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May 13, 2024 43 mins

Recently, Microsoft shut down four video game studios. The industry as a whole has seen major disruption this year. And some worry that a shift toward live service games could be a big part of the problem. What's going on? Part one of two!

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Episode Transcript

Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Welcome to Tech Stuff, a production from iHeartRadio. Hey thereon
Welcome to Tech Stuff. I'm your host, Jonathan Strickland. I'm
an executive producer with iHeart Podcasts and how the tech
are you? You know, it's a tough time to work
in the tech industry, unless, of course, you're an executive,

in which case you probably can't hear how tough it
is because of the sound of huge bags of money
hitting your desk. It's drowning everything else out socept maybe
the demands of your shareholders. But if you're not some
suit who is laying waste to the ranks of your
staff in an effort to secure payouts to the folks
who hold stocks in your company plus a hefty compensation

package for yourself, times are pretty scary. Now. That's true
across multiple industries. But today I want to talk a
bit about the video games sector in particular. Idea came
to me when I heard about Microsoft, which is a
three trillion dollar company, and how it was shutting down

several notable video game studios, which included some that are
known for a pretty wide spectrum of games. And some
of those games, yes, were clunkers. They performed less well
than expected in the market. Games like Redfall, which came
from R. Kane Austin. That's a notable example of a
game that was met with a fairly lukewarm reception. R

Kane Austin would find itself as one of the studios
that got shut down by Microsoft recently. And to be
fair to R. Kane Austin, my understanding is that Redfall
was a project that had a lot of shifting priorities
that were placed upon the development team. So I'm not
laying blame here. I think the Redfall was a pretty

complicated story. I'm not sure that what came out of
that project was the same thing as what people were
hoping for when they first started it. Anyway, those cuts
that Microsoft made, they also included studios that have produced
games that got a lot of recent critical acclaim. Tango
GameWorks is one of those studios. I mean it developed

a game called Hi Fi Rush last year, which released
to no real announcement, like it was a surprise release,
and people really clicked with that game, sometimes literally because
it's a rhythm based game. That was an unexpected pun
from me. Now, these cuts are really rough, and the
first thing I really want to say is that I

hope all the people who have been affected by those
cuts are able to land on their feet. Because it's
a really tough world out there for game development, particularly
among the big studios, which we've seen a lot of
big companies make some drastic cutbacks. I hope those who
perhaps have found themselves out of employment are able to

land a really rewarding gig soon, both professionally rewarding and
personally rewarding. But today I wanted to talk about what
might be behind Microsoft's strategy, at least to an extent. Now,
I want to preface this by saying I don't have
any special insight. It's not like I was brought into

the boardroom to talk about these things. The impressions I
get are similar to those proposed by other outside observers,
so I'm not also saying that I have a unique
perspective on this. By far is not unique. If you
do a search online, you will find countless articles and
videos of people giving their take on what's going on

in the industry. But by looking at Microsoft's recent moves,
I think I can make some general guesses. So, for
one thing, after many months of trying to close a
truly massive deal, while regulators around the world were raising
concerns about it. Microsoft finally acquired another enormous game studio
called Activision Blizzard, and that was for sixty eight point

seven billion with a B dollars. Now, it's not unusual
to see layoffs in the wake of a large acquisition
or merger because typically you do have overlap between the
two entities, right, and you say, well, why do we
want these these roles duplicated. That's bloat, that's unnecessary. So

we do need to make some hard choices in order
to run an efficient operation. That stinks for the people
who are affected. But from a business perspective, you can
understand that that there's no need to employ twice as
many people that are needed to do a specific task. However,
these studios that Microsoft just recently shut down were their

own individual organizations. They were not part of some heterogeneous whole.
It's not like Microsoft has one truly enormous room just
filled with video game developers who are all working on stuff.
These are largely separate and semi autonomous game studios. They
just have Microsoft as sort of their parent company umbrella.

