Interview: Sparkplay's Decade Of Microtransaction Lessons For Earth Eternal

Another week, another free-to-play RPG, right? With the flood of imports from Asia, kids games' popping up like mushrooms in the wake of Club Penguin, and domestic developers with an eye on the social gaming and MMO space ramping up production, it's hard to know which games will maintain any genuine interest. San Francisco-based startup Sparkplay Media hopes that its "epic fantasy" MMO title, Earth Eternal, will attract a sizable audience. From characters to gameplay style to audience, CEO Matt Mihaly and team have put a lot of thought into the game, which is currently in closed beta and will soon launch a fully-public open beta. Sparkplay and Mihaly have their gaming genesis in Iron Realms Entertainment, a company which runs microtransaction-supported text MUD games. Mihaly describes the money Iron Realms was able to earn as "modest" because of the game's small reach, but ARPU, conversely, was "insane", supported by a "small... really hardcore" audience. Iron Realms began microtransaction-based MUD play in 1997. The company was able to maintain a $22 ARPU (average revenue per user), and a $75 ARPPU (average revenue per paying user), much higher than most online games these days, and certainly an extremely challenging record for Earth Eternal to beat. Sparkplay spun off from Iron Realms in fall 2007, and has raised $4.25 million in series A venture funding from Redpoint Ventures and Prism Ventureworks. At one point several years ago, Mihaly was in discussions with Sony Online Entertainment to create a full-scale packaged MMO, but it never happened -- to his relief: "We would have gotten crushed by World of Warcraft, frankly, so it's good that we didn't pursue the project." "About three years after that, we kind of looked around and said, 'Alright, let's try again, but this time, let's do something, A, that doesn't require a publisher because we just prefer to work without publishers; B, let's take advantage of the fact that browser technology is getting better, microtransactions are finally gaining acceptance in the West," says Mihaly, who acknowledges drawing inspiration from the successes of Habbo Hotel and Runescape. Earth Eternal is, in its current state, "Completely microtransaction based," says Mihaly. "We'll probably put in an optional subscription eventually, like a club membership kind of thing. The only reason we're not going to launch with that is we don't want to confuse consumers with too many options." Gamers will be able to pay via PayPal and credit cards; dedicated cards and other payment options are under consideration. 
Of course, the game will make its money by selling in-game currency, using a dual-currency system, says Mihaly. "We sell credits, which are the RMT currency. And then there's an in-game currency exchange you can trade for gold. We did that back in '98 at Iron Realms, and immediately overnight, we saw like a doubling [of] revenue. Basically, it allows the paying players to subsidize that big demand that non-paying players have for stuff that you need to buy. Everybody wins, right? They have to buy the credits from us. The guy with money gets gold, the guy without money gets money." The game is available to play both in-browser and as a downloadable client. Says Mihaly, "The initial plan was to do in-browser and download builds as an option to people. The thing is we provide exactly the same game experience in either case. We can still do a progressive download even as an exe, so you can download the 15 MB exe, and the rest streams in in the background." Why go that route? "Everyone we talked to when we made that decision, which is two summers ago, who wasn't a techie, was really disappointed. There's a certain expectation that goes along with being in a browser. It says it's safe, it says it's easy to get into. And whether that's true or not... that's the expectation that browser gives people. And that's why we're doing it that way, purely for the expectation." The Inspiration and The Audience It Creates "We looked at Habbo and Runescape. What we saw was... Obviously, Runescape is an RPG kind of product, and Habbo is a social product. We'd see that the girls would go to Habbo for the socialization and the customization. The guys went because the girls were there. The guys would go off to play largely Runescape to play something that had achievement and killing in it. So, we wanted to combine those two into our first product, both that kind of Habbo owning your own space kind of thing, along with an RPG aspect to the game, much like Runescape or WoW or pretty much all of the DIKU-based games," says Mihaly. Mihaly hopes to entice graduates of older free-to-play games. "We’re aiming basically at about 13 to 22... the vast majority [of the beta audience] are teenagers and kids in college. What we're really looking for, there's a whole pile of kids out there that are playing games like Runescape or Habbo. They're kind of aging out of them." What do they want? "They're looking for something a little better, but they're still not looking to drop $50 on a box, $15 a month on WoW, or whatever. When we spent time on big Runescape forums, the kids seemed dissatisfied, looking for something better, but they feel like it's not out there for them," says Mihaly, despite numerous Asian free-to-play offerings. "They don't feel like those games are for them, for the most part." Devising a Theme Funnily enough, Mihaly and crew first considered going the other direction -- making a game "way beyond Age of Conan... something hyper-violent, hyper-sexualized." Instead, Earth Eternal ended up cartoony and inviting, peopled with friendly-looking fantasy human/animal hybrid races. The transition from one extreme to the other was not smooth, Mihaly admits. "[Second] we moved then to kind of a standard elves, dwarves, humans kind of thing. But again, everybody does that. It's obviously popular... it's the dominant form of fantasy games. Everybody's doing it. So, we decided to move towards using animal races and fantasy races that don't feel too human. So, no gnomes, no elves, no dwarves, no hobbits. Those are all some version of human, really. We do everything from cyclops, to clockwork, to fox people, bear people, bird people, that kind of thing." Mihaly describes the game's playstyle as "pretty familiar" with "some differences." He says, "If you've played WoW, it's going to be familiar, for example. Not that we're comparing ourselves to WoW because we're not that hubristic." "What we're trying to give people, really," Mihaly continues, "is we're looking at Runescape, for example, as low-hanging fruit, because it's an antiquated experience, although it's a very broad experience. We feel that what we're offering is the next step. It gives you more choice. You've got more choice in terms of what you can do, whom you can be, but it's not as broad or deep as World of Warcraft, which can get really complicated." The game's social aspect -- beyond the MMO boilerplate -- will come in the form of "Groves", which will launch sometime after the open beta begins. "Groves is an instanced area for yourself or your clan, so you can have a clan grove. But instead of just being a room or a house, it's actually like a valley or an island. You can earn or buy buildings, decorate the buildings, forests, NPCs. You can actually mess with the terrain itself -- so you can go into build mode, grab the terrain, drag it, create mountains, all that kind of stuff, all in real time, which is pretty cool." Of course, if someone leaves a guild -- particularly against their will -- that could have implications for the game's real money-backed virtual item ownership. "That's actually something we haven't dealt with yet," admits Mihaly. "That's actually a significant problem because if you've got people buying items for the guild, who owns them when you leave the guild? That's a tough issue. Eventually, [legal] regulations are going to come into play in the West like they have in the East." "We know Groves is going to be cool, we know players are really going to enjoy building their Grove, but we're not quite sure what beyond building the Grove they're going to want to do in the Grove," admits Mihaly. But he says that has an upshot: tightly integrated community involvement with the game is a major priority for the team -- particularly because Sparkplay knows that just because expects a certain audience doesn't mean that's who will play. "We need players to tell us that, because we don't really know yet. We can guess, but we can be wrong and spend a lot of time developing the wrong thing." Community will also drive the team's thinking on PVP, which will start completely walled off from the PVE game. "We'll figure out later whether the audience wants to see more directed PVP, things like whether it's fighting over a landmark or whatever, fighting over resources," says Mihaly. Keeping Competitive Mihaly is clearly aware that his game's robust design and audience target make it competitors of both major boxed MMOs like World of Warcraft and youth games like Runescape. How does the design of his competition affect Earth Eternal? High-level play in WoW "sounds like work," to an audience who's not intimately familiar with it, says Mihaly. "That is fun for some people, clearly. In fact, I used to be that kind of player when I was in my early 20s and had lots of free time. I played just incessantly, eight hours a day, kind of thing. But what we're building with Eternal is for someone who may want to do that, but we're not trying to force you into it." "There are no dungeons that require more than five people," says Mihaly, "And that's both an approachability thing as well as recognition that the audience we're going after may have a more difficult time organizing 25 people together. Sixteen year-olds, for example, are not known for organizing large groups of people effectively," he laughs. Earth Eternal's design is about "stripping out some of the complexity that something like WoW has," says Mihaly. "The game is even more solo-friendly than WoW. WoW is very solo-friendly. We're taking that even further." "It's little decisions like the fact the healing is it's own skill tree that anyone can take, so healing isn't tied to a class. So if you want to be a mage who can heal himself, do it. You want to be a knight who can heal himself? Do it," he explains. "There are still mechanics that make it advantageous to group together, like a knight tanking and a mage sitting back dealing damage is still effective." When it comes to expanding the experience, however, Mihaly switches inspiration from the world-beating boxed MMO to a somewhat notorious Chinese game. "We'll hopefully do weekly content updates," says Mihaly. "ZT Online might be the biggest game in the world right now. They've hit 2.3 simultaneous uniques. When we talked to them, they were telling us they do 90 updates a month. They do three updates to the game every single day -- holidays, weekends." "That's what we want to move towards," he says, "particularly in terms of content rather than game systems. I want to be releasing content as often as we can. That's going to be at least weekly. I'd like to get down to twice weekly, three times a week, maybe eventually daily. And then around new systems, new systems will be less often, but we probably still won't do kind of the big, branded expansion unless we see there's some reason to." Mihaly's own background is also a factor. "A lot of this is just see how the players react, and react to that. Coming from a text MUD background, I'm used to iterating very, very quickly. The great thing about text MUDs is they're client-agnostic for the most part So, all you do is update the server, and there's no patching. We used to updates 6-7 times a day. The closer we can get to that process, the better, because it lets us react to players just that much more quickly. That's really, to me, the holy grail." Social Networking Integration Beckons Facebook Connect? "That's definitely in the cards," says Mihaly. "We're not going to do it for launch, but hooking up to Facebook Connect is almost, to me, a no-brainer at this point. If you're doing something that's on the web, especially something that's not gated by subscription, that feels kind of open." "We'll also end up developing apps on Facebook and maybe MySpace as well that tie into the game so you can earn certain items for your Grove, just your social space, by playing a Facebook game," he adds. "We had a little demo going when we were raising money -- it was really impressive to non-tech people -- where you have the Facebook app up, and you're sitting in your room, in a Grove, in the game in the 3D world. You gift somebody something in Facebook, and it shows up in a puff of smoke in the room." But Mihaly remains skeptical about the benefits of integration. "The real question for us is whether we can use those apps to pull people off of Facebook into the game itself. So we can use it as a customer acquisition tool, and not just a way to extend the experience to players. I don't think there's been a lot of large success cases in terms of migrating people off of social networks into destination sites." "There's a lot of things we'll try," says Mihaly. "We'll kind of throw things at the board and see what sticks, in terms of marketing, but I think at the end of the day, it's still about making a fun game that people want to tell their friends about. To social games people, 'virality' is spamming your friends on Facebook, right? Real virality is a kid going to school and saying, 'Holy shit, I love this game. You gotta go play it.'" He adds: "I guarantee there's way more kids talking about World of Warcraft at school than about Mafia Wars or whatever, despite the fact that Mafia Wars has got 14 million active players. It's a low-engagement game; it's not a game you get excited about. You don't throw your life into it the way you throw it into an MMO."