ENTREPRENEURSHIP INSIDE AND OUTSIDE OF VIDEO GAMES more

Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. ENTREPRENEURSHIP INSIDE AND OUTSIDE OF VIDEO GAMES Peter Zackariasson Peter.Zackariasson@usbe.umu.se and Timothy L. Wilson Tim.Wilson@usbe.umu.se Umeå School of Business Umeå University S901 87 Umeå, Sweden ABSTRACT The history of the video game industry is one in which development and growth has been driven by entrepreneurial activity, and this activity has been international in nature. Maturity has brought growth of some firms and so entrepreneurship has evolved into intrapreneurship in certain cases. Nevertheless, conventional entrepreneurship remains active in the industry. Hardware developers, in fact, commonly depend upon small, creative firms for a certain portion of their game portfolios. The paper looks at platforms, games themselves and facilitators. At present, the future in video games appears to be in Massively Multiplayer Online Games (MMOGs). Special note might be made of activity in Korea, which is disproportionate to country size and previous contributions. Attention is also paid to ingame activities and the association they may have with entrepreneurship. Gaming itself may encourage creativity and thus entrepreneurship. Player originated activities within these games, in particular, may be purveyors of future developments. The future “outside of games” is likely to bring greater intrapreneurship, further globalization, entry of more women into the field and furtherance of creative destruction. “Inside of games,” one can expect extension of applications, for instance into therapeutic uses. INTRODUCTION People like to play. They play ball; they play war; they play cards. There’s sex play, gender play and role playing. People sometimes play dumb; others pretend they are smart. Play is a means of amusing oneself, but it also is a means of expressing ourselves. One of the hottest play things around right now is video games. They have fascinated a generation of young people, and the industry is still growing at 18 percent per years. This paper is about video games and some of the interesting things happening with this “play thing.” There are three observations that are impressive about the video game industry. First, it has been driven by creative individuals. Secondly, some of these individuals have taken advantage of opportunities that presented themselves to make the industry a virtual hotbed of entrepreneurial activity. Put another way, from its very beginning, individuals have been dedicated to the opportunity to make money from these developments. Finally, the industry has been international in nature. It is difficult to think of another industry that grew so fast in so many places. At the consumer level, there has been a global acceptance in demand. Thus, there has been commensurate global, regional activity to satisfy this demand. 1 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. Because of the entrepreneurial aspect of development in this industry, its international nature, and the fact that even insiders missed significant trends, we are reflecting upon these current phenomena in the good chance that something significant will develop later. The purpose of this paper is to trace some of the developments of entrepreneurship in the video game industry. To a certain extent this history, although relatively current and ongoing, is “old hat.” We refer to this entrepreneurship as inside the industry, but outside of the games (See Exhibit 1). That statement may sound confusing, but the industry from Russell1 to present day has attracted creative, ingenuous people. Consequently, one is seeing some interesting things developing outside the industry, but inside these games. That is, there are players who amuse themselves by changing the game itself. It is an area also covered in the paper and may be an indicator of things to come in these games. BACKGROUND Video Games We have been rather interested in video games and their development (cf. Zackariasson et al., 2006a). In one of our papers (Walfisz, et al., 2006), we tried to succinctly describe a video game. That is, a video game is a specific kind of digital entertainment where the person playing the game interacts with a digital interface and is faced with challenges of different kinds, depending on the plot of the game. In these games the gamer interacts with the computer, which can be anything from cellular phones, to game consoles (Xbox, PlayStation, and Nintendo), PC, and arcade machines. The video game itself consists of three essential parts: setting, sensory stimuli, and rules. The setting is made up of the genre and the game plot. This combination defines the situational placement of the game. Today there are several different genres of games, the most dominant are: adventure, fighting, first-person shooter (FPS), massively multiplayer online (role-playing) games (MMOG or MMORPG), platform, puzzle, racing, retro, role-playing (RP), shoot ‘em up, simulation, sports, strategy, and survival horror. A genre in video games thus can be compared to that of books, and just as in books the different genres have thin or thick plots. The plot usually drives the game, but this drive depends on the genre. Adventure games (ex. The Longest Journey by Funcom) have a very thick plot and subplots, and the gamer is engaged in the story as the game unfolds. Thus, the story here is the backbone in the game. The opposite situation would be found in first-person shooters (ex. Quake by id Software); in these games the plot tends to be inconsequential. That is, these games depend on action and the constant hide, chase, and killing. The sensory stimuli are what the gamer experience as he or she interacts with the game. Out of the five different sensory stimuli a human can experience (sight, hearing, touch, smell, and taste), games can only use sight, hearing, and touch. The first two are the most common and exist in every game. A sense of touch can be simulated by using force feedback technology. In practice, this simulation means that the controls used to navigate in the game vibrates, or moves. This use is common in arcade simulators where the gamer sits in models of cars or planes. Most consoles today also have this technology, e.g., the ability of the handheld unit to Steve Russell, an MIT student, produced the code for Spacewar in 1962 (cf. Kent, 2001). This game was copied to most U.S. computers at the time – giving an early suggestion of the popularity of this form of entertainment. 1 2 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. vibrate. In a PC this technology only exists as an add-on feature, e.g., a steering wheel that the gamer can purchase for racing games. The last part of video games is its rules. Rules are the basic mechanisms in the game and these items are made up of code and engine. All games rely on rules, as for example “if-then” statements. These rules guide how the games work and how the gamers interact with the game. In other words, for every action there are consequences that have been coded into the game. For example, if the gamer presses “space” the gun he or she is holding will fire. More fundamental to operations is the game engine. This item is the core technology that mainly handles rendering of graphics, i.e., how the graphic is presented on the screen. The engine also handles the artificial intelligence driving the game, e.g., how the computer generated forces in the game move and react and collision detection between units. One of the most successful game engines presently produced is by id Software for Doom and Quake. This engine, just as many others, is licensed to other game producers as a base for new games. A Short History of Video Games The history of video game development flows along three directions (cf. Kent, 2001). The construction of the first computer game is credited to Steve Russell, an MIT student who produced the code for Spacewar in 1962. As is the case in many developments, this advance was done within the context of demonstration of expertise and not for profit. Nevertheless, in a very short time this game became immensely popular, and it is said that the game was copied to most computers in the U.S. Russell never applied for a copyright or patent and thus received no payoff from his effort. In reflecting on the experience, he is reported to have commented, “I was the first person not to have made money from a two person computer game (Kent, 2001, 19).” Indeed, he said, “We thought about trying to make money off it for two or three days but concluded that there wasn’t a way that it could be done.” It was not the inventor or developer that gained in the business, such as Russell, but rather the individual who made it a business. That is, money making became the purview of individuals who saw the opportunity to make a business of the development. Specifically, Nolan Bushnell, who enjoyed playing Spacewar while at the University of Utah, went on found Atari, the founding firm in the industry. Further, the industry is truly international and has developed from a US, European, Japanese triad. From the earliest days, the founding firm, Atari, both shipped to and developed competitors in Europe and Japan. Italian game copies were so good that the only way one could identify them was by a mislabelling of an Atari’s address on the products, and Japan’s contributions were engendered in part by the inability of the company to service the market. Subsequent success of Nintendo and Sony are well known stories. Finally, the industry has been characterized by the inability of even insiders to grasp the significance of developments. For instance, in reflecting on Magnavox’s settlement with Atari over infringement on his patents, Ralph Baer (Kent, 2001, 47) has commented, “If anybody had had an inkling of what was going to happen to this business at Atari, they never would have gotten those terms.” The International Nature of the Industry Presently, the