So one possible reason for these shutdowns is that Microsoft
just needed to make some cutbacks to decrease the impact
of this incredibly large transaction they made to acquire Activision Blizzard,
and so like they like, well, we bought it, we
got what we said we wanted, but now we need
to cut back so that it doesn't have as large

an impact on our balance sheet at the end of
the year. I'm guessing another reason is that Microsoft is
pushing toward a game model that has become increasingly popular
because of its ability to continue to generate revenue after
a game is released, and that's the games as a
service approach, and more specifically live service games, which you

could argue is like a subcategory of games as a service. Now,
the as a service model is one that's really taken
hold of tech in general, not just the games industry,
and that has both good and bad consequences as a result.
I am not going to make a blanket statement and
say that all games as a service or live service

games are bad. I don't feel that way, but I
will say that a lot of the elements of games
as a service have had a disruptive and from at
least some points of view, harmful impact on the industry.
As a whole. Now as a service model has been
used for lots of stuff. You have security as a service,
computing as a service, storage as a service. The list

goes on and on, and essentially all of these boil
down to a provider company offering certain services over the
Internet so that the customer doesn't have to run stuff
on their own hardware, so instead the customer uses their
hardware to access this online service over the Internet. That
can be a huge help if you are launching a

startup and it's an Internet based business, using some as
a service stuff can really help you meet customer and
partner expectations. But you don't have to take on the
expense and effort of building everything from scratch on your
own premises, so there is a benefit to this approach.
With games, things can be a little bit different. Games

as a service or live service games are ones that
have a long tail revenue opportunity. The game itself might
cost money upfront, or it could be a free to
play title where gamers don't have to spend any money
to access the game initially. A lot of mobile games
fall into this category, where downloading the game is free,

but players are given incentives to spend money on the
game in return for some sort of in game benefit
or cosmetic option. Often those games could also be supported
by advertising. That's pretty typical in a lot of these
games where ads will pop up. We've also heard recently
that some Triple A studios have been talking about putting
ads into games, and that again is not a new thing.

It's happened in the past, often to disastrous results because
generally speaking, gamers are not a big fan of that.
But we're hearing Triple A studios talk about that again
as a way to continually generate revenue off of a sale,
So again it's another potential revenue changing strategy for games.

For some games, players actually see a benefit in this
arrangement in that the developer will occasionally release new content
and expand the game itself in some way. So there's
an incentive to be part of this long tail revenue
generation system because the game continues to generate value and

you're not just playing the same thing perpetual. The method
of extending revenue generation does vary. It could be a
subscription service. It might be pay for content where you've
got pay walls that block certain types of content and
you can't access it until you have paid. There are
even games that kind of get the derisive label of

pay to win. Generally speaking, that particular strategy, it's not
looked upon favorably by most of the people in the
gaming audience. Pay to win essentially just means that you
get access to things in the game that give you
an advantage over other players, and it's typically something that
you would hear about in player versus player type games.

You know you're going up against other humans and you
have paid for advantages that can help offset any imbalance
and skill you might have against other players. Generally speaking,
people hate that, but there are a lot of different options.
But the idea itself is not new at all. It's
almost as old as video games themselves are. In fact,

you could argue that the arcade machine model, which predates
the home video game, that kind of falls in line
with games as a service. Right, whether you're traditional arcade machine,
you pay to play, and when your play session is
over because you know, a ghost gobbled your pacmand three times,
or you missed one too many centipedes or whatever, you

got to cough up another quarter, or you got to
move along. But while that model would work for companies
that made arcade cabinets, or, to be more accurate, it
actually worked for arcade owners who would typically purchase an
arcade cabinet and then use that cabinet to generate revenue,
with the obvious goal meaning being that you know, you
make more in quarters than you paid for the machine,

and it would just take a certain amount of time.
While that same model would prove a little more elusive
for the home market. Initially, the way the home video
game market would work is that a video game development
company would create a game and then either it would
publish that game, or it would work with a third
party publisher to do so, to actually manufacture the game

