Summary
This article highlights the maturation of virtual worlds and online games as mass-market entertainment via the appeal of existing properties, as shown by Gazillion’s long-term agreement with Marvel and other IP holders. It also reveals the importance of increasing acquisitions in this space, with smaller studios combining or being bought to form more viable ventures, and the need for strong creative and production teams that can think beyond the existing forms of virtual world and MMOG creation. Virtual worlds and MMOGs have an extremely bright if still risky future, and are set for resurgence after a few years of stumbling in trying to duplicate the commercial success of World of Warcraft or chase the media success of Second Life.
Analysis
Gazillion Entertainment has captured headlines by inking a long-term deal with Marvel for creating online games based on Marvel's characters. Gazillion also has other IP-related agreements, such as LEGO World. The company acquired online developer NetDevil last year and has quietly acquired other small studios to build up to their current 300-strong team.
This is not the first agreement to produce online games (massively multiplayer online games -- MMOGs -- or virtual worlds, which are becoming increasingly synonymous) based on mass-market properties, but it is notable in its breadth and term: apparently all of Marvel's 5000+ characters are included, and for a span of ten years. Successful MMOGs typically take 2-3 years to produce, so there is some room for a running start there, and historically these products have retained strong revenue for between five and ten years, making a long-term agreement like this sensible.
This agreement is also notable in that Marvel has tried this sector of gaming twice before unsuccessfully, but apparently believes sufficiently in the commercial potential of online games to try it again. Beyond Marvel, other existing entertainment IP agreements have been floated with only moderate success by current market standards (e.g., Star Wars Galaxies, an early MMOG that has remained active while being fraught with problems), and many others (e.g. Star Trek Online) have yet to come to market.
Existing entertainment properties are attractive to many developers and investors because they come with a built-in fan-base. One major risk -- will people enjoy the world being created? -- seems to be taken off the table relative to untried world concepts. However, the reality is that converting an existing book, TV, or movie property into an online game is even a larger leap than is turning a book into a movie. The consumer's experience of being in an online world is unparalleled in any other form of media, which creates new issues and potential hazards in bringing out a world based on an existing property. In Marvel's case, the question is whether millions of people who enjoy their comic books and movies will enjoy not just watching superheroes, but being a superhero.
The leap needed in the psychology of the consumer in going from viewer to participant should not be underestimated. Coupled with the costs and risks inherent in developing MMOGs, plus the costs of using a licensed property, significant risks in developing MMOGs remain. However, as the success of World of Warcraft among others has shown, an online world that does manage to capture the imagination of millions of participants can create billions of dollars in revenue with an ample operating margin.
Overall, this announcement is a sign of the increasing maturity and mass-market acceptance of MMOGs and virtual worlds. This sector has stumbled in the past few years as many developers and investors have tried to duplicate the commercial success of game worlds like World of Warcraft or duplicate the media success of social worlds like Second Life.
If Gazillion follows that model -- the existing model of MMOG design and development -- then they will have a hard road ahead. They have seen this already in the commercial failure of Auto Assault and Jumpgate, two games by Net Devil whom the company acquired last year. On the other hand if Gazillion uses the Marvel licenses carefully and crafts new virtual worlds that are engaging to a mass audience, then the games that come from this agreement could easily form a central tent pole in a fast-expanding and highly profitable business.
For the MMOG sector overall this agreement is a positive sign, and hopefully will lead to greater investment in next-generation worlds embodying both new and existing media properties. The development of these worlds remains risky due to the combination of creative, technical, and business issues involved. Nevertheless, the potential for mass appeal, multiple revenue streams, and long-term consumer engagement puts online worlds in the position of being a strong (and nearly recession-proof) business that is rapidly gaining broad market acceptance.
