Here's an article examining the financial potential of online gameplayers, all that Everquest means to Sony:
"The hottest properties in cyberspace are virtual worlds. Meet the man who's making magic -- and millions of dollars each month -- by developing the Net's newest boomtowns."
Geoff Keighley, The Sorcerer of Sony, Business 2.0, August 2002
On any given day, you can find John Smedley smiting the odd necromancer or brandishing his sword alongside wood elves who want to kill the emperor of the snakelike Shissars. Sometimes, though, he just strolls around observing his fellow citizens. To you, they might look like knights, wizards, and ogres, scuttling across a three-dimensional landscape of castles, caves, and dank swamps.
But to him, they must look like money.
Smedley, 33, is the chief operating officer of Sony Online Entertainment, where he's master of the virtual boomtown known as EverQuest. Once a destination for the fringe Dungeons & Dragons crowd, the online role-playing game now has 433,000 paying customers who generate $5 million a month for the Japanese entertainment giant. Given the 40 percent gross-profit margins, and the fact that this world practically runs itself, the dragon-slaying business is looking pretty good these days.
It's so good that virtual worlds like EverQuest are fast becoming the hottest thing online. Just about every big game company is breaking virtual ground on one, looking to establish colonies that could one day generatefortunes. This fall, industry titan Electronic Arts (ERTS) is turning the most popular computer game in the history of the world -- the Sims, which has sold 7 million copies so far -- into an online Club Med where subscribers can chat, flirt, and perhaps one day make virtual babies.
Over at Microsoft (MSFT), programmers are revamping the Asheron's Call fantasy game. Vivendi-Universal (V) plans to introduce a militaristic world for fans of its best-selling Warcraft strategy games. Disney (DIS) is building Toontown. Other potentially huge theme worlds based on the Harry Potter books, Marvel Comics superheroes, and The Matrix are in the works.
One of the biggest and most ambitious of all is ready to launch. In July, Sony and LucasArts Entertainment are releasing a beta of Star Wars's first online colony. Star Wars Galaxies: An Empire Divided is set in a galaxy far, far away (sometime before the action of The Empire Strikes Back). Subscribers can play bounty hunters looking for Jedi knights, Wookiees exploring Jabba the Hutt's palace, or any number of other galactic roles. For Star Wars fans, who can effectively live here round the clock, it'll be like opium.
"This will blow the market open like a supernova," says Brad McQuaid, EverQuest's co-designer.
Maybe that's true, but so far only 1 million of the 145 million Americans who play videogames subscribe to any online worlds. And a recent study by the Interactive Digital Software Association found that two-thirds of gamers aren't inclined to play any online games. Most say they have little interest in current offerings, which haven't yet branched out beyond the men-in-tights fantasy worlds.
With the steady adoption of broadband connections and powerful desktop PCs that render awesome graphics on the fly, however, some say a new form of entertainment will finally take root -- and move toward a more mainstream audience. Consultancy Themis Group pegs 2003 revenues from online games at $635 million, more than double this year's draw. "Virtual worlds won't be a novelty anymore," predicts Paul-Jon McNealey, research director at market analyst Gartner G2. "Online gaming isn't just for hard-core geeks."
Some pundits are betting that Galaxies could end up making more money than this year's Star Wars movie. That's where Smedley comes in. A tall man with a broad forehead accentuated by a receding hairline, he loves his games so much that he has a satellite dish on his fishing boat to keep track of their progress. Galaxies is his biggest project to date; it cost an estimated $10 million to develop. Smedley is betting on its success. If he's right, it could change not just Sony, but the face of entertainment.
Smedley (his friends call him Smed) has been thinking about vivid 3-D virtual worlds since he was at Mt. Carmel High School in San Diego. That's when he and Russell Shanks, now the chief technology officer at Sony Online, holed up in the computer lab during lunch hour and played text-based MUDs -- so-called multiuser dungeons that simulated the action of the Dungeons & Dragons game.