video game industry may be visualized as being comprised of three tiers that are dependent upon the business emphasis of respective participants. On the upper tier are the equipment based firms – Nintendo, Sony (PlayStation) and Microsoft (X-Box). Each of these firms produces platforms upon which games are played as well as develop games themselves; they also have a network of firms that produce games for their respective 3 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. equipment. To a certain extent these firms determine the short term future of the industry – games developed for their systems have a virtual guarantee of success. Although these upper-tier firms may be characterized as “Japanese” or “US,” they are international in scale – they have global offices in major markets and utilize suppliers where ever they may be located. At a second level are publishers who produce and market games for not only portable and console hardware, but also online and PC games. These companies publish games that they have either developed internally or have had developed by an independent developer. They are responsible for their products’ manufacturing and marketing, including market research and all aspects of advertising. Further, they provide the essential function of financing development – either in their own studios or externally by independent developers. The large video game publishers also distribute the games they publish, while some smaller publishers instead hire distribution companies (or larger video game publishers) to distribute their games they publish. Other functions usually performed by the publisher include deciding on and paying for any license that the game may utilize; paying for localization; layout, printing, and possibly the writing of the user manual; and the creation of graphic design elements such as the box design.2 The location of these publishers is significant because they tend to be sited initially where they can serve regional markets. These locations are international, which reflects the global nature of the business. Exhibit 2 shows that these firms maintain their corporate offices in the Triad: Japan (Nintendo, Sony, Konami, Sega Sammy, Namco, Capcom, Square Enix, Bandai), the US (Electronic Arts, Activision, Microsoft Studios, THQ, Take-Two, Atari, Midway, LucasArts), and Europe (Ubisoft, Vivendi, SCi, Codemasters). At the third level are the developers, which under contract (usually) develop the software that manifest the games as seen and played on the various platforms. As games get more complex, the tendency is for these firms to get larger, but many of them stay small and independent. Wikipedia lists 253 of these firms.3 They are interesting because they tend to be innovators in the industry – id Software, as referred to previously, introduced the cutting edge 3D engine that is now licensed to other producers (cf. Kushner, 2003). Further, although it is the publisher who may finance game development, it is the developer who frequently develops the ideas and “pitches” the proposal to the publisher (Zackariasson et al., 2006b). These firms, being of an entrepreneurial nature, also tend to have a global distribution – they develop where ever there is opportunity and talent. Two jump out as intriguing and representative of how globalization is proceeding. One is Indiagames that has over 300 employees as part of its game development team based in Mumbai, India. Its key clients include studios such as Disney, Sony Pictures, and ESPN. It also has licensing deals with 20th Century Fox, Activision, Marvel Comics, Miramax and King Studios, and its productions have included Spiderman, Garfield In Dreamland, Buffy The Vampire Slayer, Bruce Lee, Jurassic Park, Scorpion King, Bricks ‘n Bowling, and Bruce Lee - Iron Fist 3D.4 Tesla Studios, as another, is a developer based in Belgrade, Hungary.5 It has not yet released any games to date, but reportedly is working on a first-person shooter for the PC and X-Box. Interactive Game Environments 2 3 http://en.wikipedia.org/wiki/Video_game_publisher downloaded 2006/7/28. http://en.wikipedia.org/wiki/List_of_video_game_developers downloaded 2006/7/28. 4 http://en.wikipedia.org/wiki/Indiagames downloaded 2006/7/28. 5 http://en.wikipedia.org/wiki/Tesla_Studios downloaded 2006/7/28. 4 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. Games develop against a backdrop. In Massively Multiplayer Online Games (MMOGs), players are provided with a persistent virtual world in which their avatars (characters) exist. That is, in these games players are provided with an environment in which they can go and do things; socialization and character development are the main focus in these games. In 2001 Edward Castronova (2001) published one of the first papers on virtual worlds and their economies. With this paper, Castronova soon became a spokesperson for virtual worlds and their economical impact on real life. That first paper was later followed by more papers, and in 2005 a book, Synthetic worlds: the business and culture of online games, that in many respects summarizes his work. The reason for the great impact of that first paper, Virtual Worlds: A First-Hand Account of Market and Society on the Cyberian Frontier, was his comparison of a virtual world economy with the nations of our physical world. Because of the trade that took place between the MMOG, EverQuest Online and trade sites on Internet such as eBay, it is possible to calculate the exchange rate of the currencies. That is, people were not only earning game script to advance their avatar’s standings in the game, but were paying real money to buy items for their game characters. This observation lent a bridge between virtual and “real” world. Put another way, he suggested it was also possible to calculate the GNP of that virtual world, mean earnings and so on. Castronova’s results were that if Norrath, the virtual world, had been a nation on earth, its GNP was somewhere between Bulgaria and Russia. Further, the life in Norrath was that of great inequity and about 33 percent of the citizens can be considered “living” in poverty. Consequently, he has concluded that there is much that can be learned from these worlds. Lately, he (Castronova, 2006) has written, “Academics should not only be studying synthetic worlds, they should be building them. Synthetic world technology represents an opportunity to re-vector centuries-old traditions of social science research. … The humans within them are real, and the societies that emerge are real human societies, but the conditions under which those societies operate are purely at the designer’s discretion.” ENTREPRENEURIAL ACTIVITY Early Entrepreneurs The history of video game development is a history of entrepreneurial activity. Bhide (2000, 6-7), after Barreto (1989), identifies four types of entrepreneur – the coordinator, the arbitrager, the innovator, and uncertainty bearer. Although there is an element of each in every entrepreneurial effort, coordinators and arbitragers are predominately financial functions, and eventually these individuals became important in the industry. Nevertheless, it is the innovator/uncertainty bearer that is our primary interest in video game development. These individuals tend to be the ones responsible for change and responsible for growth, and certainly this industry has grown. Note that these individuals do not know what alternative products and services are needed, but rather guess in the face of uncertainty (Hunt, 2000, 28). At the same time, as a group they have the feeling these guesses are correct. As a consequence, they have the fortitude to pursue these hunches in a decision style that Bhide (2000, 19) characterizes as “heads I win, tails I don’t lose too much.” In Exhibit 3 we sketch a list of 10 entrepreneurs who had an impact on the early growth of video games. In making this list, we have passed over many people who might be on other authors’ lists. We list, for instance, only the first of the game developers, Steve Russell and 5 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. Ralph Baer. That means we have passed over, among others, Toru Iwatan, developer of PacMan – the most popular arcade game in the world and Shigeru Miyamoto who created Donkey Kong, Mario, and Zelda. We might also have noted the contribution of the Russian mathematician, Alexey Pajitnov, who developed Tetris, the best selling video game of all time, or the brothers, Tim and Chris Sampler, who solved the construction of Nintendo’s system and established their group as an independent supplier of games. In entrepreneurship, however, both technological and economic acumen come into play. Consequently, we have tried to take that dual requirement into consideration – possibly with a bias toward the economic end. Nolan Bushnell is probably on most lists as the individual who started video game development as an industry by founding Atari in 1972. Start-up firms need money and so we list Don Valentine, founder of Sequoia Capital, one of the computer industry’s first and most successful high-tech venture capital firms. It was Sequoia that supported Nolan Bushnell at Atari when funds were required (1975) and also Trip Hawkins when he was starting Electronic Arts (early 80s). Alan Miller and Jim Levi are recognized as entrepreneurs because they broke out of the mold of establishing hardware companies in the industries. They formed Activision in partnership with others – Miller the programmer from Atari and Levi the businessman. Activision was the first independent publisher of games and thus established another approach for succeeding in the industry. Then, there is the Japanese contribution in this industry. We, of course, recognize Nintendo and the contributions they made. In this case, it was not new firm formation, but entrepreneurial thinking and energy. Hiroshi Yamauchi – President and his son-in-law, Minoru Arakawa – President of Nintendo – U.S., who took Nintendo Company Ltd., a nearly 