and package it and market it and ship it to
retailers and then hope that the game sells really well.
I'm not going to dive further into that business model.
There is more to it than that. It's a little
more complicated, but that's the basic idea. But the important
thing with that business model is that we're really just
talking about individual transactions. Right. That happened one time someone

a customer comes up and buys a copy of the game,
and that sale is the one and only transaction between
the gamer and the retailer and represents the one purchase
that matters to the video game developer. Now, that gamer
might later choose to give their copy of the game
away to somebody, or to sell it, you know, used

to someone else, or to trade it into a retailer
for credit, and the credit would just be a you know,
a percentage of what the original value of the game
used to be, and then the retailer would go around
and sell it for more than that because that's how
you make money as a retailer, But the video game
developer and publisher wouldn't see any of that money in

those transactions, right. The aftermarket leaves those companies out, so
they only get a slice when it's a sale of
a new copy of their game to someone. And eliminating
the aftermarket was really something that was pretty enticing to
video game companies from the get go. Like it's largely
been done now because digital distribution is largely the way

that games are distributed these days. There aren't that many
versions of games where you're going out and buying a
physical copy anymore. Heck, a lot of computer systems don't
even have optical drives, so there's like no physical medium
you would purchase in order to play on your PC.
There are exceptions, obviously, there are games where you can

still buy on cartridge based systems and such, but largely
we're talking about digital downloads these days. That has really
cut into the aftermarket, but that's fairly recent. Way back
in the early eighties, there were already efforts to figure
out ways to kind of eliminate the aftermarket, because it

sure would be better for these companies if they could
convince folks to only buy new copies of the game
instead of going and purchasing a used copy at like
a flea market or a retailer or something. And it
would take some time to essentially achieve that goal, but
there were some early attempts. One of those had its

birth way back in the late nineteen seventies, although it
would not debut until the nineteen eighties, and it would
involve a home video game console called the in television.
I'll talk more about that, but first let's take a
quick break to thank our sponsors. Before the break, I

mentioned the Intellivision, a home game console. I actually had
an intelevision, although the one I had I inherited from
a cousin who had just sort of, you know, was
going off to college and had given it up. So
my Intellivision was not a brand new one. It was
already an obsolete console at that point. But I did

have probably a couple dozen games, as I recall, although
the intelevision controller was like almost like a remote control,
and you would have overlays you could slip into it
that matched the games that you played. I remember distinctly
that I had overlays for cartridges I did not own,
and vice versa. I had cartridges where there was no overlay,

and I would have to use trial and error to
figure out what the the different buttons did in that
particular game. Anyway, the Intellvision was a cartridge based game system,
so you would typically go to your local toy store
or electronics store whatever you and you go and purchase
a new game. Now, back then cartridges cost about thirty dollars,
but that's in nineteen eighty dollars, so if we adjust

for inflation, that's around one hundred and fifteen bucks today.
So just in case you thought video games are too
expensive these days, you know, some Triple A titles start
off at seventy dollars a pop. And then go up
from there if you want a special edition. Just know
that video games have always been expensive, it's just that
a dollar doesn't go as far as it used to anyway.

The folks that in television came up with a pretty
clever idea. Why not create an add on in which
players could subscribe to an ongoing service provided by a
local cable TV company so the players could end up
accessing encoded games in television would encode the games using

the FM band frequencies and send those frequencies over cable
lines because the frequencies wouldn't interfere with all the other
stuff that was traveling over cable. The players would be
able to connect their intelevision systems up to their cable
service using a special adapter. The plug right into the
cartridge slot of the Intellvision, so it was like it

was an oversized game cartridge with wire that could attach
to your cable and to access a game using the service,
the player would turn their television to a particular channel.
This would only be available in around a dozen cities
in the United States, but they could choose from different
video game titles that would switch out each month, So