In those days, online games were free, run from university servers by computer science jocks. After 18 months at San Diego State University, where he was studying computer science, Smedley dropped out to write games on contract for Alien Technology Group. In 1993 he finally took a full-time job at Sony. He needed the salary to support his own online habit: By then, Smedley was running up $600 monthly bills on CyberStrike, one of the first graphic action games played online against others.
He knew that CyberStrike, while primitive, was on the right track. If he was willing to pay to play, he reasoned, there were probably lots of other gamers out there who would be too. So in 1996, Smedley pitched his boss at a Sony-owned PlayStation development studio on the idea of an online role-playing game. It would involve thousands of players at a time, he said. It would be three-dimensional. It would make a fortune.
Smedley recalls, "I got three minutes into this huge presentation, and he just flat out said, 'No.'"
But a few months later, a new boss, Kelly Flock, arrived. Smedley tried his pitch again. He pointed out that programmers at other companies were already working on virtual-world games like Meridian 59. And while he didn't know it at the time, Electronic Arts was already working on Ultima Online. He got the green light: EverQuest was a go. Smedley hired McQuaid and Steve Clover, two ace game programmers who were slaving as corporate systems administrators. Within three years, the small San Diego skunk works grew into a team of 56 developers and one of Sony's most expensive game projects, with a development budget approaching $5 million.
That wasn't what Sony had in mind. Videogame development for the PlayStation typically cost $2 million, and the economics were understood. But $5 million on a virtual world that would run only on PCs? The company was ready to pull the plug on future online projects for the PC.
So, with a mere six months to go before the game was ready for launch, Smedley and team formed their own company, Verant Interactive. And a different division of Sony even agreed to take a 20 percent stake in the venture.
EverQuest launched in early 1999. Some 12,000 people signed up on the first day; by the end of the week, it had more than 50,000 subscribers willing to pay $10 a month. Gamers jacking into the world generated so much traffic that the Internet nearly crashed in the San Diego area.
The most optimistic boosters at Verant were dumbfounded. This game wasn't supposed to break even for another two years, by which time it was expected to have signed up 70,000 subscribers. But six months after it launched, 150,000 people were paying to play in Smedley's online medieval faire.
A year after the breakup, Sony bought the rest of Verant for $32 million.
Smedley now had the deep pockets he needed to take on Electronic Arts, Microsoft, and Vivendi-Universal. This time Sony hasn't balked at bulking up. The company now has 480 employees at studios in San Diego, Austin, and St. Louis.
But the transition took its toll. "John definitely felt a bit awkward with all the growth at first," remembers Kevin Baca, a former programmer at the company. Smedley was drawn into a power struggle with the CEO of Sony Online. Although Smedley won full responsibility for spearheading Sony Online, McQuaid, one of Smedley's closest friends and a co-designer of EverQuest, left to start his own company, Sigil Games.
Now McQuaid is the competition, working on a persistent-world game for Microsoft. Imagine what an EverQuest veteran can do with the powerful Net-connected Xbox as his platform. It doesn't take a genius to see where all this is headed.
Sony chairman Nobuyuki Idei is worried. His company sells a lot of PlayStation 2s. It also sells tons of Walkman units, Trinitrons, and Vaio laptops -- about $57 billion worth last year. But intense competition has shaved profit margins on Sony's core electronics business to a razor-thin 1 percent, and Sony is locked into a price war with Microsoft, which last quarter trimmed the cost of its critically acclaimed but struggling Xbox to a money-losing but market-share-gobbling $199.
Idei has repeatedly said that if Sony fails to find a new business model, it will devolve into a mere supplier of electronic components. Movies and music are a hit-and-miss business. The name of the postbubble game is subscription services, which are reliable and based on service fees that can be hiked up incrementally over time, as demand allows.
The beauty of EverQuest, aside from its subscription model, is that players effectively pay to entertain each other. Sony just provides the playground: more than 1,000 computers in San Diego that have kept the game running since 1999. EverQuest also relies on 47 staffers to continually add items and quests to the game; another 128 "game masters" function as customer service reps and patrol the world answering questions.
