EA Mythic: Activision Estimate That It Takes $1 Billion To Compete With ‘World Of Warcraft’ Is Overblown

Mythic VP and lead “Warhammer Online” designer Mark Jacobs said it wouldn’t take a billion dollars for a competing MMO to take on “World of Warcraft” — maybe only $100 million.

“When certain people throw out ridiculous numbers, you know they’re throwing out ridiculous numbers because they want to scare off competition or they want to make themselves seem invincible and that sort of nonsense,” he said, referring to a statement Activision Blizzard CEO Bobby Kotick made at an investor meeting earlier this year.

“Realistically, if you’re going into this space for the first time, and you want to compete with ’WoW’ and you want to compete with us — because we’re going into that same space — you’ve got to make sure that you have at least 100 million dollars,” he said.

When I sat down with Jacobs last week during a demo of the game, we talked about what makes an MMO successful. Having worked in the industry creating MUDs in the ’80s, online games in the ’90s, and Mythic’s biggest hit “Dark Age of Camelot” in 2001, he had some advice for those wanting to make it in the MMO business.

So why is $100 million the magic number?

“The reason [you need $100 million] is that no real first-timer has ever succeeded with these games,” he said. “And when I mean succeeded, no first-timer has gone in and said, ’Okay, I can do this in two or three years and actually do it where it comes out on time and on budget. So it is really tough.”

“When you’re competing with ’WoW,’ you’re not competing with ’WoW’ at launch. You’re competing with ’WoW’ in 2008 or 2009 with all the additional content.”

Jacobs said part of problem with competing against “WoW” is that the game has a head start on content with all its expansion packs. “[Blizzard president] Mike Morhaime said when you’re competing with ’WoW,’ you’re not competing with ’WoW’ at launch,” Jacobs explained. “You’re competing with ’WoW’ in 2008 or 2009 with all the additional content. That is absolutely true. That’s what we did with ’Camelot,’ that’s what Sony did with ’EverQuest’ and that’s what we’re going to do with ’Warhammer.’ So it will get more and more difficult every year for somebody to come in and compete with whoever the leaders are.”

He also told me that it takes three to four years to create an MMO, and that $100 million is needed not just for development of a market-competitive title, but also for a safety net.”If you don’t want to compete with these games, then certainly you could do it for less,” he said. “It’s 100 million if they want to be sure that when they mess up, that they have the money to recover,” he clarified. “A lot of start-ups fail because they run out of money. It’s not because they don’t work hard; it’s like ’Oops, it took an extra year or two, now what do we do?’ If you look at the history of successful MMOs every one of them, except for ’Camelot,’ took longer than was expected.”

“When you have an experienced team with great tech who’s done this before, how much harder is that for somebody who’s never done it?”

I asked if Mythic’s parent company EA spent $100 million on “Warhammer Online.” “No, but you look at what we did spend, it was lot of money,” he said. Jacobs would only tell me that they’ve spent south of $100 million on “Warhammer Online,” and that’s because he and his team have the experience and the technology behind the game. “We are one of the most experienced MMO teams in the industry, and we had to delay the game obviously more than once,” he said. “And if we had that happen, when you have an experienced team with great tech who’s done this before, how much harder is that for somebody who’s never done it? No matter how talented the team is, they’re going to make mistakes.”

With EA and the resources backing “Warhammer Online,” I asked Jacobs how one would measure a successful MMO in the age of “WoW” with its 11 million worldwide subscribers. “I would say we don’t have to get anywhere near that number to be considered successful,” he said. “Would I like us to be number one? Well, of course. Do we have to be number one to be successful? No. I want us to be no less than number two; that would make me very happy.” For the number two spot, Jacobs reasoned that “Warhammer” would need at least a half-million subscribers, which he guessed was close to what “Final Fantasy” and “EverQuest 2” have now. “Let’s just say north of half a million would mean we’re successful. Now how a far north? I wouldn’t mind being a little bit cold.”

“Look at us six months out. Look at us six weeks out. If we’re not adding servers, we’re not doing well.”

According to Jacobs, another way to measure success is to look at the number of servers a game has added in a six-month period. “The corollary to that is if you’ve seen a game consolidate servers, you know it’s in deep, deep trouble — that’s not a healthy sign for an MMO,” he said, citing Sony’s January-released “Pirates of the Burning Sea” as a recent example. “It will be the same for ’Warhammer.’ Look at us six months out. Look at us six weeks out. If we’re not adding servers, we’re not doing well.”

But ultimately, Jacobs said they can’t worry too much about the competition. “Activision Blizzard, it’s just another company with just another game,” he said. “It’s a big game, it’s a great game that’s made a lot of money and made people very happy but it’s just somebody else to compete with. It doesn’t phase us; we’ll do what we need to do.”

Check back later for more with my interview with Jacobs.

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