Magic: The Gathering than Donald Trump.

In Search of Virtual Gold
The interview starts off well.

“I won $33,000 up in Blackhawk,” says SOE Denver studio head and former Worlds Apart chief Scott Martins. In the land of low stakes Colorado mountain gambling, where $500 counts as a jackpot, Martin’s luck at the table included winning one of those giant piles of cash casinos use to market The Dream to slot machine players.

Martins’ luck just keeps improving.

After years building up Worlds Apart from a studio creating text-based multiplayer roleplaying games, he found his ideas about the desirability, and plausibility, of charging players for collectable objects were growing more and more popular.

By E3 of last year, it was time to cash in. Confident after shipping an LOTR game, Martins spent May 2006 on the show floor, bothering anyone with intellectual property he could entice into an online trading card game deal. Even Will Wright was enthusiastically day dreaming about a Spore-themed TCG during closed door demos for his game. Martins’ persistence paid off in an unexpected way. After storming the gates of the closed Sony Online Entertainment show booth, he was surprised by SOE head John Smedley’s response. “Smed,” as he’s called in the industry, wanted to buy Martins’ company.

Two months later, Smed officially brought Worlds Apart under SOE’s banner. In the business domain, where mergers and acquisitions are measured in years, SOE’s rapid purchase of the Denver developer counts as the commercial equivalent of getting married after the first date.

Smed insists it wasn’t an impulse that led to the purchase, just a classic case of perfect timing.

“The main reason that we bought them was not the games that they had going, and it was definitely not to stay in the CCG [collectable card game] genre – although we have some big things planned around that. The future is around digital items and the power that those bring – the idea of people being able to create things of their own and the idea of people possibly being able to sell things. To me, that’s where the real future of this stuff is coming from.”

Selling the Idea
Scott Martins offers me something I really want.

Across the massive conference table at Sony Online Entertainment’s Denver studios, he slides me an uncut sheet of Stargate trading cards. I don’t collect cards and have never seen the Stargate television series and don’t know much about the franchise, other than Kurt Russell was in the original movie and he wore a beret.

I want these cards, nevertheless. They look cool. Like a foam finger handed out at a sporting event, you don’t know what you will do with it once you get it home; you just know you want it. But after a lifetime of collecting videogame swag, I realize I don’t need them, and besides, I walked over to SOE’s downtown Denver digs and I don’t want to lug the sheet around.

Still, I want them.

This makes it all the more strange that, while SOE Denver designed the cards, their real business is making digital collectable trading card games. Just like the foil-wrapped packs of cardboard goodness you can buy in your local hobby shop, the Stargate online game plays the exact same way, with the exact same cards, just in the perfected form of the digital ether.

A few days later, I log onto the Stargate TGC site and download some cards. Then, like the kid who realizes that he can, in fact, swim without water wings, I’m having fun, playing with digital property, stuff I only own in the cold, empty spaces of some database server on Sony’s computer network.

“The concept of owning something that’s entire existence is online, and I cannot actually touch, that’s a big paradigm for shift for people to make,” Smed tells me. “They’ve got to get their heads around that, and it’s not always easy.”

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While Smed doesn’t say it, the challenge he faces has less to do with convincing people to spend money on intangible stuff – the game industry does that every time it promises to let you clean up a crime filled New York City or to race the Suzuka Circuit . Check your iPod lately? It’s filled with digitally managed, digital property. We know and love digital property with all our hearts. The issue, rather, lies in reprogramming people taught to think of paper cards and plastic figures as something of value in and of themselves.

Economists have long understood what’s going on, even if the game business acts like it has just discovered gravity. The term is “exchange value,” and it works like this:

What makes diamonds more valuable than bread – and the reason someone will spend $10,000 on an ultra-rare Magic card – is people pay for what they want. It’s the wanting that produces the value. Diamonds, bread and a Black Lotus card don’t have any real value, other than what people will pay. In a world with a lot of bread, fewer diamonds and even a more limited supply of Magic cards, the values float around what people will exchange to get them.

Just having a piece of cardboard in your hand doesn’t make it any more valuable than the rights to a digital card that lives in a computer. It only matters that someone wants what you have.

No one understands this better than Smed.

“I recently bought – this is no joke – 3,000 (digital) cards online, from an eBay auction. I won’t say what I spent,” he says.

A year after the Worlds Apart deal, SOE readies to announce new products and plans coming out of its Denver shop. With a nod to all that Magic has accomplished in the collectable game world, the next step for SOE focuses squarely on how this will play out in massively multiplayer online games.

“We’re no longer in what I call the 1.0 years of online gaming, the EverQuests and World of Warcrafts, that kind of stuff.”

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Now SOE wants to out-WoW WoW the way WoW out-EQed EQ. With little left to do in terms of the traditional RPG model, Smed wants to uncover a new magic formula for online gaming. SOE titles like The Agency hope open up roleplaying beyond elf improvement, and Free Realms looks to attack digital property head on with an MMOG where joining is free, but equipment costs money.

SOE Denver fits into the picture with its skills and experience around collectable objects. Grind all you want, Martins understands that collecting remains the missing ingredient that makes the whole digital property concoction work.

People like to collect. Butterflies, coins, matchbook covers. I’ve known people who collected credit card receipts and cereal box dust. Sometimes the news covers maniacs who collect body parts. Everyone collects something. Making digital property collectable unleashes a subconscious urge to accumulate that overpowers any need to hold cheap paper in your hand.

Still, Martins thinks the “collectable” part of collectable trading card games can take away focus from something else tucked into the genre’s success.

“These are strategy games, but strategy games that you can customize the way you play them. They allow you to bring in your personality into the game.”

This principle is well enough understood by your average junior high school girl who fills her closet with clothes, not just to have them, but to provide the maximum range of self-expression. Somehow, in the male-dominated world of games, we forget half the fun of customizable gaming lies in playing dress up. Allowing players to build decks of cards that suit certain play styles or even narrative predilections – I’m trying out a fire burn deck, or prefer a black speed deck – is what really sets Magic apart from chess.

The Sea Change
Joe Hauck, WizKids‘ VP of Sales and Marketing, was one of companies Martins approached prior to the Sony deal. And WizKids seems to get that collectability and customizability together motivate digital property sales.

Even though WizKids stakes its name in the collectable market with its Clix series of miniatures-based games, the title they signed on with Martins’ company to produce was the Pirates Constructible Strategy Game.

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Unlike the collectable card games, Pirates cards punch out into pieces players use to build mini 3-D swashbuckling models. By going digital, WizKids gambled that players would be willing to give up handling cool styrene models, and they wouldn’t give up buying the real thing. Hauck seems happy with the results.

“Players are certainly willing to play both, because they see them as different experiences.”

Which, if you are in the habit of decoding tantric business speak, might mean something akin to: “Cool. People will pay for programs and we don’t have to stamp plastic in China. Hooray for the internet.”

Even as online slowly sucks the life out of the hobby shop (Again. See: Russ Pitts’ “Paper Gaming and the Hypnic Jerk” – ed.), sending players online for the joy of round-the-clock play and the convenience of computer-based management of cards, the shrewd businessman smells opportunity. Smed, with an online trading card company safely on his payroll, is ready to play his most powerful card yet.

“That’s why we think merging these things with [MMOGs] is a huge new direction, because what it is going to enable us to do is introduce this gameplay to a much broader audience than have ever seen them before.”

David Thomas is the founder of the International Game Journalists Association. He also provides commentary and criticism at buzzcut.com.

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