Games as the Real Social Software

As I mentioned in my earlier post, I’ve started actively playing World of Warcraft (WoW), a massively-multiplayer online game (MMOG). It has been a rewarding experience, going far beyond the entertainment value.

Now, I’m not kidding myself. I play Warcraft because it’s fun. It’s taking time away from watching TV, reading books, and other entertainment pursuits. But I’m also playing because I believe MMOGs will be one of the primary forms of social software for the next decade. Defined broadly, they may become the dominant form of social software. And you can’t understand games without experiencing them first-hand.

World of Warcraft, the first break-out MMOG in the West, has over 5 million paying members. (That’s $50 for the game, plus $10-$15 per month, for a revenue run-rate well over half a billion dollars annually.) And that’s nothing compared to Asia, where one game, Lineage, counts 1/12 of all South Koreans as paying users. In other words, MMOGs are at least as big a phenomenon, in terms of real usage, as the Internet was when I first started using it in the early 1990s.

Like the early Internet, MMOGs are dismissed, not inaccurately, as the pursuit of a narrow sub-segment of the population. While it’s fair to assume MMOGs will never be adopted as broadly as the Net — they are, after all, games — I see no reason for them to become at least as significant a part of our culture as other major entertainment forms like movies. Particularly significant in this regard is the growth of “social” MMOGs like Second Life and Habbo Hotel, in which hanging out, rather than killing monsters, is the primary objective. Those games will skew to a different demographic than the “sword and sorcery” MMOGs. And even though development costs for a top-flight MMOG are roughly $30 million, the economic potential is so great that I expect a wide range of sophisticated options coming on the market in the next few years.

As an observer of technology trends, though, what gets me excited about MMOGs is the way they represent the embodiment of so many things I’m following. An MMOG is dependent on the collaborative activity of its participants. It’s the epitome of software for groups. In WoW, for example, I’m part of two “guilds” of 20-50 players. One of them, “We Know,” was started by my friend and inveterate tech connector, Joi Ito. It recently got some press. We Know is filled with Internet entrepreneurs, including Ross Mayfield, CEO of Socialtext, a wiki company for which I’m an advisory . The other guild is very different — it’s composed primarily of academics and other thinkers who study and write about virtual worlds. (The irony of playing a game with people who study games professionally isn’t lost on me….)

Joining a guild transforms the experience of playing a game like WoW. The guild becomes the reference point for your in-game experience, and group activities — planning raids, exchanging information, sharing resources, chatting — become as much a focal point as the content created by the game developers. Within WoW, there are various mechanisms for group interaction, including chat. Outside the game itself, both of my guilds use various social software tools, such as Wikis, email lists, and group collaboration hubs, to coordinate their activities. All if this stuff is pretty rudimentary for where it needs to go. What the game does is provide an incentive for people to develop new software and ideas for collaborative production. Many of those ideas will translate to other group activities, including those within the business world. I think MMOGs will be, at a minimum, a significant testbed for these new technologies, because users see a direct benefit and are willing to experiment with new things.

Another fascinating aspect of MMOGs is the economic activity developing around them. Already, there is a market of several hundred million dollars annually for buying and selling virtual objects (gold, weapons, etc.) to use in games like WoW and Everquest. That’s only going to grow and become more sophisticated. Companies like IGE have build significant businesses facilitating such trades, even if many gamers object to the “farming” used to build up in-game wealth for later sale. Much of the farming is apparently done by people in low-wage countries like China. My Wharton colleague Dan Hunter (who, unlike me, is a real expert on this stuff), calls these new work systems for virtual asset trading an example of the globalization of services. It’s the same pattern that caused semiconductor production to move from the US to places like China and Taiwan, only now we’re talking about the intellectual assets where the West is supposed to retain an advantage.

Finally (for this post!), MMOGs are pushing the limits of technology. WoW is a “sharded” world, meaning that you can only interact with other players on your server. Each server has an identical copy of the world, and can support around 10,000 simultaneous players. (With over 5 million registered users, there are several hundred WoW servers worldwide.) That’s less than ideal, because it means you can’t play with people on a different server, and because as servers get close to the limit, performance slows down. New technologies based on grid computing proimise to overcome some of these limitations, although they have been promising that for a few years already. Scaling virtual worlds is a truly hard problem, especially as these worlds become larger and richer, and incorporate audio and video as well as rendered graphics.

What I come to, though, is the fact that you just have to play to understand. There are those who can read about Skype’s millions of users, and those who “get” Skype because they use it. And there are those who scratch their heads at MySpace generating more pageviews each month than Google, and those who grok the way today’s young people interact. WoW and MMOGs generally are the same thing. It’s sort of like what I felt about 15 years ago, when I was actively using proprietary online services and starting to dicover the Internet. A few yearss after that, I remember how excited I was when I first saw a URL on a billboard — it meant the Internet was something mainstream companies thought mainstream users understood. I’m eagerly awaiting that transition for virtual worlds.

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