The result is a game so addictive that the typical player spends 20 hours a week on EverQuest. That's about 8.6 million man-hours a month devoted to the game. (It took 7 million man-hours spread over 14 months to build the Empire State Building.) One-third of players 18 and older spend more time in the game world than they do at their paying jobs, according to Edward Castronova, a California State University at Fullerton economics professor who studied usage. Scarier still, some 22 percent said they'd spend all their time there if they could.
What's the attraction? Mostly socializing. Players keep coming back to find friends. Some have held funerals there for players who have died in real life. "We even have one player from Vatican City, although we haven't asked him what he does for a living," Smedley says.
It's a given that this is an intensely loyal group of gamers. Last April, when Sony raised the monthly subscription price 31 percent to $12.95, it hardly lost a player. In fact, Smedley says the game continues to add 12,000 players a month.
Hidden revenue streams are just starting to be understood. Sony runs about 42 versions to avoid overpopulation in any one world. But instead of simply load-balancing the number of players per computer, it allows fans to relocate their characters to different worlds on other servers -- for $50 a move. "Would you believe we've generated over $1 million in revenue simply from moving characters?" Smedley marvels. While the company discourages players from selling off their personae or equipment for real dollars, black-market auctions are commonplace, with some gear going for as much as $2,000. (See The Real Economics of Virtual Worlds.")
Each year, the company throws off enough cash to fund the construction of another world, like the upcoming $20 million EverQuest II. By leveraging the technology and code already written, each successive world could get cheaper to build.
So which worlds to launch? Sony's virtual-world development is Hollywood-like in its intensity. Talks with the filmmaking Wachowski brothers about bringing The Matrix online didn't go anywhere, but discussions with Marvel Comics may yield an online universe based on comic book characters like Spider-Man, the X-Men, and Marvel's panoply of colorful villains. (The Wachowskis later hooked up with Warner Bros.)
Sony's also talking about a virtual world based on the post-apocalyptic vision in the Terminator movies. Next summer brings the release of the next movie in the series, Terminator 3: Rise of the Machines. Yair Landau, president of Sony Pictures Digital Entertainment and Smedley's boss, says the company may want to create a world of battling cyborg armies. "That property might be right for us. I think gamers really identify with that franchise," he says.
Next year Sony releases PlanetSide, the first experiment of a first-person action game (think Quake) in a persistent world. Also in development is Sovereign, a real-time strategy game that will let players fight battles in future worlds. Soon, Landau says, Sony will even bring out single-player EverQuest games.
Sony's also exploring global markets. This summer, Korean game maker NCsoft will launch EverQuest in the largest online game market in the world, South Korea, where 6 percent of the population plays online games (see "Korea's National Pastime.").
But for now, Sony is confident that Star Wars Galaxies, which officially arrives in December, will eclipse all other worlds, even EverQuest. More than 139,000 players signed up for the beta test of the game, which Sony is building for LucasArts Entertainment in a revenue-sharing arrangement. Sony Online predicts that within the first three months, 500,000 people will buy the boxed Galaxies product and then begin paying an as-yet-unannounced monthly subscription fee.
That's only the start of where Galaxies may go. In 2003, Sony and LucasArts plan to release software that will let players fly X-Wing fighters into combat with hundreds of other competitors. When Sony Online tests the online console market early next year with an EverQuest game for the PlayStation 2, it goes after a share of the 40 million owners of game machines. Console versions of Galaxies could further open up that category. Assuming just a 10th of the console players get hooked, Galaxies would turn into a $500 million-a-year business. By comparison, the domestic box office tally of Star Wars Episode II: Attack of the Clones is projected to reach about $300 million.
Certainly, EverQuest's revenues are chicken feed to Sony. One hit movie from its Columbia Pictures unit can make two or three times what EverQuest brings in. But if Sony Online could replicate EverQuest's success in game after game, creating alternate compelling virtual worlds for every fantasy -- the Wild West, World War II, ancient Rome, George Orwell's 1984, or New York's 1930s mob wars -- it suddenly could be looking at revenue streams easily approaching several billion dollars a year.
