MARCH 19, 2009 • MMOs come and go, but EVE Online has soldiered on year after year building its player base to 260,000 worldwide. World of Warcraft’s arrival blew away expectation of what constitutes a successful MMO. CCP is also novel in that it hails from tiny Iceland, championed digital distribution very early on, and has global aspirations for itself beyond the niche EVE Online has already carved out.

Much has changed in the world of MMOs in the last 10 years since CCP began work on EVE Online. New micro-transaction business models have appeared to challenge the old monthly subscription model, and sped the recasting of MMOs as a service rather than a packaged good. The worldwide economic recession has also made the old subscription model less attractive to cash-strapped consumers, as well as encouraged less-complex, more casual online experiences than CCP is known for.

This March CCP released a retail version of EVE Online with its new partner Atari – the first boxed version of the title in many years, which includes EVE’s 10th expansion, Apocrypha. So DFC went to chief executive Hilmar Petursson to see how he views the state of MMOs today, and how CCP fits in.

DFC: What does the next great MMORPG need to be? In addition to genre (fantasy, space, etc.) how does the MMO experience have to evolve get away from me-too experiences?

Hilmar: Any next-generation MMO has to take more advantage of the massively multiplayer format, which allows people the opportunity and impetus to interact with each other. We have seen cases where people have transitioned single-player experiences over to networked experiences, but the online and multiplayer components have suffered, being more akin to add-ons to classic, single-player experiences rather than having interaction between people as the driving purpose of the experience. I think any next-gen MMO that wants to break away from the typical pattern has to have its core focus on the interaction between the players participating in that MMO.

There have been a lot of fantasy games out there and a few sci-fi games. We at CCP have been intrigued by a bit of a vacuum in terms of genres available for players: the “present day” setting, which doesn’t seem to be represented well in today’s products.

DFC: How does a company with a successful MMO expand its business? In other words what do you do for a second act?

Hilmar: Over time, CCP has been heavily focused on incorporating user feedback into our existing product, EVE Online. We have expanded our business through building on that feedback and have continued to invest in the experience to a greater extent than many other companies have done. That has certainly been a big point of expansion for us. In addition to that, we have identified an intellectual property which we want to add to the marketplace: the World of Darkness.

DFC: How is the business of producing and selling MMOs changing? For instance, CCP is partnering with Optisp too in China. What does it take to be successful in that market?

Hilmar: The business of producing and selling MMOs is certainly changing when it comes to the sizes of production we are seeing. Making an MMO today is like making a blockbuster Hollywood title. We have seen a great increase in the amount of money that people are willing to invest in an MMO before launching it – an obvious testament to the robustness of the business model. So from that aspect, it certainly has changed the industry a lot. When we released EVE Online in 2003, you could launch a game with a fairly modest production budget. Recently the ticket to entry is almost guaranteed to be tens of millions of dollars.

With regards to being successful in China, I think it is important to understand the market and make products that address their interests from the start. We did not do this for EVE Online initially, but we have tried our best to incorporate feedback from the Chinese EVE community in our continued development and have seen near-instant growth in China by doing so. So I think the key to success in China, as in any market, is to make every effort to understand the customers in that region and incorporate their feedback in your design process.

DFC: What is the state of server technology? As a practical matter, how does CCP get the most out of its server architecture, and where does your server technology have to do better in the years ahead?

Hilmar: You get the most out of your server architecture by being very mindful of where the software meets the hardware. When it comes to the EVE server architecture, we have researched hardware solutions just as much as we have researched software solutions. We recently went to all solidstate disk drives for our database server as a means to scale our single-shard technology. A big focus, of course, is to be able to horizontally scale infrastructure by adding more hardware into it. With our single-shard world we’ve had to create the architecture as such that we can add more computers to it that can contribute to running the EVE universe.

If companies are focusing more on the interaction between players, there is a lot of value for running worlds that are bigger than what is currently in the MMO space. We have seen a lot of benefit from running a single-shard world with 300,000 people involved in it. There is a huge advantage to having more players sharing the same experience when the core value of the value proposition has to do with the people using the same service; the more people you have within that service will exponentially increase that value proposition. The focus on service in general should prioritize running larger worlds, more sophisticated AI and more numerous player simulation structures.