100-year old playing Japanese card manufacturer, to an international power in game consoles and video game sales. Naturally, the Japanese movement started somewhere and so David Rosen is recognized as a founder of a number of businesses in Japan after WWII. The path taken in that effort eventually led his company and adopted country to international video game production and distribution. Finally, we recognize Trip Hawkins who left Apple to start Electronic Arts in the early 80s. He is noted for his marketing innovations as well as blockbuster game developments. The Present Creativity in the industry continues. Certainly, the type of project has changed from when both the industry and firms were young. Bhide (2000, 3) suggested that as firms go through the sequence of start-up, to transitional, to maturity, they pursue opportunities with different levels of uncertainty, investment requirements and likely profits. In large, the mode of pursuing creativity in these firms has changed from one of entrepreneurship to intrapreneurship.6 Just as the nature of projects has changed, so have the people who run the industry. Wingfield (2006a) has listed the 25 most influential people in the industry. From his list of 25, we picked fourteen that seemed interesting for this paper on entrepreneurship (see Exhibit 4). One might note that although companies and games in the list may be familiar, individuals remain anonymous. As a group, they tend to be male (13/14) and middle age (average 42+). Platforms – Of course one of the high interest items in the industry is what will happen to platforms. The console system remains the largest segment of the overall market, although We use the usual definition of intrapreneurship as the practice of entrepreneurial skills and approaches within a company. 6 6 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. its importance is declining (DCF Intelligence, 2006). For the past ten years Sony Computer Entertainment (SCE) has been the clear leader in the video game market; PlayStation 2 had a share of over 60% of the game console market and for third party publishers other game platforms had become of secondary consideration. That situation may be about to change. Ken Kutaragi, President, Sony Computer Entertainment, has been quoted as saying he views the PlayStation3 as a computer platform that evolves with new features and capabilities on a constant basis as opposed to a game specific hardware. Further, the new product is expected to be introduced at 600 euro (~$800), which although not bad for a North American market might prove excessive for the European and Asian markets. A general observation made of the company is that Sony engineers seem more enamored with extravagantly priced technology than consumers; consequently its brands have suffered (Kageyam, 2006). If Sony stumbles here, it would not be the first time that a platform producer made a mistake – recall Atari, Coleco and most recently Sega (cf. Kent, 2001), and Kutaragi may find himself on a short tether. Sony’s CEO, Howard Stringer, was appointed a year ago to rescue Sony. His biggest challenge comes in November with the introduction. The games division reported a 26.8 billion yen ($230.4 MM) operating loss in the April-June quarter due to R&D costs for PlayStation3. Division sales fell 29% as fewer consumers bought PlayStation2 consoles in anticipation of next mode. That cannot sit well in corporate offices looking at a turnaround situation. While Sony struggles with these issues, Microsoft and Nintendo have the opportunity to build their base with game players. DFC (2006) forecasts that the Microsoft Xbox 360 and Nintendo Wii will have larger installed bases than their respective predecessors. The company with the biggest opportunity may be Nintendo. With a market leading price and a compelling mass market message the Wii has the opportunity to be the market share leader in all major regions. Their president, Satoru Iwata, has stayed out of Sony/Microsoft battle for the living room. Instead, he has stuck with the things that Nintendo has done best, such as introduce games such as Nintendogs and Brain Age – a game successful in attracting an older market, which has recently been introduced into the US market (Wood, 2006). Of course one of the assets Iwata has is his general manager of the entertainment division, Shigeru Miyamoto, The Xbox 360 also has an opportunity to be the overall market share leader, but Moore and Jones have their work cut out for them. Microsoft was third to the table and although they could afford the significant losses that the company has been forced to take to build market share, they remain third. DCF (2006) suggests that even under the best case scenario for the Xbox 360, the system is predicted to finish third in Japan where Microsoft has had a problem attracting game developers for the Japanese market. This situation may now be remedied with the hiring of Hironobu Sakaguchi, developer of Final Fantasy (Dvorak and Guth, 2005), but it remains to be seen how this situation will develop. Other potential issues that concern experts is that Microsoft could become bogged down in efforts to reach out to the mass market via casual games, portable games and other areas that could distract from the overall Xbox 360 business. Downloading games to cell phones is fastest growing segment of industry. It is growing from a small base, however, and as yet this sector provides only 2.5 percent of industry revenue (~$250 MM/$10B). Nevertheless, it would be at such a start that entrepreneurship would be watched. At this point in time, one wonders on the one hand if revenues from this platform will ever be significant – the move toward miniaturization of phones tends not to be amenable to game play. On the other hand, one has to be impressed with the continued 7 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. expansion of the product’s capabilities; they have developed into the digital equivalent of the Swiss army knife as they have become cameras, recorders, etc. Certainly, a segment will end up playing games on telephones if only in special situations. Winfield (2006a) lists Tim Harrison of Vodafone as his “player” in the area. It would be hard, however, to count Nokia out of this segment. In the late 90s they launched Club Nokia service, which permitted subscribers to download games. Reportedly, the pared this activity in 2003 because cellphone service providers worried it would cannibalize their own offerings (Bryan-Low, 2006). Recently, however, Nokia has acquired Lordeye, a digital-music firm, and have not denied that they may not be going back to games. It remains to be seen who the players will be, how large this segment will grow and how it will be served. Games – At present, the future in video games appears to be in Massively Multiplayer Online Games (MMOGs). In these games, socialization and character development are the main feature; Bartle (2004, 474), in fact, argues that a MMOG is a place. Players are provided with a virtual world. “People go to places, do things there, and then they go back home.” Transactions among participants are a major part of the daily actions. This is a core feature of these games, and it is further re-enforced as they build in dependencies among participants. When entering the game, one chooses among a number of different classes (warrior, priest, hunter etc.) or professions (blacksmith, alchemist, leatherworker etc.) and conducts a virtual life with other participants (See Exhibit 5). These developments are even more international than the earlier history of game development. Exhibit 6 lists some current “MMOG world” developers. In looking at the list, one is struck by the Korean developers – both the number of games and the number of subscribers to those games, which seems disproportionate to the country’s population. To understand this phenomenon, it is necessary to understand that around 60% of South Korean homes are equipped with high-speed Internet connections, making Korea arguably the most Internet wired nation in the world. Koreans are such users that popular South Korean web portals like Daum and Naver have some of the highest traffic ratings in the world, despite the fact that their content is only accessible to those who understand the Korean. Koreans use the Internet for sending e-mails and research, of course, but also for entertainment, such as watching videos or playing multiplayer computer games.7 There are, at any given time, over 4 million South Korean on-line gamers. In the over 25,000 PC (Internet cafes where time is sold at about a $1 per hour) there are Korean on-line games such as Lineage and foreign games such as Halo with Korean captioning. The level of professional gaming in South Korea is the highest in the world. The country has several television channels dedicated to broadcasting video games on TV as spectator sport. Players get contracts from large companies, much like in baseball or basketball. The fan base, resembling those of some major sports, is large enough to fill grand stadiums for the grand finals of tournaments. Consequently, MMOG developers who can interest Koreans can expect significant Korean subscriptions. Tak Jin Kim, a business software developer, was the entrepreneur instrumental in this development. He originally founded NCSoft in 1997, and 1997 was a good year for video games – that year there were 13 new releases for PCs, including Quake and Origin’s MMOG, Ultima Online; 10 new companies were founded, and Nintendo introduced its “64” platform, Sony its Playstation and Tiger Electronic its handheld device. In September 1998, NCsoft launched its first and most popular game, the MMOG Lineage. Kim’s business model had 7 http://en.wikipedia.org/wiki/Contemporary_culture_of_South_Korea, downloaded 2006/7/27. 