With that kind of money, it won't be long before Hollywood moguls start to see movies as the film trailers (or the real estate tours) that introduce us to the online virtual worlds where we can actually live the movie. Sony's Landau says, "This is no Internet hype story." Just ask Smedley.
"In Seoul, the broadband age is in full swing - online games have become a national sport, and cybercafes are the new singles bars."
J.C. Herz - The Bandwidth Capital of the World, Wired 10.8, August 2002
AT FIRST GLANCE, Seoul seems like just another sprawling metropolis: Its buildings, hastily constructed with dubious financing in the months leading up to South Korea's 1997 economic crisis, are the sort of blocky, concrete-and-glass high-rises that give many modern cities the air of prefab homogeneity. Wide boulevards are choked with the oppressive traffic common in East Asia or, for that matter, Silicon Valley. Megamalls and underground shopping centers filled with Body Shops and Burger Kings cater to teens and young professionals. There's none of the high tech visual overload you see in Tokyo, or the clean-scrubbed, old-meets-new urbanism of Scandinavia — nothing to indicate that Seoul is the most wired city on the planet.
Burrow a bit, though, down the alleys, up flights of stairs, or into the corners of malls, and you find something that sets Seoul apart and fosters its passion for broadband: online game rooms, or PC baangs, as they are called here. There are 26,000 of them, tucked into every spare sliver of real estate. Filled with late-model PCs packed tightly into rows, these rabbit warrens of high-bandwidth connectivity are where young adults gather to play games, video-chat, hang out, and hook up.
They are known as "third places" — not home, not work — where teens and twentysomethings go to socialize, to be part of a group in a culture where group interaction is overwhelmingly important. As elsewhere, technology scratches a cultural itch. It is the social infrastructure, as much as the hardware and software infrastructure, that's driving the statistics.
And the numbers are impressive — South Korea has the highest per capita broadband penetration in the world. Slightly more than half of its households have high-bandwidth connections, compared to less than 10 percent in the US. The growth in broadband has surged in the last three years from a few hundred thousand subscribers to 8.5 million.
When it comes to rolling out bandwidth, South Korea's population density is an advantage. Seventy percent of its citizens live in the seven largest cities, in residential towers nestled close to DSL switching stations. The capital city of Seoul itself accounts for a quarter of the population. To put this in perspective, consider that South Korea's national communications backbone consists of 13,670 miles of optical fiber. Last year, Verizon laid down 20,500 miles of optical fiber in West Virginia alone. This fact doesn't make the Korean information infrastructure any less impressive. But the country does have an easier job on its hands than say, Indonesia, or the Philippines, or Mexico.
As luck would have it, urban apartment dwellers have a lot of broadband capacity right under their noses, courtesy of Kepco, the public power utility, which developed a network of fiber-optic cables for its own use years ago. In 1996, South Korea allowed Kepco to lease the unused 90 percent of its capacity, giving upstart providers a cheap, instant last-mile solution. Sharp competition with Korea Telecom, which the government forced to open its network in the early '90s, has driven broadband prices down to the world's lowest levels. All-you-can-eat service is available for as little as $25 a month.
The government has even set up a certification program to rate buildings based on the quality of their data lines. Developers who install fatter pipes take the opportunity to bump up their prices - not an insignificant policy in a country where 50 percent of the population lives in large apartment complexes. Fast connections are even getting bundled into the rent, as construction companies repackage minuscule high-rise people-boxes as cyber-apartments. (A typical four-bedroom is 1,150 square feet and costs $2,000 a month, not counting utilities, cyber or otherwise). Built by conglomerates like Daelim Industrial and Samsung in partnership with broadband carriers and content providers, the sales pitch is oddly reminiscent of 1950s American suburbia - except that instead of lawns and trees, developers promise an endless expanse of bandwidth allowing residents to buy flowers, chat with neighbors, and search for the perfect kimchi recipe on the local Ethernet. It's all very Epcot.
