I never expected to die on the side of a mountain, overlooking a beautiful forest. But last weekend I died in on that mountainside at least a dozen times. I lost everything in the process: my money, my food, and my weapon. As my ghost lingered over my fading corpse I realized that not only was I dead, but I was also broke.
Good thing I have a credit card and can spend cash money to recover my virtual loss. This might be a video game, but the stakes are high and the cost is real.
The tech is real too. Many now-mainstream business innovations like the cloud, SaaS, social hooks, and data security were pioneered first by game developers. "[The gaming industry] was at the forefront of most, if not all, of the canonically hard computer science problems," said game industry veteran and ArtCraft Entertainment cofounder J Todd Coleman. "These aren't easy problems to solve, and to make a successful online game, you have to nail all of them."
Coleman's career began in B2B tech. "I started in the Exact, Transform, and Load (ETL) space. I came into the games industry with the idea that game developers were all hackers, and that our team was going to set the games industry on fire with our 'commercial software practices.'" What he found was the opposite. "[Software developers] were severely behind the [game industry] curve."
SEE: Augmented reality gaining more traction than virtual reality in the enterprise (Tech Pro Research)
Coleman and his cofounder Gordon Walton are veterans of building large-scale multiplayer games. ArtCraft's first product, Crowfall, is a persistant-universe multiplayer game. Players of massively multiplayer video games often sink hundreds—or thousands—of dollars into the product and demand round-the-clock service. To support a large and demanding client-base game developers are forced to innovate. "Some of these games service millions of concurrent players in a 24-7 environment where the customer—i.e., the player—is absolutely unwilling to accept even milliseconds of service interruption," he explained.
Coleman isn't exaggerating about the scale of the games-as-a-service industry. According to game industry market intelligence firm newzoo the global game market hit 99.6 billion in 2016 and is expected to grow nearly 20% by 2020. Cloud-based mobile games occupy more than 30% of the total market, and PC games another 25%. In North America alone, according to the newzoo report, the cloud-distributed game market is growing by 4% annually.
Through an amalgamation of private investment and crowdfunding Crowfall has raised over $10 million to date. The company sells early access packages and virtual items that have value in the game. "Kickstarter and Patreon provide great opportunity for all kinds of creative projects," Walton said. "Gaming helped drive a lot of interest and money to those platforms in the early days, and it still does."
The model worked for other developers of competitive projects, including Cloud Imperium's Star Citizen and Sandbox Interactive's Albion Online. Star Citizen has raised over $150 million in crowdfunding, making it one of the largest independent software projects of all time.
SEE: Research: Virtual and augmented reality in the enterprise (Tech Pro Research)
Even in its waning years the decade-old World of Warcraft still generates approximately $1 billion annually from approximately 6 million subscribers for publisher Activision Blizzard. Blizzard develops a suite of micro and macro-transaction games, including the popular card game Hearthstone. In August 2015 GameSpot reported that Hearthstone alone generates $20 million per month in micro-transactions.
Coleman and Walton spoke with TechRepublic about the lessons startups and enterprise companies can learn from game developers about the cloud, social media, and SaaS.
Most business technology professionals understand software-as-a-service models. Can you explain how the game industry innovated with cloud services?
For [more than three decades] the game industry has confronted hard tech challenges like artificial intelligence, real-time physics simulations, cloud computing, high-performance graphics, security on a massive scale, crypto-currency, localization and internationalization, and big data.
People have been offering "games as a service" since the advent of the internet. The difference, of course, is scale. It's much different to aggregate an online community of a few hundred or thousand, than it is to manage a community of millions. The basic idea is the same: Provide a platform for people to communicate centered around a common passion, and eventually they form both positive and negative social bonds that give them a sense of community and belonging. Those bonds are incredibly sticky.
The nice thing about games is that they provide the initial spark by attracting an audience, and they also provide structured activities ... that cause these social bonds to form. We've seen guilds—a collection of players who play together, even though they are often geographically and economically quite diverse—that were created almost twenty years ago in Ultima Online that are still playing together today. It's an interesting thing to see: In these cases, the social bonds became so strong that they outlived the original game, and like nomadic tribes, they migrate en masse from one new game title to the next.
SEE: Virtual and augmented reality policy (Tech Pro Research report)
Your game is similar to an enterprise-grade software product, yet it's created by a very small team. What can enterprise companies learn from nimble game companies?
The games industry is hyper-competitive, sort of like Hollywood. A lot more people want to make games than the industry can support. [Expectations are] also hyper-demanding. For example, if your banking app takes 3 to 5 seconds to load, your customers might be a little annoyed but probably won't even contact you. If your game consistently lags for 3 to 5 seconds, your customers will leave in a fit of rage, and maybe trash you publicly on every forum they can find.