8 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. him license this game to Internet Cafes, which undoubtedly affected its popularity among Koreans. Estimates of as many as 4 million subscribers have been made for this game, which was 10 times as many as other MMOGs. The success of this game helped the company expand to locations in Taiwan, China, Japan and the United States. It has only been recently that Blizzard Entertainment has been successful in surpassing Lineage’s popularity, and that with a playerbase that exceeds 6 million. What Blizzard did with World of Warcraft was to appeal to the casual gamer, which is one of the main reasons for their huge success. It was released without the usual high initial learning curve of these games in which prospective players learn a complicated graphical user interface8 before starting to game. It thus opened up to people that were not familiar with these kinds of games. It would be remiss here not to mention Will Wright, creator of The Sims the best selling video game of all time (Wingfield, 2006b). His contribution was that games don’t have to be a bout gore and sex. Instead, he has an evident fascination with building things. His first game was SimCity published by Broderbund and developed by his company, Maxis Software, which was the start of what has been called “God Games.” Maxis acquired by Electronic Arts (EA) in 1997 for $125 MM. The Sims came out in 1999 to a forecast of 400,000 and sold a million in a few months. One of the side effects of this offering was that it opened up the “girl market” segment for games. His group is now at work on Spore, which is expected to be one of the biggest sellers in 2007 at EA. In this game, players will build from a starting blob to a civilization. It is expected to cost $20 MM in development, which suggests a major reason that entrepreneurship has given way to intrapreneurship in major game development. Naturally, development of conventional games continues. In fact, conventional games still outsell MMOGs by a six to one margin.9 Although there was some slight softening in 2005 sales compared to 2004, demand remains high and gamers demand variety. We have already noted the activities of Microsoft, Nintendo and Sony. There will be some brand extensions. Electronic Arts, for instance, will have a Madden NFL 07 and also a NCAA Football 07 game. There will also be games associated with movies and other brand marks. Electronic Arts will come out with The Godfather for sure this year and they also have a NASCAR game. THQ has a game Cars associated with the movie of the same name. Some of the old arcade games (Pac-Man, Frogger, Galaga) have also been released for Xbox and PC systems (Snider, 2006). Rockstar Games, which created the Grand Theft Auto titles, has a game Bully out this fall, which looks like it will cause some controversy (Breznican, 2006). Of course if the industry is going to enlarge its market, there will need to be more offerings like Nintendo’s Brains that attracts new segments. “Conventional” entrepreneurship is alive and well in the industry. We have already alluded to the role that independent producers play in creating new concepts. The odds are with them; 68 percent of online games that make it onto the market make a profit (Rockwell, 2006). The online game market is projected to grow from $3.4 billion in 2005 to $13 billion in 2011, according statistics compiled by the Game Initiative, an Austin company that sponsors game conferences. But not all of them turn a profit. It is very competitive and so one naturally has to build something people are going to play and enjoy. And money is available as attested to Wingfield’s (2006a – see Exhibit 4) listing of as a “player,” John (GUI) menus and icons with which the gamer controls the avatar. ESA, 2006 (www.thesa.com) gives the following statistics: 2005 video game sales – 190.5 MM units, $6.06 billion; PC game sales – 38 MM units, $0.95 billion. 9 8 9 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. Riccitello, former EA president and now with the private-equity, $1.9 billion firm, Elevation Partner – a potential acquirer of game companies. Facilitators – Very early individuals found ways to take advantage of the popularity of games. A literature grew up, for instance, on how to improve game scores. Today, one can hire a tutor online for the same purpose (Wingfield, 2006c) – and the money is not bad. The interviewee indicated he has made up to $2700 a week and has upped his hourly rate to $65. The average age of instructors is ~19 at the site that was referenced, and the games in which they specialized were Halo 2 and Super Smash Brothers Melee, popular competitive games. Naturally, if there is competition, then there are leagues. In Asia, the best competitors are treated like rock stars, and agreement has been reached to open a TV segment of such competition in the US (Wingfield, 2006d). Matt Bromberg, president & COO, of Major League Gaming (MLG) announced agreement has been reached on seven, hour-long shows between the USA network and MLG. The shows will air on Saturday mornings between Thanksgiving and Christmas. MLG will award over $800,000 to teams and players, and the events will be staged in Dallas and Philadelphia among others. Competition will be in Microsoft’s Halo 2 and Nintendo’s Super Smash Bros. Melee. Then there is the idea of education in general. Today, hundreds of colleges and universities around the world -including respected schools such as Carnegie Mellon University and the University of Southern California -- offer courses and degree programs in computer gaming, as do a growing number of community colleges (Meyer, 2006). The other element of entrepreneurship is perhaps lesser known to non-gamers and perhaps more seditious (cf. Barboza, 2005). Affluent online gamers who lack the time and patience to work their way up to the higher levels of games are willing to pay (mostly) Chinese or other third world individuals to play the early rounds for them in virtual (no pun intended) sweatshops. Advantage is thus taken of the lack of employment and low wages to place individuals in poor working environments. This virtual economy is blurring the line between fantasy and reality, but it is entrepreneurial and clearly international. With this blurring, clearly trouble can follow. Gamers may spend 14 hours a day and take drugs to play longer. Consequently, in July, The Netherlands will open Europe’s first center for game addicts (Curley, 2006). Ironically, unlike other addicts, gamers may get their first game from their parents. The Future (?) – Entrepreneurship Inside Games We are interested in entrepreneurship inside of video games from two perspectives as suggested in Exhibit 1. First, game developers provide a need for participants to exercise entrepreneurial activity. Thus, the games form an exercise in group cooperation. It therefore is interesting where that need leads players in solving problems. One of the authors is studying interactions between the participants within World of Warcraft (Blizzard), as a full participant and gamer (Zackariasson, 2006) – see Exhibit 7. For instance, Blizzard recently has included the possibility of upgrading participants’ armor, but in order to do that reagents are required from a wide number of professions (See Exhibit 8). Therefore, one option for players is to barter with other participants within this game, requiring items from different professions. These transactions for items, however, can be a tedious and monotonous activity, but required in order to build one’s avatar, the object of the game. On the other hand, most reagents can be sold among gamers for the in-game currency. Making money in this game is hard, however, and as one’s avatar develops, more money is needed. Thus, the need of participants to shortcut time spent has enabled entrepreneurial individuals to provide 10 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. this service outside the game – trading in-game currency for real-world currency through markets such as eBay, the bridge situation studied by Castronova (2001). Secondly, there is an opportunity in these games for individuals to originate their own activities. Book (2005) has studied player initiated advertising in interactive games. She noted that MMOGs have become increasingly popular sites for branded advertising campaigns. Most in-game advertising efforts involve established corporations working with game administrators to deliver targeted ad campaigns or the development of separate branded worlds. Some players, however, are creating original brands for avatar clothing, virtual vehicles, and event hosting services. She closely followed four member-developed business brands within There and Second Life and hypothesized that each brand’s identity was deeply intertwined with its creator's personal identity and the identity of its parent world. To date, these innovators have used conventional industry tactics such as the creation of memorable brand names, product lines, logos and promotional web sites to create and communicate complex brand identities, spending as much as 50 hours per week promoting and managing their brands. Originally these brands were developed for their creators’ own entertainment, but now have unexpectedly turned into profitable enterprises that she says defy stable definitions of work and play. We have a second example that has turn up in the interaction studies (See Exhibit 9 – The Stripper). This example is at first blush rather amusing, but we can only wonder where it might lead and how long Blizzard might tolerate the behavior. If it goes on, can the “world’s oldest profession” be far behind? Nevertheless, these examples are doubly interesting because there appears to be a relationship between play and creativity. In other words, correlation studies show that playful individuals tend to score higher on tests of creativity and tend to be judged more creative by others (Dansky, 1994). Activities are considered playful to the extent that they are intrinsically motivated and self-directed, that they are relatively free from externally imposed rules or constraints, and