Thought Leaders in Online Gaming: Scott Hartsman, CEO of Trion Worlds (Part 7)

Sramana Mitra: How many games have been funded on the various crowdfunding platforms?

Scott Hartsman: I wish I knew the answer but I’m afraid I don’t.

Sramana Mitra: Is it hundreds or thousands of games?

Scott Hartsman: The order of magnitude, at this point, I would say is around hundreds. I would say there are hundreds of campaigns. I do not know how many of them actually have succeeded and got funding, and from there, turned into shipped products. One risk that everybody sees in crowdfunding in general is, even if the project gets funded, that doesn’t necessarily mean it’s going to ship. That’s where we are right now with crowdfunding. We’re on the second and third generation of crowd funded products and the world is beginning to realize that just because they get funded doesn’t necessarily mean they will make it out the door. It is gambling in a way.

Sramana Mitra: What is your assessment of the venture capital industry? The VCs got really excited with Zynga. I would say Trion was a big exception rather than the rule as far as venture funding is concerned. I don’t think that level of venture funding has gone into a gaming company in history, right?

Scott Hartsman: Very few.

Sramana Mitra: I don’t remember how much you raised, but it was upwards of $100 million, right?

Scott Hartsman: Yes.

Sramana Mitra: What is the current climate vis-à-vis gaming companies and the venture world?

Scott Hartsman: I’m sure you’ve seen the news around Zynga’s IPO and what happened with King Dot Com recently. Clearly, people are now realizing that a lot of the latest round of investments happened around mobile and tablet in particular. I think people realize that the gold rush was ending maybe a year or so ago. You’re seeing a lot fewer large investments, but you are still seeing lots of smaller investments.

Sramana Mitra: Does that investment take into account the fact that the PC gaming business is a much healthier business than mobile gaming? I think the VCs got carried away by mobile gaming. Has that corrected itself?

Scott Hartsman: You’re still seeing angels putting money into mobile companies. You’re not seeing much of that in PC games. For investment in PC games lately, what we’re seeing is more overseas companies trying to build from the ground up or invest in getting studios started. That’s companies like Nexon, Smilegate, and Perfect World. They’re all investing into PC studios here as developers have fallen out of major studios or have fallen out of mobile companies in the last two years.

Sramana Mitra: What about the publisher landscape? You guys are obviously operating not just as a developer of games, but also the publisher of games including third-party games. Who else is a major publisher other than Electronic Arts? What options do developers have other than coming to you?

Scott Hartsman: I look at it two ways. For the single-player mode, you have your EA, Ubisoft, and Activision. For online games, you have companies like us, Nexon, and Perfect World. That’s the division that we face.

Sramana Mitra: You categorize EA as single-player only. They’re not in multi-player at all.

Scott Hartsman: By what I know, they don’t do a lot of investing in outside studios. What I was talking about were people who are putting money into third-party partners.

Sramana Mitra: What else should I have asked you that I haven’t asked you?

Scott Hartsman: I think you asked me at greater depth more than I was ready for. I think the one question that you didn’t hit on is the current state of security on the Internet as it applies to online games. I do get pinged on that one every now and again. You’ve probably seen the latest reports about the hospital hack that’s reported by anybody who has been in a small country hospital for the last couple of years. Maintaining our security is another incredible focus for us and a way that we can also provide value to development partners. If they’re busy making a game, the last thing they want to be having to worry about is all of the security of their services.

The other big one would be, “What’s next for Trion?” We’ve a technology base. We’ve our own games that have succeeded on this base. With ArcheAge, we’re now proving that it really is something that can be extended to partners in a generic, reusable, and extensible way. What’s going to happen is we’re going to continue pushing the technology forward while continuing to develop our own AAA online games and continuing to expand out with new partners in the coming years.

Sramana Mitra: What’s interesting is the analogy with Pixar. This is a hits business. Pixar managed to roll out one hit after another leveraging technology, great story telling, and creativity in a business that has very little ability to predict what’s going to work. As I was listening to you, one thing that I found very compelling is the way you’re using your crowdfunding test mechanism to see if your concept is gelling with the potential audience, whether they’re going to put some money on it. That seems like a powerful way of testing ideas.

Scott Hartsman: I’m glad you think so. Very blunt, brutal, honest feedback has actually been a core tenet of our own internal culture the entire time I’ve been here. It’s definitely a lot of what got the company its first successes. What we really see going outside is just a way of getting even more of that blunt feedback into the process even sooner.

Sramana Mitra: What impresses me is that you’ve figured out a way of doing that at scale. You do have a large community around your platform. You’ve figured out a way to test concepts at scale before building them. That’s really powerful.

Scott Hartsman: Thank you. We totally agree. That is not a typical behavior of game companies. It’s a typical behavior of web companies.

Sramana Mitra: I could extrapolate further. As that becomes better formulated and better executed, you may be able to validate and finance entire games out of the gate instead of going out there blindfolded.

Scott Hartsman: I completely agree.

Sramana Mitra: Very nice. Thank your for your time. I really enjoyed talking to you and wish you all the best.

This segment is part 7 in the series : Thought Leaders in Online Gaming: Scott Hartsman, CEO of Trion Worlds
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