DESPITE THIS UTOPIAN vision of e-domesticity, the real allure of high-rise broadband is escape from the constraints of real estate. Escape into the wide horizons of a computer game, or into the welcoming company of other micro-apartment dwellers — preferably at the same time. Not only is South Korea a more wired country than the US, it is also a more gregarious one. Even if most Koreans had an American-style mega home-theater cocoon, they would still go out. These people do not bowl alone, particularly if they're single (most don't move out of their parents' place until they get married). They want to be with their friends.
And right now, the place to be with your friends is a PC baang in downtown Seoul upholstered in Romper Room hues. A hundred monitors glow with the candy colors of computer games. There are also a handful of "love seat" stations, outfitted with two computers and a double-wide bench. Theoretically, this is so guys can play videogames while their girlfriends video-chat with pals.
If you really watch the love seats, though, it becomes apparent that they're not so much a porch swing as an Internet-mediated bar stool. Every so often a girl will saunter by one of the stations, eye the occupant, and then sit down — or not. As it turns out, singles are video-chatting in game rooms all over town. If they hit it off, the guy says something like, "I'm sitting at love seat number 47 at this particular PC baang, if you'd care to join me." If the girl is sufficiently intrigued, she hops on the subway or walks — nothing is more than 20 minutes away in central Seoul. She cruises by, checks him out, and if she likes the look of him in person she sits down, hoping the lighting and shading algorithms she used to enhance her features in the video chat don't make her seem unglamorous in person.
Young-Baek Kim, 50, the proprietor of this PC baang, spends his days watching these scenarios play out. A former pharmacist, Kim used to work in a PC baang as a second job. Now he's the boss, and the business has expanded to seven locations staffed by his aunt, uncle, and cousins. Overhead is low, and margins are high — two years ago, South Korea's PC baangs raked in $6 billion. They are a great small-business opportunity.
But they are also the product of a huge business crisis. In 1997, when the Korean economy imploded, thousands of middle managers were laid off, with no hope of finding new suit-and-tie jobs. They had tightly knit extended families, though, and as a result, access to moderate amounts of capital from relatives (the cornerstone of the nation's small-business culture). A lot of them opened PC baangs - it cost the same as opening a restaurant, and it was less sweaty. Their out-of-work compatriots needed an inexpensive way to spend time. Tech-savvy students wanted to get out of the house. All the PC baang owners needed was something to draw people in groups and keep them paying a buck an hour while laying down extra cash for sodas and instant noodles.
THAT SOMETHING was online computer games. Because Korea was a Japanese colony for 40 years, until the end of World War II, it has had an acrimonious relationship with Japan. The latter's consumer electronics have traditionally been all but verboten thanks to both trade policy and cultural resentment. No PlayStations, no Sega, no Nintendo. As a result, PCs have become the dominant game platform in South Korea — unlike in the rest of the world, where consoles rule. And in 1998, with Starcraft the most popular game on the market, PC baang owners started hosting tournaments to boost business.
That snowball has now reached the bottom of the hill. Starcraft is not just a game in South Korea, it is a national sport, what football was in America in the 1970s. Five million people — equivalent to 30 million in the US - play. And three cable stations broadcast competitive gaming full-time to a TV audience.
Why watch gaming on TV? Partly for the same reason millions of fans tune in for golf — if you play, it's compelling to see the pros do their thing. But largely it's about production values. There is so much insane enthusiasm staged around an event, it takes on a kind of obsessive allure — seeing a subject this arcane, broadcast with such a degree of adrenaline, described in frenzied, masterful detail, is riveting.
As an Enigma-esque theme song introduces the broadcast, a three-camera studio crew stands by in a PC baang in the basement of one of Seoul's largest malls. Two opponents decked out in metallic vinyl armor face each other across flat-screen workstations, steeling themselves for a five-game session of Kingdom Under Fire. Dry-ice fog rolls across the floor. As the music builds to a gothic intensity, YES or NO appears on the TV screen, giving at-home viewers a chance to vote online for the contestants: Maxim, a two-time winner from the Cherry Clan, versus Fusion, a rising star from the Saint Clan. Their faces zoom briefly onto the screen as the commentator, sequestered in an adjacent room, announces the Korean equivalent of "Let's get ready to rumble."