typically there was somewhere between fifteen and twenty games on
this I saw different versions of that depending on the source,
and I didn't have access to this when I had
in television, so I don't really have direct experience with it.
The idea was that you could choose a game available
on this service and it would tell the terminal to

accept the game code the next time the cable channel
transmitted that specific game, so the channel was constantly transmitting code,
your terminal just didn't pick it up because the terminal
was only waiting for a specific signal based upon whichever
game you wanted to play. And once that transmission started,
the terminal would say all right and would download that

code into memory on the adapter, and that's where it
would live. And it was just in memory, volatile memory,
so once it shut off or once you wanted to
play a different game, that information would get whited. So
you wouldn't have access to this title forever, just for
however long your play session was going. Really so instead

of going out and buying a copy of the game
and in television, owner could subscribe to the service and
pay a monthly fee and then play games that way
and again. Because the games were just stored in memory,
they weren't permanently part of the player's library. In television
called this technology the play cable. Now, this was really
forward thinking, but you could argue it was two forward

thinking and it was ahead of its time. Now. According
to Stuart Schlay of CED magazine, way back in two
thousand and five, in television was only able to secure
about three percent of all households that could access this service.
So while the Intellivision had a decent install base for
the time, like more than two million units were sold

by nineteen eighty two, for example, only around six hundred
and fifty thousand of those even would have access to
the play cable service. And then of those six hundred
and fifty thousand, not that many people took the plunge
to pay four dollars ninety five cents per month to
actually use it. Now, there were some problems with the
business model from the get go, because gamers weren't the

only folks who had to cough up a decent amount
of money to be part of play cable. Right, you
had to buy the adapter, and then you had to
pay a subscription to the service. But the cable television
providers also had to pay in order to be able
to use this service. They would have to purchase a
really expensive computer to run the transmission side of this

service because it wasn't provided by Intellvision, So the cable
companies would have to pay like twelve grand for these
really expensive and particular computer systems. By nineteen eighty four,
in television had decided to unplug the play cable because
it just hadn't caught on plus in nineteen eighty four.

That's obviously after the video game crash of nineteen eighty three,
the home video game market in the United States was
in ruins. In other parts of the world it was
a different story, but the entire market crashed for the
US in nineteen eighty three. It's what would create the
opportunity for Nintendo to kind of resurrect that market. But

for all a good year, it was desolation in the
home video game space. Computers were kind of taking up
some of the gaps. Yeah, it was grim. In television,
games had been getting more complex, and that was also
part of the problem because the play cable system could
only support transfers of up to six kilobytes. So as

games were getting more sophisticated, the play cable couldn't keep up.
It physically was limited to six kilobytes of data for
these transfers, so if a game required more than that,
it would not be eligible for play cable. It just
wouldn't work. So, no matter what, the play cable had
probably a pretty limited lifespan. Even if the video game

market had not crashed in nineteen eighty three, it's unlikely
that in television would have kept it going that it
would have remained relevant, So it went could put unless
you think in television was the only example of an
early go at the games as a service model. Allow
me to tell you about the Atari game lie Line
from a company called Control Video Corporation. So this wasn't

from Atari itself, but from this CVC company, which interestingly
was founded by a guy named Bill von Meister, so
Bill the Mister. He he also co founded one of
the earliest online services called the Source, so really really
forward thinking dude. Similar to the play cable, GameLine was

a product and a service that would let Atari twenty
six hundred owners connect their console, by this time using
their phone line with an adapter that would plug into
the cartridge slot of your Attari twenty six hundred and
so it was similar to the play cable, but play
cable obviously connected to cable. Game Line connected to a
phone line, and so gamelines transmissions were over the telephone

system instead of cable TV frequencies. Now. According to Dan
Skelton in the Atari Compendium, this adapter cost forty nine
dollars and ninety five cents, and that included a year
of service. I'm not sure how much service was after that,
but that's not the only fee we'd be talking about,
because the way game line worked is that you would