that the link between means and ends is loose and flexible – which is exactly what is being done in MMOGs. Consequently, we seek to find the nature of play that is being pursued. REFLECTIONS The video game industry is one of those rare industries that attract both the business and consumer press. It attracts the business press because of the industry growth rate and the association with firms who depend on innovation and timing for success. The consumer interest arises because of the large, dedicated and demanding market. Both sides, in fact, are interested in “what’s new?” To be sure, this paper tried to deal with “what’s new” in the industry. That is a difficult task. In fact, it is a little tough as an academic in sustaining an understanding of “what’s current?” Quite literally, news on the industry comes out on a daily basis. None the less, we think that certain generalities can be made with regard to entrepreneurship in this industry. Specifically, we would say that a case could be made for: 1. Continuation of the intrapreneurship trend. There is a both a foundation in the industry of individuals succeeding within a corporate framework (intrapreneurship) and success coming from independent companies (entrepreneurship). It would appear that continuation of an intrapreneurship trend is likely to continue. The major corporations are still relatively young, and thus there is an appreciation for creativity in satisfying a growing market. Further, established companies are profitable and their cash positions permit them to buy promising organizations to 11 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. develop output – both platform developers and major publishers are expected to continue this practice. The driving force for creative groups to work under a corporate umbrella is the expense and time that is required to develop a game. 2. Further globalization of game development. We have seen what has happened in Korea where both a market and a product were developed. We have also alluded to some of the developments in India and Hungary. Naturally, the industry is watching developments in China. Some of the Korean firms have had success with offerings there, but one, Wemade has had a running legal dispute with Shanda, a Chinese conglomerate, over one of their newer MMORPGs. Shanda allegedly has infringed on Wemade’s intellectual property rights – a familiar charge in China. The case is still ongoing in a Beijing court.10 It thus remains to be seen if video games follow the trend of rights disregard in China typified in other software. 3. Entry of more women into the field. One cannot help but wonder where the women are in this field. There are famous women authors, movie directors, designers and artists, but in Wingfield’s (2006a) listing of power players, only one woman appears, Jill Hamburger of Best Buys. It is not that women do not play games; ESA indicates that 38 percent of gamers are women.11 Consequently, it would seem that more women are likely to enter the field, and we take heart with the story of Claudia Batten of Massive, Inc. and Microsoft. Recently, the 31-year-old Batten sold her software company to Microsoft for up to $400 million (Savage, 2006). Massive’s software downloads real-time advertising into background features of the action when the user is online. Advertising has long existed in video games, mostly in the form of static ads and product placements that cannot be changed once the game is sealed for sale. Four years ago, Batten founded Massive Inc. with two Australians in New York to develop software that downloads advertising into online video games - a world first. In car games, for example, advertising can be inserted on billboards in the background as cars drive past. Ads can also be placed in games on pizza boxes, TV screens, soft-drink cans and vending machines. Advertisers can change the ads around - slotting in a movie promotion one day, or a soft-drink ad the next. It is also geographically specific and can be sold around the globe. Massive now employs 80 staff in New York, London, Los Angeles Chicago, San Francisco, Paris, Sydney, Cologne and Toronto. Its clients include Coca-Cola, major Hollywood studios and car companies. 4. Furtherance of the creative destruction characteristics of the industry. Despite what we have said above about intrapreneurship, some companies are likely to slip. We do not want to wish anyone evil, but the facts of life are that the video game industry is a tough one. Consequently, there will be new firms that bring new ways of doing things to the industry. Older firms may suffer in their wake. Recall Motorola, Atari, Coleco, Sega and now Nintendo, Sony and Microsoft (cf. Kent, 2001). It would appear that Schumpeter’s creative destruction is alive and well (Schumpeter, 1975/1942, 82-85). We would not be so interested perhaps in the firms that would “suffer in the wake” (unless we were playing the market of course), but it would be the ones displace 10 11 http://en.wikipedia.org/wiki/Wemade_Entertainment ESA, 2006 (www.thesa.com). 12 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. the old with the new. It might be argued that this displacement is unlikely to happen because established firms have been employing a practice of buying up firms with new technology. We think that strategy will slow down the process, but eventually established firms will miss the one that will hurt them. One reason for following entrepreneurship is to gage the ones that may have the new that would displace the old. 5. Entrepreneurship into new uses of video games. It may already be done. If not, it may be done before this paper gets into publication. It is hard to stay ahead of this field. Nevertheless, one can think of a number of “other” uses for video games. The area beyond entertainment undoubtedly will develop. For instance, we have noted the apparent need to provide therapy for addictive gamers (Curley, 2006). We would think that video games could be used in therapy. Put another way, video games have provided growing entertainment for three decades, which apparently have culminated with a form of activity where “people go places, do things there and then they go back home” (Bartle, 2004). Undoubtedly, this ability could be put to go use. In the simplest case, they could be used by a growing elderly population to provide them some mental stimulation under conditions where their physical conditions limit their ability to “go places and do things.” Of course, such an application would require a much more user friendliness – a more click-it and run type of use, but then that is what entrepreneurs do, i.e., meet needs others have overlooked. Given that start, it is not hard to conceive of situations where the practice of role playing with avatars could not be used as therapy for mental disorders. Technology developed within this industry could in fact become the basis for virtual existence in other areas. Therapeutic application could be one of these. But the existence of these technologies opens up the possibilities that today are used in virtual communities. These are not only places for socialisation, but also marketplaces for both physical good and information. So if there is a birthplace for commercial virtual worlds that has the abilities to create new markets and new spheres for entrepreneurship to occur, video game industry is the place. CONCLUSIONS To say the least, the video game industry is an interesting one to follow. Its relatively short history is built upon creativity and entrepreneurship, which has been international in nature. Things move quickly, and one year can make significant differences in participants, markets and products. Although still lagging behind “conventional” games, MMOGs would seem to factor strongly in the industry future. Consequently, we suspect the future “outside of games” is likely to bring greater intrapreneurship, further globalization, entry of more women into the field and furtherance of creative destruction. “Inside of games,” one can expect extension of applications, for instance into therapeutic uses. 13 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. REFERENCES Barboza, B. 2005. Ogre to slay? Outsource it to Chinese. New York Times www.nytimes.com/2005/12/09/technology/09gaming.htm, downloaded 2006-05-04. Barreto, H. 1989. The entrepreneur in economic history. New York: Routledge. Bartle, R. 2004. Designing virtual worlds. Indianapolis, IN: New Riders Press. Bhide, A.V. 2000. The origin and evolution of new businesses. New York: Oxford University Press. Book, B. 2005. Virtual world business brands: Entrepreneurship and identity in massively multiplayer online gaming environments. SSRN: http://ssrn.com/abstract=736823 Breznican, A. 2006. “Bully” hits schoolyard, for good or bad. USAToday. 10 August. D1. Bryan-Low, C. 2006. Nokia aims to distribute content with deal for digital-music firm. Wall Street Journal. 09 August. B2. Castronova, E. 2006. The data game: How economists can learn from online video games. Yale Economic Review. www.yaleeconomicreview.com/issues/summer2006. (Downloaded 2006/8/6). Castronova, E. 2005. Synthetic worlds: the business and culture of online games. Chicago: The University of Chicago Press. Castronova, E. 2001. Virtual worlds: A first-hand account of market and society on the cyberian frontier. CESifo Working Paper No. 618. December. Curley, F. 2006. Clinic for game addicts opens in Netherlands. Associated Press. Appeared in Indiana Gazette, 13/6. B18. Dansky, J.L. 1994. Play. Encyclopedia of creativity, vol. 2. Runco, M.A. and Pritzker, S.R, eds. San Diego, CA: Academic Press, 393-408. DCF Intelligence Game Industry Brief. 2006. The fight for number one in video games. 10 July. newsletter@dfcint.com. Dvorak, P, and Guth, R.A. 2005. Microsoft taps top designer to win over Japan’s gamers. Wall Street Journal. 25/2. B3. Electronic Software Association (ESA). 