Thought Leaders in Online Gaming: Scott Hartsman, CEO of Trion Worlds (Part 6)

Sramana Mitra: You’ve said several times that one of the organizing principles of your portfolio is that you want the business model to be fair for the customer. Can you talk about this a bit? You are coming from where the customer will subscribe into your games and you started monetizing right away. Now the world has moved to free-to-play, you don’t monetize games right away. It has a gestation period and you start monetizing later. How do you determine what is fair? How long does it take to reach the level of monetization that you were earlier monetizing at? What are the economics of the business now?

Scott Hartsman: Let me start out with the highest philosophical point. Here’s how I think of things in terms of fair and how we think about them internally as a whole. There are two ways to think about the psychology of sales in free-to-play games. Number one is when I pay for a thing, I get a thing that I genuinely value and that I’m happy for. The other type of sale is people paying to make the hurting stop. It’s a darker pattern of psychology and that’s one that we actively try to avoid. When people complain about the free-to-play model, they’re not complaining about free-to-play, what they’re complaining about are the types of games that use that darker model, which unfortunately has been driving the majority of free-to-play games for quite some time.

We are avoiding that model entirely. We believe that that also helps our retention. Our games succeed more since users interact directly with each other. More users online, equals more fun. Therefore, our customers and we benefit when they are playing for more time overall. We want them to stick around even if we’re not asking them for every single penny every time we potentially could. We do end up seeing the net benefit of that over time. A lot of the time what will happen is a player would come online, and a small number will monetize right away. More will monetize within five days if they stick around. Then if they stick around for a couple of weeks, the chances of monetization go up even further.

One other thing that we do to mitigate the need for monetization of every user is we also let users buy gifts directly for other users. We have the concept of premium time. We call them patrons. It’s like an optional subscription where people can pay for subscription for additional benefits. They can buy those as virtual goods and buy a token that represents time to gift to a friend. So a friend who truly wants to remain free forever can get all the advantages. As long as somebody is paying for it, we’re good either way.

Sramana Mitra: What is the lifetime value of a customer?

Scott Hartsman: It changes game to game. I don’t have the stats in front of me.

Sramana Mitra: Is the free­-to-play model comparable to the subscription model?

Scott Hartsman: It’s actually greater. On average, it’s about three times greater for us.

Sramana Mitra: How much does it take for the free-to-play model to start generating substantial revenue?

Scott Hartsman: There’s a couple of different ways to handle it, because there’s a bunch of different sub-models. I’ll give you two examples that we work with a lot. One of them is the almost crowdfunding model, which we’re using on Trove. Trove is one of our internally developed games where we took the game out to the public almost at the concept stage when only one core feature was developed. What we did right away was put it out there for customer support and give them deals on what we were calling support packs where you could kick in at different tiers of support. You could get rewards for that right away. Then stay in touch with the development team and support the game early that way. Then, the game ramped up over time as it became technically capable of handling more users.

Sramana Mitra: How many people did you get to support you on Kickstarter on Trove?

Scott Hartsman: It wasn’t on Kickstarter. It was on our own platform actually. I can tell you that from sign-ups to actual monetary supporters, it has been over 200,000 players.

Sramana Mitra: That’s very interesting because now you’re applying the crowdfunding model to do customer research as well as financing some of these games from the potential customer base. That gives you a lot of leverage.

Scott Hartsman: That is dead-on correct. That’s half the reason why I was excited about the crowdfunding model. As weird as it sounds for a CEO to say this, for me it wasn’t about the money. For me, it was about the validation. It’s all well and good for somebody to tell you, “I’ll play that game when it comes out.” It’s a different thing to get them to kick-in $20.

Sramana Mitra: You are a heavily venture-funded company that allowed you to launch several games, build a big following, and have huge amounts of revenues. You can dismiss the idea of the crowdfunding campaign generating a bunch of money up front. For people who are starting out, it’s a very big deal.

Scott Hartsman: It is. Even for them though, the benefit that it buys them is, it is better for them to realize that they have problems with their games.

Sramana Mitra: What I was commenting on was beyond validation, the cash part also allows a lot of people to bootstrap their games and get them off the ground

Scott Hartsman: That’s exactly right. That’s one of the reasons that you start seeing so many new games coming out of nowhere. Ten years ago, it would have been next to impossible for a gentleman in Kentucky to put a small studio together and begin commercially shipping games. Thanks to Kickstarter, that’s what we’re seeing right now. If he can stir up enough interest in Kickstarter, he can build his own studio and ship his third game this year.

This segment is part 6 in the series : Thought Leaders in Online Gaming: Scott Hartsman, CEO of Trion Worlds
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