get one of these adapters, you'd plug it into your
computer and hook it up to your phone system, and
when you turned it on for the first time, game
Line would automatically dial in to a particular phone line
and a computer system, and you would be prompted to
register your GameLine system and to create a personal identification
number or PIN, and then you would get to enter

whichever game you wanted by putting in a three digit
code that correlated to that specific game, and then that
game would be sent to temporarily live on the memory
of the adapter you were using. The adapter you had,
by the way, also required a nine volt battery to
remain powered because again it's volatile memory, so if it

loses power, then the information and is wiped from the system.
So you wanted to create a pen for every person
in your household because, as it would turn out, the
service would grant a user unlimited plays on their birthday.
So if you made a pen for everyone and the
dog in your family, you could use that specific pen

to log into the service on the respective person or
animal's birthday for unlimited plays. You know, hack the system,
is what I'm saying. Like the play Cable game lines
lineup would change month to month, and it would include
new games as well as, you know, really the most
popular titles that were on the service. They also put
out a magazine that informed customers about which titles would

become available in the upcoming month. Games could be played
only a limited number of times before they would get
wiped from memory. At that point, you could choose to
download the code again or access the code again, but
it would be for another charge, another fee, and we're
typically talking about one dollar per title. So for a

dollar you could play titles on the service for up
to eight times or so before they would just disappear
from your cartridge. The instruction manual for the device argued
that the limit was only on game plays, not the
time spent while playing, which means if you're really good,
then you could play all night. Because it doesn't matter

that it's only for eight plays. You're a master gamer.
You're going to breeze through this game and have a
great time, and you're not going to die every three seconds.
If you were to take a break during your game session,
the manual stress that you should only turn off your television,
but not the Atari console, nor should you remove the
cartridge from the game system or else the play session

would terminate early before all the plays had been exhausted. Now,
I'm sure, when compared to arcade machines, which were typically,
you know, twenty five cents per play, this could seem
like a bargain. You would get twice as many plays
as your typical arcade machine for the same amount of money,
eight plays for a versus four. But then I would

say for it to be a real bargain, I would
argue Atari games would have to be at least half
as good as the kind of games you could find
in the arcade and as a former Atari twenty six
hundred owner, I can assure you the Atari games, even
the really good ones, were not as good as what
you could find in an arcade. They just weren't, not
graphically and most of the time not gameplay wise, even

though there were some true bangers on the Atari twenty
six hundred. To this day, I think River Raid and
Pitfall are some of my favorite games for my childhood,
but I don't think they were better than what you
could find in the arcade. Now, this company, CBC, had
some hurdles that were pretty hard to overcome, and one
of the biggest is that the larger game companies that

were making titles for the Atari refused to license their
games to CVC so they could carry those games on
their service, and this left out a lot of really
important companies like Atari itself would not sign on. Neither
did Activision or Mattel or Parker Brothers, and there were
some others that held out too, and that kept the

library of games that were available on the game line
system pretty limited to games that had less appeal. You know,
these weren't necessarily bad games, although I'm sure there were
some of those too, but they were not the games
that had the best marketing and the largest demand among
Atari twenty six hundred owners, so that was a big
challenge for game Line. Now, it's possible that these bigger

companies were working on their own competing service ideas and
that's why they held out. They didn't want to contribute
to a company that would then become a competitor. This
is kind of like the Netflix story. Right when Netflix
started to stream movies, it started to run into issues
getting licensing agreements with different studios because the studios would

prefer to hold out and have their own operated service
rather than allow their stuff to be carried by a
potential competitor. But the whole thing would become moot anyway,
because again, the nineteen eighty three video game crash happened,
and a lot of the smaller third party companies that
were creating the titles the game Line was relying upon
they went belly up. That disaster trickled down to GameLine

and CVC itself, so the service did not last much longer.
In fact, you could see why it wouldn't because you
suddenly had this glut of Atari twenty six hundred cartridges
on the market and they were at insane markedown prices,
so you could go out and scoop up a dozen
or more cartridges for like twenty bucks, and then you

would have the cartridges, you could play the game as
many times as you wanted all day, and you wouldn't
have to worry about spending a dollar on just eight
plays or whatever. So game Line's business model was entirely
undercut by this industry crash. Now, that was not the
fault of CBC, and as time would show, the idea
of creating a service rather than focusing on just a

game would continue to be a goal for the industry. Okay,
we've got so much more to cover. We're going to
be back after a quick break to thank our sponsors. Okay.

