Resetting online gaming's future?

NC Interactive CEO Robert Garriott has ambitions to take a run at Sony and Electronic Arts. Brash, perhaps, but his parent company happens to run the biggest online game in the world.

If online gaming is to ever appeal to a mainstream audience in the United States, the conventional wisdom is that the breakthrough titles will likely come from Sony and Electronic Arts.

But no single company yet dominates online gaming, a $210 million business that analysts project will reach $1.8 billion by 2005. And before any coronation takes place, a little-known software developer in Austin, Texas, called NC Interactive is planning to make a run at showing these giants and the rest of the online gaming world how things should be done.

A brash ambition, but NC Interactive has reason to be confident: Its parent company in South Korea, NCsoft, just happens to run the biggest online game in the world.

"Lineage," the company's medieval role-playing game, has more than 4 million subscribers who pay an average monthly subscription fee of almost $25 to participate in "blood pledge" clans that besiege virtual castles and slay digital dragons.

The vast majority of those subscribers are in NCsoft's home base of Korea, a nation with one of the highest broadband penetration rates in the world. A recent Nielsen survey concluded that more than 95 percent of home Internet connections in Korea are high speed, or broadband.

The company has expanded the game into other regions, most notably Taiwan, where it has enjoyed modest success. NCsoft has yet to find much of an audience for the U.S. version of "Lineage," but Robert Garriott, CEO of NC Interactive, is convinced the company can export its success from the Pacific Rim.

"Up to now, all the success stories in online gaming have been medieval role-playing fantasy games," said Garriott, who helped his brother, Richard "Lord British" Garriott, create one of the first online gaming breakthroughs with the "Ultima" series. "We think those are great, and the concept has worked really well for us with 'Lineage.' But we believe the long-term viability of online gaming is going to require new kinds of products that broaden the market."

Garriott recently talked with CNET News.com about the challenges posed by online gaming and NC's position in the industry.

Q: What made "Lineage" such a phenomenon in Korea?
A: There are obviously a number of factors in Asia. The early reason is that "Lineage" was released in 1998, and that's the same time that the game room phenomenon was taking off in Korea. (Game rooms are Internet cafe-type shops where game players congregate.) At that time, they did not have a reason for people to come in and utilize the computers. It was also a time when Korea was going through a severe recession, so people had a lot of time on their hands.

"When a new product comes out and the experience is terrible because the publisher didn't pay enough attention to the infrastructure, it reflects badly on the whole online gaming experience."
It turns out that all of that was coming together at the right time for NCsoft to build a great relationship with the game rooms. That became a great way to draw people into the game and really became the start of a new type of social revolution.

At the same time as this was really starting to grow, the South Korean government decided to really focus on technology growth, and part of that was expanding broadband Internet access throughout Korea.

And that prompted people to start playing the game at home?
Exactly. If you look at our business two years ago, it was virtually 100 percent game-room business. Now, game rooms represent about 50 percent of our business, and the other half is home users. People initially got hooked in the game rooms, and then they started buying PCs and connecting them at home.

How important has broadband penetration been for the growth of "Lineage"?
It has been extremely important to our business, and that's because of our business model, which is very different from something like Sony's "EverQuest." Those business models include buying a box with the game CD and then paying a fee to play online.

Because we grew up through the game rooms, we came out with a different model. We've always given away our client for free, and we do regular upgrades and improvements to the game. The initial client is now about 400 megabytes, and every two or three months, we come out with a new episode that might require downloading another 100 megabytes. Doing that over a 56K modem is going to be extremely painful.

Has the broadband equation worked both ways, with "Lineage" prompting people to sign up for broadband?
Absolutely. We have a partnership with KT (formerly Korea Telecom), which is basically the largest broadband ISP in world. If you talk with KT, they'll tell you that a large part of their success has come from the content side, and the biggest content in Korea now is "Lineage."