Kingdom Under Fire, like many real-time strategy games, is a mixture of Tolkienesque imagery and resource allocation. Players micromanage supply chains staffed by tiny serfs while casting flashy magical spells to vanquish their opponents. Televised games are played in fast-forward, like speed chess, creating a spectacle of medieval Europe on Benzedrine: villagers frantically mining, keystone-cop masons bricking up buildings in seconds, antlike armies on the march. The excitement builds. The villagers are smelting! Six minutes in, swarms of little soldiers are wreaking micromayhem. Flocks of bats and fire-breathing dragons are on the wing — all accompanied by color commentary and a soundtrack.
The music reaches a crescendo as the challenger finishes off the defending champion in round one. Cut to a commercial: sexy teens on the run, snacking on Atlas candy bars. Then the commentators are back, trading banter and postgame analysis, replaying the highlights and gearing up for round two. More music. More frenzied medieval villagers. One hour and 55 minutes later, the defending champ prevails.
"We had a 41 share last week of people who watch cable TV at that time," says Chong Il Hun, 32, the lead announcer, who has become a celebrity TV personality in the three years he's been covering game tournaments. His station also airs online tutorials — playback footage of pro players along with voice-over commentary ("In this situation, I chose to go for the Yamato Gun, as opposed to the Optic Flare").
Chong points out a 20-year-old in an orange sweatshirt, immersed in online tactical warfare. "He's a pro gamer. Most of them practice 10 hours every day, like musicians," he says. "In Korea, people play games using the Internet like that. It's a kind of boom. It's the culture, it accelerates things. The first person gets something, other people get jealous, it spreads to the mainstream." Seventy percent of the country's Internet users are also online gamers, as opposed to 20 percent in the US.
SOUTH KOREA'S hypersocial culture affects how people connect in virtual space. Lineage, a homegrown online world, is a testament to the overlay of virtual and physical environments. It hosts more than 3 million players. On any given night, 150,000 of them are signed on simultaneously. Most play from PC baangs, which buy Lineage access for 20 cents an hour and sell it for a dollar, but an increasing number — those with wives and families — pay $25 a month to subscribe from home.
Like its Western counterparts EverQuest and Ultima Online, Lineage is a role-playing game set in the Middle Ages. Based on a comic book, the story involves the efforts of an evil king's stepson (the rightful heir) to rally a group of faithful followers (the Blood Pledge) and topple the usurper. In practice, it unfolds like a massively multiplayer king of the hill. The goal is to capture the castle, which allows you to raise money by levying tariffs on chain mail and mead. That enables you to buy more weapons and recruit soldiers to guard the castle against the onslaught of other attackers who want to do the same thing. Competing Blood Pledges — large gangs of players that can number in the hundreds — lay siege to one another's castles for hours at a time on fat broadband connections that allow the battles to play out in full glory.
What makes Lineage a distinctively Korean experience is that when players assemble to take down a castle, they do so in person, commandeering a local PC baang for as long as it takes. In the middle of a battle, these people aren't text-chatting. They're yelling across the room. Platoons sit at adjacent computers, coordinating among themselves and taking orders from the Blood Pledge leader. Lineage has a fixed hierarchy, unlike American role-playing games, in which leadership structures emerge organically. At the outset, you choose to be either royalty or a commoner. If you're a prince or princess, your job is to put together an army and lead it. If you're a commoner, your job is to find a leader. You pledge loyalty and fight to take over castles, and no matter how great you are at it, you can never be in charge.
This kind of tightly defined clan structure, which mirrors the Confucian hierarchy of Korean society, would be anathema to American players, who generally want to be the hero-king Lone Ranger. "In Korea, everyone is very comfortable with taking on subordinate roles," says Richard Garriott, who created Ultima and now runs the US division of Lineage's developer, NCsoft. "Their groups are extremely well structured, to the point where they march in lines, attack in waves, and have a style of coordination that you could not possible match in the United States."