DFC: CCP was able to build EVE Online from a fairly low user base. Can that still happen after World of Warcraft? What are the challenges to creative teams desiring to make MMOs today?

Hilmar: One strategy CCP employed in building EVE Online was to focus on incorporating user feedback as quickly as possible to create a reinforcing cycle of user feedback yielding results and, consequently, customer value. I think it is certainly possible to build a game today in the same way we did, but it will require a very patient team starting from a small base and then working very hard for a long time to build up from there. Currently the market is certainly more competitive than it was when we started EVE Online, but I think the general principle of starting small and rapidly incorporating feedback is a strategy that would still work today. You may be able to carve out a little bit of a niche on a smaller scale by doing that, but we’re a good example of how you can grow that niche given that you respond quickly and honestly enough to your players.

DFC: Does a successful MMO have to launch with a boxed retail SKU?

Hilmar: I don’t think it is necessary to do so. With EVE Online we have been able to be quite successful only with digital distribution, but based on our experience in heading towards retail distribution launch on March 10, 2009 with Atari, we have certainly come to realize that retail still plays a huge role and will continue to do so for decades to come. It might have been a little bit of an underestimation on our part not to previously realize that. I certainly think you can be successful with digital distribution alone, but if you don’t include retail you are forsaking a large portion of potential players.

DFC: What does the White Wolf acquisition mean for CCP? How does it change CCP?

Hilmar: The merger with White Wolf has meant several things for CCP. It was the foundation of our office in the US. Along with our offices in Reykjavik and China, CCP has become a truly global organization, which was a part of our original long-term plan. Although we operated out of Iceland for the first eight years, having the sort of global ability to add and integrate all of the cultures that we have now in Asia, Europe and America has made the vision of CCP being a “Born Global” organization a reality.

DFC: Ever since the financial crisis hit Iceland, we’ve heard where CCP was considering leaving the country to work on new projects if conditions did not improve. What is the current situation?

Hilmar: CCP currently has no plans to move out of Iceland. While the financial crisis is hitting the world over, Iceland has had to resort to some drastic measures to dig itself out of the situation. But that hasn’t really affected CCP, per se. We’ve been remarkably fortunate to weather the storm so triumphantly – as EVE has broken its own records multiple times in 2009 already, we’ve been able to rely on the strength of our global company to endure the harsh times in the country of our headquarters. So no, we have made no specific plans to move CCP from Iceland – we’re Vikings and we’re used to a harsh climate.

DFC: One of the assets behind EVE is how involved CCP team members are in the ongoing operation of the game. Unfortunately, every few years there is another case of CCP staff being accused of using their position to gain in-game advantage for themselves or others. What kinds of oversight measures has CCP had to put into operation to allay the user community, and how successful have those measures been?

Hilmar: It is true there was a case of a CCP employee being caught with his hand in the cookie jar, as brought to light during a routine audit by our Internal Affairs division. Subsequently, we added the Council of Stellar Management and bolstered the power of IA, both in the hope of bringing our policies and procedures to a level of transparency that would earn back the trust CCP had worked so hard to establish with the EVE players. I think we now are in a position where the community is quite allied with CCP in our efforts and the CSM, as a democratically-elected body that helps us achieve our goals of openness, has been pivotal in this progression.

DFC: What is CCP’s take on the free-toplay, micro-transaction model? Is there anything in that model CCP would like to embrace, and if so, why?

Hilmar: CCP is of the opinion that the MMO industry, similar to the mobile phone industry, has to realize that customers want to choose how they pay for the service. We are seeing the mobile phone industry, which ultimately is a subscription-based industry like our own, embrace various enhancements to their business model. I think if you analyze micro-transaction/free-to-play business models, you can find subscription elements interspersed.

To cater to several “consumption styles”, we recently added an enhancement to EVE called employees into CCP that truly understand a Pilot License Extension (PLEX) which our core design philosophy and who can basically allows people to trade subscription time for in-game assets with another player. This allows for a little bit of free-to-play style on one end and a little bit of micro-transaction style on the other. PLEX has been our effort to introduce something that allows people to choose their business model rather than having it dictated to them by the company who makes the game they enjoy.