SEE: Intellectual property: A new challenge in the cloud (Tech Pro Research)
On top of that, we're also not successful unless our games are fun. Fun is an ephemeral concept. You can't just go to a website and pull down a "fun" algorithm to add to your code base. The only way to find it is iteration and experimentation, which is time-consuming and risky. That iteration cycle, which becomes an inherent part of your DNA as a game company, is probably the single most important survival trait.
If I were go to back to the B2B world, that's the biggest thing I would try and instill at my new company: the inherent drive to iterate on your product until it shines.
How has the cloud changed the business of games?
It depends on the type of game. For my particular niche, which is Massively Multiplayer games—games where thousands-to-millions of players are playing together in a shared virtual environment—it has been a game-changer (pun intended). Historically, we had to buy or lease a warehouse full of servers to support all of those concurrent players. That's millions of dollars as an up-front cost to support your launch. It's also very risky, because you're making a guess as to how popular your title will be, months or years ahead of the actual launch. If you under-provision you either turn customers away, which is bad, or your game service collapses, which is worse. If you over-provision, you just wasted a ton of money.
With a service like AWS, that problem has been reduced to almost a non-issue. Ten years ago, if I wanted to bring up the game service in, say, Singapore, I might have to fly some engineers out to set up a remote facility. Or, if I used an outsources data center I could put in a request for them to do it, but turnaround time was typically weeks-to-months. In contrast: Last week I asked one of my senior engineers to pull up a server in Singapore. He provisioned it and we had players in and playing the game on the Singapore servers inside 20 minutes.
What emerging technologies are most important to your product?
If I could wave a magic wand I would ask for ubiquitous high-speed internet nationwide. Like, "fiber to every house" kind of speeds. The example that I gave earlier, 3 to 5 second delay, was just for convenience. That's actually dramatically underselling the importance of network speed. A 3-second delay is an eternity. Only 50 milliseconds can be the difference between a play experience that your customers love and a game that is "so laggy it isn't worth playing."
SEE: Interview questions: Virtual reality designer (Tech Pro Research report)
In terms of other emerging tech:
Virtual Reality is still a big unknown. There is a lot of activity around it, and a lot of funding, but mass adoption is still a giant question mark. "If we build it, will they come?" No one knows.
Augmented Reality—where you put a digital interface layer on top of 3D rendered objects seamlessly inserted into the world around you—is definitely coming. No one really doubts the impact of this one, and it's going to be transformational in the same way the internet was. It's just a matter of time.
How are game mechanics deployed in products other than video games?
A lot of the lessons learned in the games industry turn out to be surprisingly applicable outside the space and eventually migrate to other industries. People talk a lot about "gamification," which makes a great buzz word, but the real impact has been in the crossover of production and business model innovation.
WATCH: The Story of Overwatch (GameSpot video)
MMOs introduced the idea of a subscription based software-as-a-service long before SaaS was a thing. Before Bitcoin, people were already making millions of dollars treating World of Warcraft gold as a virtual currency. Virtual worlds included friends list, private messaging, status updates long before social media. The concept of "minimum viable product" was born out of there.com and IMVU, both of which were pioneers in the virtual world space.
What does the near future—say 18 to 36 months—of game business tech look like?
If my above predictions are true and VR or AR becomes significant, you can expect the same kind of cross-pollination. The cornerstone technologies that drive both Virtual Reality and Augmented Reality—3D rendered environments and fully articulated 3D avatars, physics and lighting simulations, communication layers that enable aggregated communities—are things that we've been doing in gaming for years.
SEE: Could playing video games make you smarter? (CBS News)
As I said, I'm not quite sold on VR outside of the dedicated enthusiast; I am just not convinced that the average consumer is going to be willing to strap an HMD to their face. But AR is definitely coming, and it's going to impact everything we do: shopping, travel, entertainment, dating, research. Basically every kind of social interaction and activity you can imagine. The simple act of walking around the world is going to feel fundamentally different when we are all swimming in layers of 3D information and imagery. The real world is going to start feeling a lot more like a virtual world, with all the opportunities and challenges you might expect.
- Learn to play Go, the world's oldest and most strategic game (TechRepublic)
- Google Deepmind AI tries it hand at creating Hearthstone and Magic: The Gathering cards (TechRepublic)
- How Blizzard can save the business of World of Warcraft (TechRepublic)
- How to build an external GPU for 4K video editing, VR, and gaming (TechRepublic)
- Google Deepmind AI tries it hand at creating Hearthstone and Magic: The Gathering cards (TechRepublic)
- How Google's DeepMind beat the game of Go, which is even more complex than chess (TechRepublic)
- 'Warcraft' explained (CNET)
- Hacker taunts Blizzard after knocking gamers offline (ZDNet)
Dan Patterson has nothing to disclose. He does not hold investments in the technology companies he covers.
Dan is a Senior Writer for TechRepublic. He covers cybersecurity and the intersection of technology, politics and government.