2006. Essential facts about the computer and video game industry: 2006 sales, demographics and usage data. (www.thesa.com Downloaded 2006/8/6). Hunt, S.D. 2000. A genera theory of competition: Resources, competences, productivity, economic growth. Thousand Oaks, CA: Sage International Publications, Inc. 14 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. Kageyam, Y. 2006. At 60, Sony focusing on rebuilding brand. Associated Press. Appeared in Indiana Gazette, 30/7. D1&D8. Kane, Y.I. 2006. Sony posts a profit as Stringer continues with turnaround plan. Wall Street Journal. 28/7. A10. Kent, S. 2001. Ultimate history of video games. Rocklin, CA: Prima Publishing. Kushner, D. 2003. Masters of Doom: How two guys created an empire and transformed pop culture. New York: Random house. Lundin, R.A. and Söderholm, A. 1995. A theory of the temporary organization. Scandinavian Journal of Management. 11-4. 437-455. Meyer, E.L. 2006. Gaming the system. Washington Post Magazine. 6 August. W22. Rockwell, L. 2006. Austin startups' game faces are on: After years of consolidation, startup game studios flourish. Austin, TX: American-Statesman. 06 July. Savage, J. 2006. Kiwi entrepreneur nets multi-million dollar Microsoft deal. New Zealand Herald. 21 May. Schumpeter, J. 1975/1942. Capitalism, socialism and democracy. New York: Harper. 82-85. Walfisz, M., Zackariasson, P. and Wilson, T.L. 2006. Real-time strategy: Evolutionary game development. Business Horizons – in press. Wingfield, N. 2006a. Hollywood: The power players. Wall Street Journal. 18/2. P1&P4. Wingfield, N. 2006b. Master of the universe. Wall Street Journal. 28/5. A1&A8. Wingfield, N. 2006c. Want to get good at videogames? Hire a kid online. Wall Street Journal. 26/7. A1&A13. Wingfield, N. 2006d. Videogame league, USA network reach deal to air player contests. Wall Street Journal. 17/4. B5. Woods, G.P. 2006. Nintendo’s brain-training game targets older players. Wall Street Journal. 23/2. B1&B4. Zackariasson, P. 2006. Unpublished research. Umeå University, Umeå, Sweden. Zackariasson, P., Walfisz, M. and Wilson, T.L. 2006a. Management of creativity in video game development: A case study. Services Marketing Quarterly. 27-4, 73-97. Zackariasson, P., Blomquist, T. and Wilson, T.L. 2006b. Internal project marketing: A case study. Marketing Theory and Practice Conference Proceedings. Chapman, J., ed., 89-94. 15 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. Exhibit 1 – Conceptual Layout of Entrepreneurship in Video Games Game Environment Developer Encouraged Activities The Game Activities of Established Firms - Intrapreneurship Player Originated Activities Activities of New Entrants Entrepreneurship Facilitator and Ancillary Activities Exhibit 2 – List of Video Game Publishers and Corporate Headquarters 01. Electronic Arts US 02. Activision US 03. Nintendo Japan 04. Microsoft Game Studios US 05. Sony Computer Entertainment Japan 06. Ubisoft France 07. Konami Japan 08. ThQ US 09. Sega Sammy Holdings Japan 10. Take-Two Interactive US 11. Namco Japan 12. Vivendi Universal Games France 13. Atari US 14. SCi Games UK 15. Capcom Japan 16. Square Enix Japan 12 17. Bandai Games Japan 18. Codemasters UK 19. Midway US 20. Lucas Arts US Exhibit 3 – Hall of Fame of Conventional Entrepreneurship within the Video Game Industry (cf. Kent 2001) 12 Now merged into Namco. 16 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. Nolan Bushnell – Game developer and co-founder of Atari (1972). Bushnell as a personality and Atari as a company went on to dominate the industry for a 5-10 year period. Consequently, established roots of the industry as we now know it. Don Valentine – Founder of Sequoia Capital, one of the computer industry’s first and most successful high-tech venture capital firms. Supported Nolan Bushnell at Atari when funds were required (1975) and also Trip Hawkins when he was starting Electronic Arts (early 80s). Alan Miller & Jim Levi – Partners who formed Activision, Miller the programmer from Atari and Levi the businessman. Activision was the first independent publisher of games and thus established another approach for succeeding in the industry. Hiroshi Yamauchi, President, and his son-in-law, Minoru Arakawa, President-Nintendo, U.S. – Took Nintendo Company Ltd., a nearly 100-year old playing Japanese card manufacturer, to an international power in game consoles and video game sales. David Rosen – Founder of a number of businesses in Japan after WWII. Path eventually led company and country to video game production and international distribution. Trip Hawkins – Left Apple to start Electronic Arts. Marketing innovations as well as blockbuster game developments. Steve Russell – MIT student who produced the code for Spacewar in 1962. The game was not copyrighted or patented, but quickly copied to most computers in U.S. at the time. Reported to have commented (Kent, 2001, 19), “I was the first person not to have made money from a two person computer game. … We thought about trying to make money off it for two or three days but concluded that there wasn’t a way that it could be done.” Ralph Baer – Engineer at Sanders, who patented interactive television game (1968) and more than 70 other ideas during his lifetime. In 1976, Magnavox, which held his patents, charged Bushnell with infringement. That settlement led to the unfettered release of Pong, the first blockbuster video game. 17 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. Exhibit 4 – Present “Players” in the Industry (From Winfield, 2006a) Individual, Age Ken Kutaragi, 55 Satoru Iwata, 46 Shigeru Miyamoto, 53 Peter Moore, 50 Jason Jones, 34 Frank Gibeau, 37 Will Wright, 46 Larry Shapiro, 41 Rob Pardo, 35 Sam Houser, 34 Jason Hall, 34 Tim Harrison, 35 John Riccitello, 46 Jill Hamburger, 47 Position, Firm President, Sony Computer Entertainment President, Nintendo Present Activity Created PlayStation business in mid-90s. Will spearhead PlayStation 3, due out in November. Has stayed out of Sony/Microsoft battle for living room. Has stuck with games such as Nintendogs and later will release Revolution, a one-hand (instead of two) controller. Considered by many to be greatest game developer of all time. Has created Mario, Zelda and Donkey Kong. Latest creation, Nintendogs, has sold 5 MM copies since last year. Priority is to boost production and sales of Xbox. Instrumental in creation of Halo. Halo 3 expected to help sell Xbox 360 in competition with Sony. Runs the division that accounts for the biggest chunk of the biggest games publisher’s revenue. Creator of Sims (best selling PC game in history) and working on Spore, which holds similar promise to some. Scouting out film and TV projects for star game designers. Oversees the development of World of Warcraft, a MMOG with 5.5 MM subscribers worldwide. Co-created Grand Theft Auto series. At forefront of studio’s effort to better games themselves – on docket, a Dirty Harry game. Downloading games to cell phones is fastest growing segment of industry. Influences which mobile games are distributed on Vodafone wireless network. Former EA president. Now with privateequity, $1.9 billion firm, a potential acquirer of game companies. For most of publishers, Best Buy is one of top three retailers. Hamburger influences how they are presented in the 930 stores – only woman on list! General Manager – Entertainment Analysis & Development Division, Nintendo Corporate VP, Interactive Entertainment Microsoft Lead Designer – Bungle Studios, Microsoft Executive VP, Electronic Arts Chief Creative Officer, Maxis Electronic Arts Co-head, Video Game Dept. Creative Artists Agency VP of Game Design, Blizzard Entertainment, Vivendi Universal President – Rockstar Games, Take-Two Interactive Software Sr. VP, Warner Bros. Interactive Entertainment Head of Games, Vodafone Group Managing Director & Cofounder, Elevation Partner VP of Gaming Domain, Best Buys 18 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. Exhibit 5 – Some Notes on MMOGs On a general level all producers of MMOGs offer about the same package to the customers. These packages consist of six different parts: 1) a client, 2) persistent world(s), 3) guides, 4) community tools, 5) support, and 6) account administration. Arguing that there are similarities, however, we must at the same time acknowledge that there are individual differences. These differences stem from degrees of differentiation in these six parts. There is a client to be downloaded, or bought from the local vendor. As such, this piece of code is just like any other software to be installed on the computer. Specifically, the client contains ample information about the persistent world; when moving within this virtual world, information is loaded locally and diminishes traffic over Internet. Consequently, the client is only a gate, or a browser to access and communicate, with the persistent world and the other gamers. Our previous work (Zackariasson and Wilson, 2004) focused on Anarchy Online as an example. It provides only one persistent world, but three versions of it – Atlantean, Rimor, and Die Neue Welt. These versions are what Funcom calls dimensions, but they actually are mirrors of the same world. The first two dimensions (named after the first two spaceships that landed on the Anarchy Online planet RubiKa according to the storyline) were created to lower the server pressures. By dividing gamers onto two worlds, server traffic was lowered and lag reduced. The last dimension is a German-speaking server (The New World). Since the main language spoken within Anarchy Online is English, offering a special server for the German customers provides possibilities for this large segment the opportunity to communicate in its native language. On Anarchy Online’s homepage, there are three different user guides – a beginners’ guide, a manual, and a dictionary. Each of these guides helps the gamer to interact with the client and server in a technical manner. The beginners’ guide provides the gamer with a background of what Anarchy Online is and the in-game storyline. Further, it provides the