So that was the sad tale of the play cable
from in Television and game Line from Atari. But there's
still more early attempts we could talk about. Nintendo itself
had such a service. It was called the Stela View
or Sateleeview, I guess because it's after satellite. But this
service was only in Japan and it was during the

Super Nintendo Entertainment System era. Subscribers to the Stelaview service
would get access to more than one hundred games using
an SNS Super Nintendo Entertainment System and add on an
adapter that could access these games via satellite as the
name suggests, and they could also access other stuff too.

It wasn't just games. You could actually use your SNS
to do stuff like read magazine articles and other media,
which is kind of cool, Like it really predates the
era of consoles, video game consoles becoming media centers, right.
Microsoft really stressed that when the Xbox three sixty came out,
really the Xbox One, I should say the Xbox One

was where the media center stuff really became front and center,
to the point where Microsoft kind of alienated the gaming
crowd as a result of that. Anyway, the teleview service
only lasted a few years before Nintendo withdrew support for
it due to some corporate shenanigans between it and a
company called st Giga or I don't know if it's

Saint Giga, but it is big S, little t period,
all caps Giga. Anyway, this company operated the actual satellite
service and Nintendo in this company got into some corporate
disagreements and ultimately Nintendo decided that it was done, and
once it left, Giga continued to operate the service for

a little while, but without Nintendo's support it was unsustainable.
So apparently, even before this corporate relationship soured between the
two companies, the service had a pretty limited rollout. I
mean again, it was just in Japan, it wasn't outside
of that market, and it was an expensive subscription, so
you know, not that many gamers were necessarily in a

position where they could even subscribe in the first place.
And it also came to a time when the next
generation of consoles was coming out, So why would you
spend more money to play games on the previous generation's
consoles when a new one is right on the horizon. Meanwhile,
competitor Sega created a service that harkened back to the

play cable system from in television. They introduced the Sega Channel.
So like the play Cable service, the Sega Channel relied
upon the cooperation of cable television carriers and Sega Genesis
owners could use an adapter to connect to this service
through their cable provider, so each month, players would be

able to try out somewhere between fifty and seventy titles
a month as options. Various sources disagree on exactly how
many titles were available, so I can't give you a
firm number. I saw one that said, definitively it was
seventy and another that said, definitively it was fifty. Whether
these are both true and at different times it was
different numbers, I don't know, because I never had a

Sega Genesis, but these games changed out month to month. However,
the timing on this launch was terrible because the Sega
Saturn debuted essentially the year after Sega Channel went live,
and since the Sega Channel was for the Sega Genesis,
the previous generations console, that was not ideal. Plus, the
subscription fee was something like fifteen dollars a month, and

there was a twenty five dollars activation fee at the
very beginning anyway, so not that many gamers were eager
to spend a recurring fifteen dollars a month to play
games on the previous generation hardware. So just a few
years after its debut, the Sega Channel fizzled out. The
strategy for the services I mentioned so far mostly revolved
around granting players access to games that otherwise they could

just go outside and buy right like. These were games
that also existed in cartridge or disc form so you
could go to your store and buy a copy. So
really these were for people who wanted to try out
games but didn't necessarily have the money to commit to
making a full on purchase. It was really a lot

like the video rental model, you know, where you would
go to a place like like Blockbuster and rent a
movie as opposed to going out and buying a copy
of it, because you know, you didn't have to go
and get a physical copy of that and purchase it.
You didn't even need a physical copy at all. You
would just download the stuff onto the memory of the
adapter or whatever. But then we would see developers move

