Tuesday, August 31, 2010

Market Segmentation

Imagine 5 users and two ways to design your game: Option A and Option B.

I use a scale of 1-10.
10 means a player loves your game. 1 means he hates it.

All users buy a game if they give it at least a rating of 5/10.
All users pay the same price when they buy the game.

"User benefit" on a scale 1-10 of different users depending on design option:

Option: A | B
User 1: 9 | 5
User 2: 8 | 5
User 3: 9 | 5
User 4: 2 | 5
User 5: 1 | 5
Sum : 29 | 25

Total benefit
Option A: 9+8+9+2+1=29
Option B: 5+5+5+5+5=25

To maximize aggregate user benefit you would have to chose option A, but at option B you sell the game 5 times. At option A you only sell it 3 times.

Substract costs, and your profit at option B is much, much higher than at option A.

That is why the number of sold items says nothing about quality of the product! This explains why Hollywood blockbusters make the most money, although nobody sane would argue that they are the best movies possible. This is why WoW is just fun enough to occasionally resubscribe. That is the reason all Star Trek movies only appeal to the non-fans.

Player 1-3 would absolutely love a game developed according to option A - they will never get it.

Only way would be to make (allow !) consumers to pay more. But that is a tricky problem; and don't start talking about item shops!

My suggestion is market segmentation:
It would not cost much to take e.g. the WoW engine and change a few rules. Create different MMOs for different players.

Give the market a choice!


I suggest to build the basics of one MMO with a lot of money. Then I suggest to give this framework, that has everything but rules, to different teams.

These teams cannot add graphics, they cannot add server architecture, they cannot add animations...
But they can change the rules of the game.

That is:
- They can calibrate difficulty
- They can calibrate reward structures
- They can calibrate PvE/PvP
- They can add incentives to explore
- ..

All the things that don't cost much to change.

When Blizzard talks about content, they think about adding graphics/animations to the game.

But when designers are faced with the limitations mentioned above, they will find out that this is not the only way to create content. For example, a story doesn't necessarily need much work.

Move some creatures from one point to another, make a NPC camp bigger. Make a NPC camp overtake a town. These are all examples that cost almost nothing. I wrote about it some time ago.

We need some rivalry between concepts. Not just a rivalry about who can churn out more polished 3D graphics/sounds/animation per month.

Compare it to chess:
The board and the figurines are created once. Subsequently they are given to different developer teams.
These teams will invent rules that they consider fun and eventually the teams with the best rules will have the most players. In capitalism this works especially good if you allow the different teams to charge different amounts of money for their games using different payment methodes.

Some teams will think that making chess easy to win against a computer is the best way. Another team will think that making chess all about PvP, is the best way. Another team will want to add concentrated coolness and allows all your figurines to move like queens.

We need pluralism and competition in this market. This is not only good for the consumer, but especially good for the suppliers(developers).

Actually, it is also a very risk-averse approach!


  1. Actually thats the thing I thought since UO - why not make server with different rulesets . This is relatively inexpensive, yet no one makes aside the trivial pvp/pve separation

    Heck take WoW -its awesome server and client. Tons of content and itemization. I saw some amazing stuff on private servers, if they can do it why no one else does?

    Or say licensing MMO engine to 3d parties.

    In fact if quality server/client and basic world were available on legal basis with WoW I bet it would be booming franchise

    So far its not happening in mainstream west (lots of asian mmos do it though). But I hope one day it will.

  2. yet no one makes aside the trivial pvp/pve separation

    I'd really be interested in reasons for why the western developers don't use product segmentation. There must be some kind of reason !