gamer with a description of the different parts of the game, as equipment, nano programs (spells), skills, combat, etc. and how to get started. From this material, one learns the basics of survival on Rubi-Ka. As the beginners’ guide serves to get the gamer into the game as soon as possible, the manual is more comprehensive and contains more comprehensive information about how to interact with the client and persistent world. Funcom encourages alternative sources of information by saying that “the best help is always to be found within the game: ask others for help! People are usually happy to be of assistance, and you may even make some new friends while you’re at it.” The last part of information in this package is the dictionary that contains both technical and in-game abbreviations with their explanations, e.g., MMORPG, Newbie, RP, Aggro, or HOT. Funcom also provides a forum where gamers can communicate through postings and their replies. They also suggest a social guideline to be followed when posting on this Forum. Although extensive in its format, this forum provides opportunities for gamers to communicate with each other and also with the personnel from Funcom. There are further persons working at Funcom who have the responsibility for engaging in communication in this forum, following threads, and providing comments. When having problems in Anarchy Online, the gamer can also interact with Advisors of Rubi-Ka (ARK), which is an interesting feature of this MMOG. This organisation is built around gamers who have volunteered to help Funcom to solve problems live – within the MMOG. That is, when a gamer has problems he or she sends a petition, which is later responded to by an ARK spawning in front of the character. If the problem cannot be solved with the help of the ARK, then it will be forwarded to an employee at Funcom. As stated on the ARK homepage “The Advisors split their time in AO between answering petitions from players, training new Advisors, bug hunting, reporting, and bringing life to the world of Rubi-Ka.” The last item in the offering of Anarchy Online is the ‘My account’ webpage. This part of the package is a page where the gamer can access information about his or her account and communicate with Funcom concerning billing and account maintenance. 19 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. Exhibit 6 – MMOG Developers World Ultima Online Lineage EverQuest Anarchy Online Dark Age of Camelot Legend of Mir II Runscape Final Fantasy XI Ragnarok Online Westward Journey II Mu Online Cross Gate Star Wars Galaxies Lineage II World of Legend Toontown Legend of Mir III City of Heroes EverQuest II World of Warcraft Launch Date 1997 1998 1999 2001 2001 2001 2002 2002 2002 2002 2002 2002 2003 2003 2003 2003 2003 2004 2004 2004 Subscriptions13 Developer HQ US Korea US Norway US Korea UK Japan Korea China Korea Japan US Korea China US Korea US US US 220 000 Origin 2 500 000 NCSoft 420 000 Sony Online Entertainment 14 125 000 Funcom 250 000 Mythic Entertainment 2 000 000 100 000 500 000 300 000 1 500 000 1 500 000 1 000 000 300 000 1 500 000 1 000 000 150 000 1 000 000 175 000 200 000 6 000 00015 Wemade Entertainment Jagex Ltd. Square Enix Gravity Corp. NetEase WebZen Inc. Square Enix LucasArt/SOE NCSoft Pacific Epoch VR Studio Wemade Entertainment Cryptic Studios SOE Blizzard Entertainment “Data are approximate, as there is no centralized reporting source. Industry analyst Bruce Sterling Woodcock summarizes population level drawn from insider reports and press releases at http://pw1.netcom.com/~sirbruce/Subscriptions.html. Consultant Betsy Book maintains an updated review of social virtual worlds at http://www.virtualworldsreview.com. Figures for Asian virtual worlds rely on “China Internet Source”, a report by JP Morgan Asia Pacific Equity Research (May 2004).” Castronova, Edward (2005). Synthetic Worlds: The Business and Culture of Online Games. Chicago: The University of Chicago Press. 14 Authors’ estimate. 15 http://www.gamasutra.com/php-bin/news_index.php?story=8352, accessed 12 April 2006 20 13 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. Exhibit 7 – Developer Encouraged Entrepreneurship within the Video Game: Quests One of the exercises in World of Warcraft (Blizzard Entertainment) is attacking dungeons, defeating the mobs there and extracting valuable booty when successful. These attacks can be conducted either with a guild or an ad hoc raid. These two situations are rather different and can be compared with the academic literature as being associated with permanent or temporary organizations (cf. Lundin and Söderholm, 1995). Each of these organizations requires leadership and depends upon the leader’s knowledge and ability to coordinate and communicated. Thus, as in our physical work leadership is a combination of practical and people skills. To explain, in the game guilds are “permanent” organizations. They are composed of persons who have joined in order to benefit from being in a community. In a guild there is a formal leader, the person that started the guild, or has been appointed leader by the members. Leadership in this position is mainly about coordinating the activities of the guild and supervising barter of valuable items among the different members in the guild. Presently, the biggest value in being a member of a guild is to ability to enter high level dungeons. In these dungeons, 40 persons of different classes work together to defeat the mobs; in victory they receive valuable loot from their corpses. Of course, any 40 persons can enter these dungeons, but as a guild repeatedly make these runs, they gain the knowledge of working as a team. Each member learns what is expected and in what way the different monsters are killed. When a guild has learned to run a dungeon, this process is done smoothly as everyone knows what is expected and who is responsible. A raid is different from a guild run. It is a project conducted by a temporary organization of 5 to 40 persons. Members of raids are mostly not members of the same guild, and they have gathered to run a single dungeon for a few hours. Thus, participants have no previous experience of working together. Since the individual proficiency of handling the avatar and knowledge of the instance differs, group performance in individual raids varies. Success in these projects depends heavily on leadership and communication. In effect these leaders need extensive knowledge of how to succeed in the dungeon and the ability to communicate this knowledge in an ad hoc manner. In summary, the person leading a guild or a raid has to have extensive knowledge of the places they are going to, what each class can do, and how the mobs they confront are likely to behave – or at least his/her best guesses of likely behavior. That sounds a lot like a simulation for entrepreneurship in a virtual world environment. 21 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. Exhibit 8 – Developer Encouraged Entrepreneurship within the Video Game: Upgrading Armor in World of Warcraft Recently, Blizzard modified its World of Warcraft game so that gamers could upgrade their armor. That is, they could update the first complete set of armor that could be worn when one reached level 60, the highest level. Blizzard has marketed this armor upgrade as an alternative for those casual gamers who do not have adequate time to do the high level dungeons, which was the original means for getting this protection. Upgrading in that manner is a long process where the gamer many times depends upon others to help as well as paying several hundred gold for material and deposition. For example, a priest after having upgraded the Devout Bracer to a Virtuous Bracer proceeds with quests that will upgrade the belt and gloves too. One of these quests read (www.thottbot.com): “Ah, you're in need of my latest project... the extra-dimensional ghost revealer! Unfortunately I've run out of funds and manpower. You're willing to help? Excellent! Our first task is to build a device to harvest the very fabric of death! Building an ectoplasmic distiller won't be an easy task, <name>. I'll need you to bring me an arcanite converter, some greater eternal essences and stonescale oil. I'll also need some volcanic ash from the lava pools in the Burning Steppes to build a filter. *** Return to Mux Manascrambler in Gadgetzan with 1 Delicate Arcanite Converter, 4 Greater Eternal Essence, 10 Stonescale Oil, 25 Volcanic Ash and 40 gold.”1 Completing this and a number of more quests will in the end reward the priest with a full set of Virtuous armor. The total cost of these items in game currency would be 126 gold (see footnote). If a gamer decided not to buy these items from the auction house, they can be created by using different professions in the game. This approach would require help from a miner, an alchemist, an enchanter, and an engineer to gather the reagents and create the items. The problem is that each avatar can only have two primary professions. Thus, what each avatar can do is limited and cannot be enough to complete this quest by itself. Or, instead of spending 126 gold, one could only spend 40 gold, but an extremely long time gathering reagents. 