Certainly there are game designs that cater more to micro-transactions versus subscription models but ultimately the power lies with the consumer. It is the role of the company to provide payment options that the people want to use.

DFC: How is CCP involved in the Asian market today? What products do you have developing there, who are you partnering with, what are your goals?

Hilmar: In 2006, we established CCP Asia in Shanghai, China with the primary objective of learning. We want to truly understand the market and actively recruit Chinese help us to adapt that to the needs of the market in Asia overall and China specifically. Though we have yet to announce any specific products, we do have longterm goals for that market and you will hear from us in years for come what our endeavors there have yielded.

DFC: Is CCP in Latin America? If so, please tell us more about your efforts in this emerging market.

Hilmar: CCP is not specifically in Latin America, but EVE Online as a global product has people from all over subscribing to it. For example, we have a lot of people from Brazil that are playing EVE. We are currently at the grassroots level where people are coming to the game from their own interest and building strong communities around it. That’s often the start of much greater things. So even though we haven’t announced any structured plans to formally enter Latin America, we watch user trends carefully to evaluate that position on a continuing basis.

EVE Online Background
This enormous sci-fi world is a poster child of how MMOGs can put players in charge of a game world and still maintain a playable, expandable universe.

Description
The EVE Online is, unlike most of its rivals, one persistent universe rather than separate servers. A large part of the game revolves around building alliances with other players to trade goods, mine asteroids, manufacture goods, and fight other groups for control over the world’s resources and (star) bases. Its strong emphasis on trading facilitates non-combative game play and allows players to run a corporation instead. The game is truly notable for several reasons.

1. One server farm. The game runs entirely on a single server farm creating one gigantic universe in which all players interact (Most other games only support 2,000-5,000 concurrent users on any particular server or ‘shard.’). Until Red Moon Rising, CCP believed their technology could withstand “well over 30,000” concurrent users. The expansion strained the server farm, leading to the 2006 decision to upgrade the game’s architecture, which “doubled” server capacity, presumably to 60,000. In February 2009 EVE Online recorded 51,675 concurrent accounts logged on to the same server

2. No instances. The game does not use “instancing” at all, so that all 30,000

3. Player control. Unlike many game developers who aim to control player behavior, EVE Online has given incredible power to its users through their corporations, which are like supercharged guilds.

The game allows open PvP for further player control. Perhaps as a result, player-developer relations have been friendly, even during difficult times.

4. Digital download. The game’s main distribution channel is CCP Games website, where the game is available for direct download. The company advertises heavily on hobbyist MMOG websites.

5. Successful non-retail. The game has reached 150,000 subscribers paying the standard $15 subscription fee. This is a first for a non-retail distributed game.

EVE Online has proven its sustainability by growing from a small, but somewhat mediocre game with a hardcore base to a mature, well-regarded universe. In only a few years, the EVE Online has shed its buggy past as well as its early parent company Simon & Schuster Interactive (a wholly owned subsidiary of Viacom). After CCP purchased the rights back from Simon & Schuster Interactive in late 2003, it doubled subscriber numbers to 54,000 in only twelve months.

The game’s dedicated following may be a limited target market, but it is a loyal one. It has allowed the 115-person Icelandic developer to keep annual costs around $200,000.

All expansion packs are free, and the EVE Online Buddy Program allows full-subscription players to give out free 14-day trial accounts to their friends. Once the account is converted to a full-time subscription, the referrers are entered into a monthly prize raffle.

MMM Publishing runs a full-color print magazine, E-ON, devoted to EVE Online, which it distributes in over 70 countries. In 2006 CCP announced a merger with White Wolf Inc. A collectible card game called, also based on EVE Online, called Eve: The Second Genesis emerged from the marriage. Most recently, Steam has begun offering EVE Online, including the first 21 days free.

Nearly six years after launch, in March 2009, EVE Online finally received a full retail launch, handled by Atari. The game was launched at $34.95 and included two free months.

Outlook
Ongoing development, a unique universe and extensive player control make EVE Online’s constituency very loyal, and subscriber numbers are likely to remain stable. Efforts to increase the subscriber base, through discount offers, geographical expansion, and retail distribution should keep EVE Online healthy.