KibaBase

I promised I’ll answer shawn42’s challenge in the first mailbag edition that I will explain and outline a business model for the future, usually involving free software or copyfree software. As it turned out, I acutally did this already for Space Fighter Ace, an upcoming online shoot-em up game. Unfortunately the business plan for the Space Fighter Ace project is lost in the shuffle. So I am writing a business model plan, again.

Now let be clear here, I am not a successful businessman in the sense I started a startup and sold big. I only made about 120 US dollars in the span of two years. You can take this as “kiba’s interesting thought on business models”, but not as advice on how to run your game development studio. Got that? Ok.

First I got to outline a few simple principle.

The first principle is that you should try not to sell anything that is infinite and freely available. In other words, I wouldn’t try to sell something that can easily be downloaded for free. This rules out selling the games itself, for the most part. Unless I am social engineering something like asking fans to “name your price”.  So just give out all the games, wallpapers, and whatever else for free.

The second principle is that you should sell something that is valuable, but also relatively scarce. For example, oxygen may be very valuable, but it is so plentiful people don’t sell oxygen for breathing unless it is for a no-oxygen atmosophere. Anything that is scarce but also valuable is generally sellable to someone. Not everybody will buy or want a print poster or a beautifully decorated game box but there is always someone who want it. Examples also include gaming services and tech support. These services simply can’t be replicated by simply outsourcing it to some tech support company in India.
The third principle is no compromise. Don’t hide trade secrets(unless it is a secrets that customers want to stay hidden, like hidden prizes in MMORPGs) or force upon everybody or anybody with a NDA.(Non-disclosure agreements) You should compete everything on brand. If you’re good enough than you should be able to survive a thousand imitators. That mean no hiding source code, no copyright monopoly, nothing.

The fourth principle is to grow the company completely organically. That mean no venture capital funding or big fat advertising budget. Everything is done with the initial funding and grows through profit. The enterprise must be able to make money back from the get-go. That’s not including unmeasured opportunity cost and such. It just mean that the enterprise must generate profit using the small initial funding source. This principle is more of a preference than anything else. If you want to get funding so you get a couple of hackers from the start, do so.

In light of Subspace Continuum, my direct competitor and inspiration, it seem that at the default, the servers people play on and the games are for free. A survey outside a little bit of Space Fighter Ace’s genre into FPS probably yield that the servers people play on is for free. However, the game are mostly must be brought or pirated. Since this violate principle number one, we can ignore that details. This indicate multiplayer gaming services, despite their relative scarcity, are often free. This is different compared to MMORPGs, in which services are not often free. Because they are persistent worlds, it is required that their gaming world is maintained constantly. This is something which required lot of manpower. The services that they charge is much more than simply a place to play. It is also important that the server administrators or game masters to maintain a friendly atmosphere, as well keep the server stable, in addition to keeping the server up to date.

So what is Space Fighter Ace’s design? Well like, subspace continuum, it is a game in which players fly in 2D environment with realistic physics and shooting each other out of the sky. It is a game that is decisively massive multiplayer. The plan I believed was to have about 24 players at the end of this year. However, I’ll probably expand it to larger scale with much more complex flight tactics and actual combat objectives. Thinks 200 players taking part in full scale carrier battles much like the battle of midway in WWII. This, I believe will push the resource of dedicated server. It also mean that the incentive for players to pay for such a dedicated environment also goes up higher.

However, the design of space fighter ace gaming network is not of a closed nature. You see, I have disadvantages since I don’t control the supply of servers. Even so, I do have control over the metaserver. First mover advantage will naturally dictate that people will flock to the only metaserver for a while and make such metaservers valuable. By the time imitators and competitors established their presence, this is a non-issue. I still do not felt safe with this first mover advantages. With every bit of my gaming network, down to the client, the metaserver, and server, are open, I am easily replicable. Branding will count for a large part of my competitive advantage, but it will only be one weapon in my arsenal.