1 The easiest way to obtain these items is buying them from other gamers. For this purpose, there is an auction house where gamers can auction their items, providing them with an opening bid, a buyout bid, and the time the item should be in auction. The average price for buying these items would then be (www.allakhazam.com): 1 Delicate Arcanite Converter 4 Greater Eternal Essence 10 Stonescale Oil 25 Volcanic Ash (not tradable) Sum: 45 gold 28 gold 13 gold 40 gold 126 gold 22 Paper in preparation for 2nd Aalborg University Conference on Internationalisation of Companies and InterCultural Management: Please do not quote without authors’ permission. Exhibit 9 – Player Originated (Creative) Entrepreneurship inside the Game: The Stripper As I I was running along in Newland City on my way to one of my many missions I stumbled across an avatar As was running along in Newland City on my way to one of my many missions I stumbled across an avatar that was something out ofof the ordinary. But of course, one do have to remember that this city was at that time the that was something out the ordinary. But of course, one do have to remember that this city was at that time the homestead of the neutral gamers, those that had not chosen sides in the conflict, or rather had chosen to stay homestead of the neutral gamers, those that had not chosen sides in the conflict, or rather had chosen to stay out out of the conflict. So if there were one place on Rubi-Ka where you would find the odd ones, this was it. It was of the conflict. So if there were one place on Rubi-Ka where you would find the odd ones, this was it. It was not not the appearance of this avatar that was out of the ordinary, at that time anyway, but rather what she said to me I the appearance of this avatar that was out of the ordinary, at that time anyway, but rather what she said to me as asran past her. ‘Would you like me to to strip for you?’ At this timewas using my Atrox avatar, at at that time I ran past her. ‘Would you like me strip for you?’ At this time I I was using my Atrox avatar, that time about about level 150 of 220.220. I was an Enforcer byname of Monkfish, equipped withwith a sword, massive armor – level 150 out out of I was an Enforcer by the the name of Monkfish, equipped a big big sword, massive armor – actually,things thingsbig on big on Monkfish. When choosing an avatar in Anarchy Online you are actually, most most were were Monkfish. When choosing an avatar in Anarchy Online you are informed that informed that Atrox is abreed. But judging But judging from the of it, I would say I would say thatbreedawith no Atrox is a genderless genderless breed. from the appearance appearance of it, that it is a male it is male breed with no femaleThis avatar that now hadthat now had me with this me with this question wasboth in level and female equivalent. equivalent. This avatar approached approached question was very small, very small, bothsize. I doand in size. that she was female,she was female, and most likely also of thethe oneSolitus, the one in in level remember I do remember that and most likely also of the breed Solitus, breed most humanlike. most humanlike. She was also clothing, social that are only for show and have show and class. no armor class. not She was also wearing social wearing those clothing, those that are only for no armor have That is, it does That is, it doesprotection when attacked. when attacked. provide any not provide any protection Now, at at that time had not started taking notes when gaming, not seeing gaming asas an actual part of my Now, that time I I had not started taking notes when gaming, not seeing gaming an actual part of my research; but I do remember me stopping abruptly, turning toward her and replying something like ‘say what?!’. research; but I do remember me stopping abruptly, turning toward her and replying something like ‘say what?!’. Ordinarily you will not stop and actually speak toto strangers saying things to you in the streets, at least I Ordinarily you will not stop and actually speak strangers saying things to you in the streets, at least I wouldn’t. There are a lot ofof things said, most of them also rather uninteresting. But this comment had never wouldn’t. There are a lot things said, most of them also rather uninteresting. But this comment I I had never heard before and the content ofof the message was too intriguing, or actually hilarious to miss out. Promising new heard before and the content the message was too intriguing, or actually hilarious to miss out. Promising new dimensions ofof Anarchy Online had never came across before. dimensions Anarchy Online I I had never came across before. ‘What do you mean by stripping?’ I proceeded asking her; and she explained toto me how she (actually, have no ‘What do you mean by stripping?’ I proceeded asking her; and she explained me how she (actually, I I have no idea if if the gamer actually wasfemale, forfor some reason I doubt that, but as the avatar was female I’ll go with idea the gamer actually were a female, some reason I doubt that, but as the avatar were female I’ll go with that) would strip for me, with exotic dancing and the whole thing, if if only gave her a few credits. I remember that) would strip for me, with exotic dancing and the whole thing, I I only gave her a few credits. I remember being rather surprised ofof how easy it all sounded, how it was introduced by her as naturally occurring event. being rather surprised how easy it all sounded, how it was introduced by her as a a naturally occurring event. An event that I, I, for some reason, had missed out completely, despite the huge amount of hours had spent here. An event that for some reason, had missed out completely, despite the huge amount of hours I I had spent here. I continued probing her about how she would go about stripping for me, here inin the game. was having a hard I continued probing her about how she would go about stripping for me, here the game. I I was having a hard time seeing how this would bebe done and needed some more explanation of how it actually were to be done. I time seeing how this would done and needed some more explanation of how it actually were to be done. I guess that it it actually were at this point that she got bored with me and realized that would never bebe a guess that actually were at this point that she got bored with me and realized that I I would never a ‘customer’ ofof hers. But she did explain that she had found this very prosperous way of making credits by ‘customer’ hers. But she did explain that she had found this very prosperous way of making credits by running a macro that made her avatar dance, changing toto other clothes so it seems like she removed them one running a macro that made her avatar dance, changing other clothes so it seems like she removed them one after the other, finally leaving her inin thongs and small top only (there are no possibilities toto be completely after the other, finally leaving her thongs and a a small top only (there are no possibilities be completely nude). I wanted toto ask her more, had a bunch ofof questions for her at this moment, but realizing that she was nude). I wanted ask her more, I I had a bunch questions for her at this moment, but realizing that she was wasting her time with me she said ‘cya’ (an acronym meaning ‘see you’) andand walked overthe the next male wasting her time with me she said ‘cya’ (a contraction meaning ‘see you’) walked over to to next male avatar coming her way. avatar coming her way. Technically it’s have realized by now, I whatnot about todid. go of thisthe ‘emotes’eventlets your avatar move in As you might not difficult to perform was this avatar let There is fascinating that by now. Casually (here different ways, dancing, greeting, laughing, but alsoanything) I was hanging around the area, studyingemotes in meaning standing completely still and not saying the gestures that are not so friendly. Using these the sequences makes it possible thecreate rather met. Finally series ofelope with a and writing a script that makes it stripper’s interaction with to avatars she elaborative she did movement; customer into a back alley nearby. possibleato execute this with one commando from alley. Whatmakes this very easy. So kind ofyour avatar is were After few minutes I made my way over to the the gamer I saw was indeed some while dancing, there ‘dancing’ according todance moves; begin were in sexy but not that revealing clothes, the gamers only have to pirouettes and other the script, to there with the changing of clothes to more revealing ones and there were change theother clothes at appropriate times; fromemote ‘moon’ (originally a very nastyfor example. herethis a even to ‘butt in your face’ with the help of the ‘Golden hotpants’ to ‘white thongs’, gesture, but All it had while a payingmessage). The whole show ended with a blow kiss toward the paying customer who had been whole other avatar sits and watches the event. cheering and applauding throughout the performance. The stripper changed her clothes and as she ran past, she As you might have realised by now, Iof,’ peeping tom’,let go of this fascinating event by now. Casually (here called me something along the line was not about to or ‘free rider’. meaning standing completely still and not saying anything) I was hanging around the area, studying the stripper’s interaction with the avatars she met. Finally she did. elope with a customer that lets your avatar move in Technically it’s not difficult to perform what this avatar did There is the ‘emotes’ into a back alley nearby. After a fewways, dancing, greeting, laughing, but also What I saw was indeed some kind ofUsing these emotes in different minutes I made my way over to the alley. the gestures that are not so friendly. dancing, there were pirouettes and otherit possible to create rather the changing of clothes to more revealing onesscript that were it sequences makes dance moves; there were elaborative series of movement; and writing a and there makes even the ‘buttexecute this with one commando from the gamer (originally a very nasty gesture,yourhere it had a possible to in your face’ with the help of the emote ‘moon’ makes this very easy. So while but avatar is whole other according to the script, to begin with in a blow kiss toward the paying customergamers only have to ‘dancing’ message). The whole show ended with sexy but not that revealing clothes, the who had been cheering and applauding throughout the times; from ‘Golden hotpants’ to ‘whiteclothes and as she ran past, she change to other clothes at appropriate performance. The stripper changed her thongs’, for example. All this called me paying avatar sits the line of,’ peeping tom’, or ‘free rider’. while a something along and watches the event. 23