Ready? Here we go.
One of the fundamental rules of starting a large successful business is the idea of owning "a smaller piece of a bigger pie". I'm going to explain this idea in some detail because it's going to be an important pillar of a lot of the posts this week. If you're already familiar with the idea, you can skip ahead a couple of paragraphs.
Greed has killed far more companies than it has saved. When you have a really good idea for a product or a service, it's quite tempting to say "this is my idea, I own it, and I want to be paid millions of dollars for it." Paradoxically though, if you try to hold on to the idea too firmly and try to make money on it too forcefully, you will end up making no money at all. When you start a new business with a big new idea, that's all you have: the idea. That's what you have to go out and sell to potential investors and co-founders of your business. Invariably, those investors and co-founders are going to want to own a piece of your dream. The question that will eventually come up: how much of your dream do you give away so that your dream will become a profitable reality?
When you own the initial idea, you own 100% of a coin-sized pie. You want to grow that pie to the size of a dinner table. Greed will drive you to want to continue to own 100% of that table-sized pie. But if you try, you're going to have a hard time growing that pie beyond its original size. You may well end up at the end of the process continuing to own 100%... of a coin-sized pie. Hard as it may be to grasp, owning 10% of a table-sized pie is far preferable to that. You own a smaller piece of a bigger pie.
Arguably, no entrepreneur implemented this idea better than Bob Metcalfe, founder of 3Com Corporation. When Bob Metcalfe founded 3Com in 1979, he owned 100% of an idea: manufacture Ethernet cards. The idea in and of itself was worthless: Bob owned 100% of nothing. He and a partner recruited two co-workers from his previous company. Then he started seeking financing for his idea. Then he recruited a professional manager to run his company. By 1981, he owned 21% of a million dollar company. He continued to recruit smart people, parsing out small pieces of his dream to each new addition as his company grew. He got other people invested in his dream.
By 1990, Bob Metcalfe owned a few percent of a company worth hundreds of millions of dollars. He went from owning all of something worth nothing, to owning a tiny fraction of something worth a fortune.
When founding a business, it pays not to be too greedy. Since then, a lot of smart people have followed this model straight to enormous fame and riches. I'm sure you can think of a few examples.
What does all of this have to do with EVE? Maybe, not much. Maybe, everything. As I'm going to be talking about this week, with the slow collapse of World of Warcraft and with SW:TOR pretty much officially a fizzle, the MMO market is likely to become a lot more crowded in the next year or two with a lot more niche games. There's going to be a lot more room for success. There's going to be a lot more room for failure.
A month or so ago, the Forbes gaming industry writer published an interview that he conducted with Hilmar Pétursson. The interview has been passed around quite a bit. But there's a really intriguing part of it that seems to have been missed. We all know that that DUST 514 and EVE will be "connected" somehow, though we don't know exactly how. But that wasn't always the plan. In the interview, Hilmar says...
Initially we were not going to connect them. We were actually thinking about time shifting it so that DUST 514 would take place during a different time period in the EVE Universe. Yet that didn’t sound cool enough, so eventually we came to the idea of having EVE and DUST be two games in the same universe.And isn't that interesting.
Because just making another Team Fortress 2, or Global Agenda, or FireFall, or Tribes, strikes me as going for a pretty tiny piece of a fairly small pie. So for all of you out there that think CCP is going to be content with a DUST 514 isolated from EVE? Ain't gonna happen. CCP has already considered that, and rejected it. And it's a good thing they have because if they accepted that, then DUST 514 would have been a failure before it even came out. There's far too much competition in that space. By the end of 2012, "free-to-play" FPSMMOs are going to be a dime a dozen, and all of them are going to be looking to capitalize on micro-transactions. In that field, DUST will quickly get lost, particularly since it's launching as a console-only game.
But let's talk more about that tomorrow.
For now, the only choice DUST 514 has is to differentiate itself, and this is done partially through the EVE connection. But more importantly, by making the impact of the instant-on PvP also have a persistent impact on the game-world itself, CCP can make DUST 514 more meaningful and go for a larger piece of the MMO pie. It's the meta-game that makes EVE so popular, after all. As I've said before, CCP will be looking to catch lightning in a bottle twice by replicating that aspect into DUST. The more the fights have lasting meaning, the more likely that is to be successful.
The major thing CCP has on its side is time and patience. Those of you that are hoping for DUST 514 to fail often forget that EVE Online itself survived its first three years with only 100,000 paid subscriptions. It seems likely that DUST's business model will allow for the same slow, steady growth that EVE had. When David Reid was interviewed by Digital Spy earlier in the year, he said:
There's a risk of getting the economy wrong. The EVE Online economy has been built for years, and people have a pretty good sense of what it takes to earn an ISK, how much time you need to spend mining or trading in the game to make money.And that isn't the only danger. The space CCP is going for is not exactly devoid of competition either...
What could happen is somehow in Dust we do something wrong, and you can earn ISK at a faster pace and there's something unintended there and we accidentally have some hyperinflation in our economy.
Yeah, I'm getting too specific. I'll stop. Tomorrow, let's talk micro-transactions and how they're going to play into this new batch of MMOs. And how greed might kill them.