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Virtual Worlds and Computer Games: Destinations or Starting Points?

August 27, 2007

Having not had a chance to post anything for the past fortnight, I feel a little cheap returning to a subject I covered in my last blog post but as the business roles of virtual worlds and gaming evolve I think these are important moments to take not of along the way.

The first piece is an example of Hollywood/virtual world crossover; John August’s ‘The Nines’ (you can see the first nine minutes here and the trailer here), which involves some virtual world elements (note ‘The Sims’ style icons over people’s heads in the trailer), incorporates Second Life in part of its promotional ARG (alternate reality game). Although the Second Life element makes up just a part of the ARG, August himself stated in an interview (in SL) that had he known more about SL would have played a bigger role (I’m not cynical enough to believe he was saying that just to keep his audience happy).

The other news of interest came from Yves Guillemot, CEO of Ubisoft, furthered the claim that they intend to push into ‘film’, promising a short CGI piece as support to the upcoming Assasin’s Creed game. In past interview he has also stated that they see their competitors not just as other gaming companies “but books, films, the internet, theatre and music.”

This echoes the sentiment expressed by Neil Young of EA games in Kristin Thompson’s book ‘The Frodo Franchise’:

“If you think about the way EA has to grow to be the next great entertainment company instead of just the best game company, we have to move further along the continuum of intellectual-property ownership. It’s our objective ultimately to be creating intellectual properties that would move onto other media – that would move into film, move into television, move into books. Just like the film studios’ motivation is to move to games, to own game companies”

Ubisoft’s and EA’s angle on this may seem overly ambitious but I’m intrigued to see what they come up with. To be frank though it comes down to money: if the gaming industry wants to rival, say, Hollywood then it needs to find more sources of income beyond hardware and games. While all eyes are on Hollywood’s annual blockbuster releases these represent only a fraction of their income, the rest coming from licensing agreements for merchandise, TV stations and, yes, computer games.

While Hollywood benefits from game tie-ins, many of which are very desirable from the perspective of the games companies the same cannot be said for the desirability of games franchises by Hollywood. While EA paid something in the range of $10million a piece for the rights to make games based on ‘The Lord of the Rings’ and Harry Potter’ films, Eidos received just £1million in licensing from Paramount for the rights to make ‘Tomb Raider’ (whether this included rights to the sequel I’m uncertain, a seperate deal will be negotiated for the third). To make matters worse most computer game adaptations have fared poorly at the box office movie, Tomb Raider being one of the few exceptions*. Hopefully Halo or even the World of Warcraft movies can change that. At the moment few games spawn successful merchandising lines, although the first Halo novel ‘Halo:The Flood’ got onto the best-sellers list when it was released in 2003 and Th WoW TCG seems very popular. But, and this is the main point; do people other then the players of these games actually buy these things? I imagine not.

Thinking about how to explain this problem I came up with the idea of ‘Destination’ and ‘Starting Points’. ‘Starting Points’ are media that drive people to other media, these other media being ‘Destinations’. ‘Destinations’ may be starting points for some, but usually a niche or minority. Virtual worlds and computer games are starting points for a minority, probably a growing minority, but a minority all the same, which means that media that originates from them tends to be limited in terms of audience. This problem is compacted when said ‘Destination’ media fails to impress the broader audience at whom it is aimed. For example, I doubt many of those people who were not players of the Doom computer games who went to see the film adaptaion were impressed enough to go on and try the games. As noted above upcoming films like Halo might alter this dynamic. Second Life is in a similar position, regular media coverage has encouraged somewhere in the region of 8 million people to try it out (give or take a few thousand multiple accounts) but only 500,000 or so to stick it out. As a ‘Destination’ it lacks, what they call in the industry, ‘stickiness’.

Ubisoft and EA have a big challenge ahead. Will the CG Assassin’s Creed ‘film’ be anymore than a glorified ad for the game, or will it generate revenue, will it be sold to media companies as a piece of programming? It’s interesting to compare computer games to other niche media genres. Comic film adaptations barely existed following the success of the Superman films of the late 70s/early 80s (Captain America, The Punisher adaptations barely registered on the popular culture radar, along with the Spider-man TV series of the early 80s), but the broad appeal and commercial success of the first X-Men film in 2000 changed the attitude of both Hollywood and filmgoers toward this genre. Even relative failures such as Daredevil, Hulk and Superman Returns have done little to damage enthusiasm for the genre (at least not from the studios’ perpectives). Figures from 2002, the year Spider-man topped the box office saw comic sales up by 10%, success may be seen to stem from a number of factors including promotions such as ‘free comics day’ but surely the massive mainstream success of the Spider-man film had some influence on these figures. Undoubtedly yes, but to what degree is less clear. Marvel’s third quarter report from 2002 showed a big increase in sales but was somewhat ambiguous on the issue of what those sales constituted: licensing and toys demonstrated increased sales, as for publishing sales (comics and graphic novels), Marvel were a little more sketchy on just how great increases were. Ironically enough, in terms of the stock market Activision benefited more from the Spider-man franchise than Marvel did seeing a 12% rise in stock versus Marvel’s 5.5%.

On paper Marvel had a great ‘Starting Point’ in the Spider-man movie, and unlike the X-Men films it maintained much of the traditional comic book look and feel, including an only slightly modified spandex costume, but this didn’t bring the same broad audience to the comic/graphic novel ‘Destination’ point. This might have been a distribution issue and Marvel themselves had been struggling to maintain their market since the mid 90s (see this great two-part article for more on this), but these are the kinds of things companies expanding into unexplored media pastures need to consider. Given that comic books and computer games have similar core markets I think that Ubisoft and EA need to take note of Marvel’s plight.

*Read Kristin Thompson’s ‘The Frod Franchise’ for more details (sorry to go on about this book but it is absolutely amazing!)

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