Sounds like you have multiple challenges in the United States, then, given our low broadband penetration and the minor role of game rooms here.
We do view the U.S. as a challenge. Korea is the No. 1 country in the world for online gaming, and for that to spill over into the United States, it will take a continuous rollout of broadband. I think everyone's been disappointed with how slowly broadband has taken off in the United States. Once the infrastructure is in place, the question becomes what games are appropriate in different markets.

There's no question tastes are different in Korea. People play in a very team-oriented way there, partly because the phenomenon really started in game rooms, where it's very simple to form friendships that carry over into the game...People here are not as used to getting together and teaming up as they are in Korea; they like to play solo more.

Are you adjusting the U.S. version of the game in that regard?

"I think cheating is a problem for everyone in this business."
There are a number of things we have been doing to readjust the game here. One of the most critical issues is that in Korea...you've got a lot of very experienced players. The game design issues there are how do you keep experienced players happy? In the U.S., it's how can we keep newbie players happy? How can we make sure they have fun right off the bat?

We've developed a newbie zone where they can be safe and protected until they work up to Level 10. We've redone the graphics; it used to be that the older parts of the game had all the latest graphics, and the initial zones looked pretty basic, which doesn't help get new players excited.

Are you looking beyond "Lineage" too?
Yes, we're designing lots of new products--some that are targeted specifically to the "Lineage" customer and some that might be more attuned to U.S. customers off the bat. On the "Lineage" side we've been working on "Lineage Forever," a continuation of "Lineage" with totally new graphics. It's an attempt to take the whole "Lineage" system and add a new look and feel to it that we think will be more applicable to the U.S. market.

We're also coming out with "Lineage II," which is basically a massively multiplayer role-playing game in the tradition of "EverQuest." And we're coming out with a whole new slate of products, the first of which will be "City of Heroes."

A lot of the big game makers seem to be counting on the appeal of established franchises such as "Star Wars" and "The Sims." Can you make a go of it with original content?
If you look at the way the game business developed, early on, you had the opportunity to build your own franchise based on having the best technology and the best user experience. That's how "Ultima" became what it was. We built a franchise based on a quality experience. Then, as the business matures, the opportunity to succeed based on the fact that you're the only one with a certain technology disappears. That's when the franchises become really important.

I think that's all natural; it happened in the boxed-game business, and I think it will happen with online games as well. But we're still in the early stage of the online game business. We're an infant compared to the boxed-game business...In the next few years, I believe you have an opportunity to build franchises. I think that will fade away as the business grows and the technology becomes more solid and widespread. But in the next few years, I believe companies in this business have the opportunity to create their own (intellectual property), and in the long run, that will have more of a payoff.

I imagine you've learned something about back-end issues from accommodating 300,000 simultaneous players. How much of an advantage is that?
Everyone thinks it's an easy task to run these games, which is the biggest fallacy that people getting into this business make. That's why you see these massively hyped games that launch, and nobody can log in for the first week or two...There's a lot of know-how that goes into running a stable service that can keep all these players happy...We have a facility in Korea that is the largest Internet data center in the country.

It's really a critical part of this business that a lot of people tend to underestimate, to the detriment of everyone. We are not really competitive with the other companies in the industry. The issue to me is not whether we can steal a customer away from "EverQuest," but how can we bring new customers into this industry...When a new product comes out and the experience is terrible because the publisher didn't pay enough attention to the infrastructure, it reflects badly on the whole online gaming experience.

Has cheating been much of a problem with "Lineage"?
I think cheating is a problem for everyone in this business. One of the areas where we address that is that we log absolutely everything that happens on our servers. If cheating does occur, we can find out how it happened and who did it, and we can exclude that person from our game forever.

But it can't just be us. Ultimately, the way this is going to stop is to exclude people from all the games if they're making trouble. Ultimately, I think the game companies are going to have to swap that information on troublemakers. Hopefully, we'll have an industrywide approach to dealing with an issue that can really ruin the experience for other game players.  

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