Arguably, it is the tight-knittedness of Korean society, and its people's tendency to physically gather around technology, that makes Lineage and the PC baangs a success. Unsurprisingly, Lineage hasn't taken off in North America, partly because it's a game in which not everyone can be the boss. More fundamentally, the distance between Americans, physically and socially, makes it impossible to replicate the contagiousness of the game, which is also the contagiousness of PC baangs in South Korea and of broadband overall in the country. In the US, going online is not generally a group social experience and almost never a face-to-face social experience — in fact, we presume that if you're online, you're not talking to someone who's in the room.
The merging of virtual and physical space has huge implications, not just for the players but also for the way companies operate and where their costs are carried. NCsoft has only a few dozen customer-service reps to deal with 3 million gamers. Why? Because if a guy in a PC baang has a question, he can turn to someone next to him and ask "What is this about?" or "How do you do that?" If the person doesn't know, there's always the proprietor, who's been trained by NCsoft to troubleshoot. Afterward, not only has the question been answered, but the person who asked it is that much more of an expert, in case the player next to him ever has the same question. Essentially, customer support has been completely decentralized, because players help one another — and also market to one another. Buzz across the room sells broadband better than any targeted advertisement can.
IN THE US and Europe, where media companies are obsessed with pumping copyrighted content into living rooms, online games are not acknowledged as the market driver for broadband. But in other parts of the world, especially where population density is high and PC game rooms are giving millions of people their first taste of connectivity, online games are becoming the hottest high-bandwidth ticket in town.
"We're talking to Singapore, Thailand, Egypt, Saudi Arabia, South America," says Heo Hong, NCsoft's CFO. In Taiwan, there are a million Lineage players, most of whom play from home. In Japan, NCsoft has a joint venture with Yahoo! and Softbank to package Lineage as a subscription service. Last year, the game launched in Hong Kong. This year, a Chinese partner will roll it out in Beijing.
In Asia, where copyright law is only loosely enforced, massively multiplayer online games are less risky for media developers than movies, music, TV programs, or console games. Unlike freestanding content, online worlds are almost impossible to pirate. Someone could copy the client application, but the game itself lives on a centrally maintained network. Even if that person were able to duplicate the backend system (it costs millions to run Lineage as a reliable service), there is no way to replicate the presence of 2 million people and the dynamics that occur in a human system of that scale. The value isn't bound up in the content. It's bound up in the interactions — in the group experience.
South Korea's broadband commons challenges North American assumptions about what bandwidth is for and why it's relevant. In the US, cable, telephone, and media companies spin visions of set-top boxes and online jukeboxes, trying to "leverage content" and turn old archives into new media streams. There is a profound fear of empowering consumers to share media in a self-organizing way on a mass scale. Yet this is precisely what makes South Korea the broadband capital of the world. It's not a futuristic fantasy that caters to alienated couch potatoes; it's a present-day reality that meets the needs of a culture of joiners — a place where physical and virtual are not mutually exclusive categories.
When NCsoft, originally a systems integrator, decided to move into broadband media, it could have chosen to distribute "webisodes," or online animation. After all, South Korea is the third-largest producer of animation after the US and Japan. Instead, NCsoft's Heo says, the company "wanted to focus on interaction. And what is more interactive than games? We made this market. We made new sectors. American media companies were just using online capacity to distribute offline media."
So what about those of us in channel-surfing American cocoon-land? The vision of streaming media piped into the home, video-on-demand 24/7, and needle-narrow target markets is heralded as the way forward. Yet it is possible that this vision is holding us back. Perhaps the real market opportunities have nothing to do with connecting people to the Universal back catalog and everything to do with connecting people to each other. If Seoul is any kind of signpost, the way forward does not lie in the single servings of media we consume but in the playgrounds we share — no matter who's manning the turrets and storming the castles.
J. C. Herz (jnhq@yahoo.com) wrote about Star Wars Galaxies in Wired 10.06.