to create games specifically to tap into a recurring subscription
revenue stream and bypass the whole physical copy or having
it being available in some other format entirely. They said, well,
this model is going to work, but only if we're
not making it an alternative to just going out and
buying the game. So we're going to change tracks a

little bit, because subscription service and live service these are
two terms that are related, but they're not necessarily synonymous.
I want to first mention a game called Air Warrior,
which I had never heard about until I had researched
this topic. Air Warrior was a flight combat simulator game
released by a company called Kesmi in nineteen eighty seven.

You could argue this was an early MMOG with actual graphics.
So MMO stands for massively multiplayer online and g stands
for game. And there's a lot of different MMOs. Right,
There's MMO RP, which I would argue are probably the
most famous massively multiplayer online role playing games, but there

are a lot of games that are massively multiplayer online games.
The case with Air Warrior was, you know, it was
a game with very primitive graphics. It actually had graphics.
It was an early MMO that had graphics that was
pretty incredible. And this is in the late nineteen eighties
where not many people even had dial up modems at

that point, and those who did often had dial up
modems that had a pretty low bad rate, which meant
you couldn't make a really, you know, deeply sophisticated game.
It just wouldn't be a good experience because the transmission
speeds would be far too low. So this was like
a monochromatic wire frame air combat simulator. The eighties saw

some really early MMOs besides Air Warrior. Ones that came
out before Air Warrior, but those were text based, so
they were often dungeon crawlers called MUDs, which stands for
multi User dungeon. These are descendants of early text based
computer games, stuff like the Old Old Old Zork series
or Hitchiker's Guide to the Galaxy or Leather Goddess of Phobos.

Those are the ones I think of when I think
of the text based adventure games. Air Warrior was different.
It was a game with real but primitive graphics, and
to play Air Warrior, gamers had to subscribe to a
service and they paid a fee of around eleven dollars
an hour to play this game online. So there was
a dedicated but small fan base for this game, not

really surprising considering the limitations of the game and the
expense that went along with it. The first computer role
playing game to really tap into this model was arguably
Never Winter Nights. This debuted as part of America Online's offerings.
So AOL's business model was essentially to charge users by

the hour for accessing online services. So it benefited the
company to create features on their service that were compelling
and you know, sticky for lack of a better word,
It's really not that different from how social platforms like
TikTok and Facebook use algorithmic strategies to keep people on
those apps for as long as possible to drive engagement.

It's the same idea, what can we offer that is
compelling to our customers so that they keep using our
services and drive up the amount of money they owe
us in that per hour charging. So Never Winter Nights
was part of this strategy. It was based off the
Forbidden Realms mythology of the Dungeons and Dragons game. It

also followed in the footsteps of some computer role playing
games or CRPGs, not Internet based ones, but just computer
based ones, like Pool of Radiance. By the way, that
was one of my favorite games as a kid. Pool
of Radiance I thought was a truly brilliant adaptation of
Dungeons and Dragons rules andthologies, and I loved playing it.

AOL initially introduced two different tiers of pricing for game
sessions on Never Winter Nights. If it was during an
off peak hour, you would be expected to pay five
dollars an hour. For play sessions during peak service, that
would double to ten dollars an hour in order to
be able to play this game. Later on, AOL would

switch the game to be a free to play option
in the overall subscription service of AOL, so you didn't
have to pay extra just to play this game. It
was part of the overall offering, and that moved to
free to play is also something we would see a
lot more of in the next decade and a half
or two decades or actually three. I am in denial

about how long ago the nineteen nineties were because to
think about it is really disheartening when I realized how
much of my life was in the nineties a decade.
As it would turn out anyway, Never Winter Nights would
would sun at by the late nineties. It didn't stick
around forever. Obviously, AOL itself transformed quite a bit throughout

the nineties, so it is no longer an active thing.
There would be other games with the name Never Winter Nights,
but they are not directly connected to this early MMO RPG. Also,
it wasn't initially that massive, you know, the two MS
Stanford massively multiplayer, and at least initially Never Winter Nights.