I could charge for servers after a few trial days on playing. However, I felt this will stunt my growth and give my competitors more leeways. They can offer the server for free and take everybody away from my game. To counter this, the metaserver will have an open policy. The servers that were not part of my gaming network can be listed on the metaserver. These servers are fully private and are not controlled by me. So owners on these servers can do whatever they want. It will be much like nexuiz, bzflags, and other network.

So how will I actually differentiate the paying server from a free one? First of all, I have a dedicated server in which everybody can play on, but spaces reserved for paying customers. So if a server was full, the paying customer can boot a player from the game so he have a seat to play on. Also, the environment is moderated to maintain a pleasant atmosphere. Players are also tracked on a game ladder. Private servers might use something else to track players but they won’t have the benefit of bngei registered on the official network.

As a bonus, paying players will get tech support and development preferences over freeloaders by developers(me).

However, I probably won’t have the resource to have hundred of servers. To solve this, I can license servers for a certain fee every year to be part of the official gaming network. They only have to meet certain requirement. First, their server must have 99.9% uptime, excluding when they’re upgrading the software.  They must also have testimony from paying players who ventured on private servers to learn how pleasant and fun the server is.

After they entered the services, they will get the privilege of having players tracked on the official game ladder but they also must offer the same kind of deal to paying customers. They no longer have the power to kick  anybody for any reason.

In return, they received priority tech support and preference in development. They also get a share of the revenues from paying players for how long a player play on their server. This give incentive for server owners to attract players to their gaming server for profit and to cover the fee of being licensed. Revenues is spilt 50% based on each player’s subscription fee. Players who play on my own server will mean I naturally get more than 50% of the revenues. This give them incentive to be continued to be part of the official gaming network.

However, my server business model idea would actually be one of the later services I would charge for. Instead, I would actually implement other revenue source in order of ease. The server business model much harder because I have to keep track of customers in addition to who are licensed.

In the beginning, I would offset some of the cost of running a website and a gaming server by selling advertising, in keeping with principle 4. It would be very easy to cover the cost of the website since the domain name is minimal and I can just use my existing hosting plan. As for a dedicated gaming server, that is a different matter. It will probably cost me 20 dollars a month. Unless I asked for donation to keep it running, it is likely that I will run out of money. This mean I should at least have a large reserve fund or make it up through profit on other sites. If the game rose enough in popularity, it is probably likely that I could afford to run the dedicated game server from the game’s website alone.

As the game grows in popularity, I will probably add a game store for those who want to buy t-shirts. I’ll choose a middleman who will spare me the risk of purchasing and keeping inventories. In due time, I will expand the range of product offering to include decorated game box, usb sticks, and other merchandises. If I make a lot of money, it will become clear that I can move out of the middleman’s store and start my own. Likely, it will mean a lot more work but I will have a higher profit margin. If the profit margin is high enough, I can just hire somebody to do the packaging and shipping. As the gaming service  roll out, I can tie special bonus to the gaming service like making speciality items or one-off items for players who are of considerable skills sometime as a gift or something players earn the right to purchase. Paying players will automatically get additional discounts on top of whatever discounts they applied for.

The last tier and possibly the most difficult business model is LAN party. Basically, I would sell tickets for those who want to play in a LAN party. The computers and the gaming server will be provided. There will be available food. Of course, paying customers will also get a discount. This will be a very costly enterprise, but it could also mean a lot of money. I can also splices it up to make it more attractive. For example, a junk food buffet will be provided. Gaming tournament will have a prize at the end. I could also offset my cost by offering by having sponsors or advertisers. For the LAN party to be possible, there must be a lot of players around the globe so that I won’t be serving an empty market.

If there are more business model I could implement, I’ll be glad to try them as long as it complement my existing business models and doesn’t violate existing principles.

In conclusion, I think it is safe to say there are probably a lot of business models in a post-copyright world. One simply must have the imagination to think of them and the drive to execute them, as well try different things if a business model doesn’t do well. Some business models might be inappropriate for some genre and some will work well for other genres.

I think  I fully answered Shawn42’s challenge. I must say it is not much of a challenge at all.

Happy hacking.

~Kiba

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