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Monday, May 8, 2006 - Page updated at 12:00 AM

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Electronics Entertainment Expo

"Warcraft" fuels market for online gaming industry

Seattle Times technology reporter

Puget Sound area eyes MMO games


As a growing game-development center, the area has some companies that have created or are working on massively multiplayer online games.

ArenaNet: Although its "Guild Wars" has many hallmarks of an MMO game, ArenaNet prefers to think of the series as an online role-playing game. A second game in the series debuted last month.

Flying Lab Software: Founded by two former Microsoft employees and developing "Pirates of the Burning Sea." No announced release date yet.

Microsoft: Publishing "Vanguard: Saga of Heroes." The game is being created by a San Diego studio founded by some of the creative team behind "Everquest," one of the most popular MMO games.

Monolith: The Kirkland-based studio created "The Matrix Online," a game based on the "Matrix" movie series, but exited the MMO business last year after transferring the title to Sony Online Entertainment.

Sony Online Entertainment: Sony's division opened an office in Kirkland early last year and stocked it with former Microsoft employees. SOE-Seattle, as it is called, is working on an as-yet-unnamed MMO and promises it will have a more mainstream approach than typical games in the genre.

The 2006 Electronics Entertainment Expo

What it is: The annual industry-only conference for the video-game business.

When and where: Conference and workshop sessions run Tuesday-Thursday at the Los Angeles Convention Center. The expo runs Wednesday-Friday.

What happens there: About two-thirds of the 400 exhibitors will show off the games they're preparing to release by the holidays. Retailers will get a sneak preview of the hottest games of the year.

What to expect: The next-generation video-game systems from Sony and Nintendo will be the talk of the show. But increasing attention is directed at mobile gaming; half of the exhibitors will launch a title for a handheld platform.

Who's selling earplugs?: Walking the show floor is like being trapped in a Best Buy for days. There will be 5,800 flat-screen computer and television screens, all blaring at once.

Source: E3Expo

Related content

The annual Electronics Entertainment Expo rolls into Los Angeles this week, and you're going to hear a lot of talk about dazzling, expensive new video-game consoles competing for living-room space.

But even as these machines hit the market, the gaming industry is suddenly renewing its interest in a less-glamorous segment: the massively multiplayer games for the personal computer.

These games offer vast, online fantasy worlds where players can talk with each other and join up to fight bad guys. Yes, they can be pretty nerdy, although fans say they like the social aspects of the genre.

"It's like hanging out at your favorite bar or coffeehouse, except that instead of playing pool you're fighting back the undead hordes," said Benjamin Ellinger, a Microsoft program manager and associate professor at DigiPen Institute of Technology, a video-game programming college in Redmond.

These games, around since the late '80s, have never been the 800-pound gorilla.

That is, until "World of Warcraft" came along. The game, which took five years to create, has the industry's head spinning by racking up unprecedented numbers of players and revenue.

"World of Warcraft" has 6.25 million players and was launched just 18 months ago. Once you buy it at the store, where it sells for around $50, you have to pay a monthly fee of about $15 (that's in the U.S.; prices are different in other countries).

And though Vivendi Universal, which owns the game, hasn't said how much money it's making off of "World of Warcraft," it doesn't take a math whiz to figure out there's some serious cash coming in.

Vivendi said last month that its games unit, which includes "World of Warcraft" and a number of other titles, brought in $170 million in sales in the first quarter of this year.

That's nearly 19 percent more than the year-ago period, an increase mainly attributable to "World of Warcraft," the company said.

A popular game with a steady and growing source of monthly income? It's a developer's dream.

Boost to industry

"The nice part about that game is it's really opened up the gaming business to say this is a viable business," said Matt Wilson, a former Microsoft employee who now heads a Sony game studio in Kirkland. "In fact, it's more than a viable business. It's probably the ultimate business."

There are 43 massively multiplayer online games, or MMOs, currently in development, according to a roundup published Friday by gaming site Joystiq. They include titles based on "Star Trek," "Pirates of the Caribbean" and "Lord of the Rings."

It's a business that several Puget Sound-area companies are leaping into as well. There are 40 employees now in Wilson's studio, which Sony's online entertainment division opened last year.

Sony Online Entertainment Seattle, as it is known, is working on an unnamed MMO game that Wilson said will break out of the "elf at the woodpile" fantasy mold with a more mainstream theme.

"Now, almost everybody is looking for an MMO, looking to develop one internally or externally," he said. "The venture-capital money is flowing a lot more into the MMO space, and I think the opportunities are huge."

In Seattle, a studio founded by a former Microsoftie named Russell Williams is working on a pirate-themed MMO called "Pirates of the Burning Sea," where players can sail the world on ships.

Kirkland-based Monolith Productions released an MMO last year based on the "Matrix" movies.

Microsoft's Game Studios division is publishing an MMO called "Vanguard: Saga of Heroes" for the Windows XP and Vista operating systems. The game is being developed by a San Diego studio founded by two of the creators of "Everquest," a pioneer in the MMO space.

And then there's Bellevue-based ArenaNet, which could be considered the second-biggest success story in the MMO world except the studio prefers to characterize its "Guild Wars" game as an online role-playing title.

ArenaNet debuted "Guild Wars" a year ago, selling more than a million copies since, and last month released a second game in the series.

The game is extremely profitable, said ArenaNet co-founder Jeff Strain, so much so that the studio has bulked up to 110 employees.

"Guild Wars" doesn't charge a subscription, which Strain says has contributed to its success.

Instead, Strain endorses the idea of releasing two new games in the series every year. At $50 a pop, that's a cheaper annual cost than what a "World of Warcraft" player would have to pay, he said.

ArenaNet was founded in 2000 after Strain and two colleagues at Blizzard Entertainment, which created the "Warcraft" series, decided to start their own company.

They left Irvine, Calif., for Seattle, eyeing the region's quality of life and game-developer talent.

It took five years to create "Guild Wars" at a cost of $20 million to $30 million — a typical budget for a large MMO, Strain said.

Along the way, ArenaNet was acquired by NCSoft, a South Korean game company that provided the additional funding to finish building the game.

"Guild Wars" is available in the United States, Europe and parts of Asia, and plans to expand soon into China and Eastern Europe.

Strain won't say how many people are currently playing the game — he's saving that announcement for later — but said it's much more than a million now.

"When we next announce sales numbers I think people are going to be shocked," he said.

Getting people to pay for more than one subscription is a tough sell, and studios are looking at other ways to make money from MMO games.

Williams, whose Seattle studio is developing the pirate-themed game, said the idea of microtransactions is floating around the industry.

In this model, the game itself would be free, but a player could pay $1 or $5 to level up or get special items. It's worked very well in South Korea, where gaming is a very social experience, he said.

"I dream of the world of microtransactions because I think that's fantastic," he said. "What if you could buy television so you wouldn't have to watch commercials? I'd pay on a per-episode basis."

The search for new revenue streams is one of the most talked-about goals in video gaming, and a hot MMO can propel a studio and a publisher for years. And for all the buzz at E3 about next-gen this and super-console that, there will be many other conversations about how to replicate a "World of Warcraft"-level success.

"Lots and lots of companies are attempting to make the next great MMO," said Ellinger at DigiPen.

"This is a significant part of the present games-industry hiring boom, that plus the new consoles. Most will fail, as it is much, much harder than it seems."

Kim Peterson: 206-464-2360 or kpeterson@seattletimes.com

Copyright © 2006 The Seattle Times Company

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