While multiplayer was not massive, I think the servers were
limited to around fifty players at a time. Later on,
I think it expanded, but it didn't start out as
being truly massive, despite getting the name MMO RPG. But yeah, never.
Winter Nights was an early example, and other MMORPGs would follow.

There was Meridian fifty nine that was the first MMOORPG
with graphics rendered as three dimensional objects instead of just
two D icons or sprites. Meridian fifty was a game
that had a flat rate subscription fee, so you didn't
pay by the hour, you paid by the month, and
the servers from Ridy and fifty nine were also limited.

They could support fifty players per server, so you could
argue the first M didn't really apply for that one either. Also,
if the server you wanted to play on was really popular,
you would find yourself unable to connect, which could be
really frustrating. You'd have to just keep trying and hope
that someone had either quit their play session or lost

a connection, and you just take it. But yeah, it
was a somewhat of a limited experience and it would
only last for a few years before Sunsetting as well.
Lots more MMORPGs would follow. Ultima Online was a big one.
I actually remember when Ultima Online launched because I was
at a convention and Richard Garriott, the guy who created
the Ultimate series, was there and was introducing people to

an early build of Ultima Online. So they had an
instance running where we got a chance to kind of
just see where the game was in development. It was
an incredible experience because usually you don't get that kind
of insight. That's a really rare thing unless you happen
to be, you know, someone who's already in the industry.
Otherwise you just don't get that kind of access. EverQuest

was a really big, popular early MMO RPG that depended
upon the subscription service. EverQuest two would continue that, but
the powerhouse of the entire industry was World of Warcraft
and still is World of Warcraft that's still going on today. Obviously,
games of this nature didn't stop with World of Warcraft.
It's not like that came out and then you'd never

heard about any other MMO RPG. There are others out there.
You know, there's Fallout seventy six, which is just you know,
a few years old at this point, Elder Scrolls Online,
Final Fantasy fourteen, a Realm Reborn, and tons of others exist.
So those games go on and on, with the idea
being that players will occasionally get new content that keeps

them invested in the gameplay, and in return, they will
continue to subscribe to the service, or, in the case
of free to play games, they will be tempted to
spend real world money on things that will enhance their
online experience in some way, and that prospect would find
its way into other kinds of games outside of RPGs.

It would also be boosted by a trend toward requiring
players to have a persistent Internet connection in order to
play the game at all, even a game that did
not have some sort of online component to it, and
that would complicate things. We'll pick up there in our
next episode to continue to talk about games as a

service and live service games and why this move is
changing the industry. A lot of people feel that it's
changing the industry for the worst, that it's not it's
not a good thing. And certainly there are practices within
live service games that are predatory and exploitative and just

not good for the consumer, and they tend to feel
very cynical and crass and short sighted. But there are
also ways of doing live service games that even if Ultimately,
you're talking about ways to continue to generate revenue from
your game. Don't feel predatory. So we're going to talk
more about this in our next episode. We've got plenty

of other examples to talk about, and developments and evolution
of the business model to take into consideration to kind
of see how we got to where we are now
and why some people in the industry say stay alive
till twenty five, meaning twenty twenty five, because twenty twenty
four so far has been a really tough and scary

year for people in the games industry. Okay, we're going
to wrap up here for now. We'll be back on
Wednesday to talk more about this. And I hope all
of you out there are well. I hope none of
you are struggling with any concerns about your living because
I've been there and it sucks, and I hope that's

not the case for you. I hope you're flourishing and
doing way better than I am, because I want to
see y'all succeed and to just have a wonderful life.
That's my desire. Because I'm a SAP. That's it for me.
I'll talk to you again really soon. Tech Stuff is

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