The Business and Design of Free-To-Play Games


A Lively Failure: 5 Other Reasons Lively Flopped

[Editor's Note: Contributing writer Simon Newstead is CEO and Co-Founder of Frenzoo, a 3D Fashion startup and the writer of the VR Fashion blog.  He can be contacted at: simon at frenzoo dot com.]

Much has been written on why Google pulled the plug on Lively, its 5 month old virtual world.

The consensus, as Google themselves explained, was a need to "focus more on our core search, ads and apps business".

Most observers viewed the cancellation as a tough but correct decision during a major slowdown in its core online advertising market. Many questioned the launch of the service in the first place.  A search company moving into 3D cartoon chat and online gaming without a clear business model seemed a bit of a stretch.

Even Lively engineering manager Niniane Wang admitted at Virtual Worlds London last month there was still no internal decision on Lively's virtual economy model - not a great sign for a public service several months after launch.

However there were other factors that also helped contribute to the demise of the Lively service.  These may not have grabbed as many headlines, but they had an impact, and not in a good way:

1. Rarity (or lack thereof)

Why do World of Warcraft players grind for hours and hours on end to level up or gain a new weapon or skill?  Why do millions of Stardoll fans log in every day just to get their daily StarDollar allowance?  Why do Gaia Online users save for months (or plead total strangers) to buy that one special item at the top of their wishlist?


The cardinal rule: make items rare. I.e. require effort and/or money to acquire items, and those items become highly sought after. Desire breeds addiction, addiction plus good, fun gameplay = many repeat visitors.

Yet the day Lively opened its doors, all items in their catalog were free.  With that precedent set, nothing "felt" valuable.  With that, there was no "desire" factor or goal to strive for - and far less motivation to keep coming back.

This design decision made Lively feel like a "throw away" environment, and users responded in turn.

2. Too powerful and complex an interface

As Ars Technica observed in its launch review, the user interface was difficult.

Unlike Second Life, Lively was designed to be a casual "pick up and go" experience for the mainstream - yet the UI wasn't designed that way.

For example, many users (myself included) didn't know how to make our avatars walk around a room.

Frustrated right clicking, left clicking, and hitting arrow keys yielded nothing. It turned out that the way to walk was to hover the mouse over your avatar, then drag and move the mouse to cause your avatar to walk around.  Not intuitive.

You might think that the way to solve that was to use a more standard control, for example left click on a place and avatar walks towards it. However this brings up a higher order question: Why was walking even allowed in the first place?

Walking didn't add anything to the social chat experience except complexity and confusion.

Lively's competitor and 3D chat leader IMVU recognized this fact and even years after their launch, IMVU doesn't support avatar walking.


It doesn't need to.

3. Too rough, too early

Unlike an unknown startup, anything Google launches to the public is going to attract a day one audience of millions.

That's what happens when you are the most visited web company in the world.  You had better make sure that it's ready. In Lively's case, it wasn't just the lack of Mac support that caused fits among its early user base (although that didn't help).

It was other issues such as lack of an open content program, leading to a dearth of selections in the store on the first day.  A few months would have made all the difference as Google had truly promising and unique content ecosystem in development which could have been a game changer.

It was also many little things:

Anger and confusion greeted a friend who had spent an hour decorating her room, yet returned a few hours later to find strangers had put sofas on the ceiling, tipped over chairs and rearranged plants into a jumbled mess.

All because at launch it was too easy to unknowingly allow others to edit your public room.  This and many other small, yet very frustrating user experience issues surely would have been cleaned up with more time in a closed beta.

First impressions count even more in a spotlight.

4. Audience and art

Lively tried to be everything to everyone right from day 1.

Unlike other games based around a theme - be it anime lifestyle in Gaia Online, music in vSide or 3D Avatar Fashion in Frenzoo (disclosure: this is my product) - Google went for an audience of everyone. Or, as Google put it themselves, "Be who you want to be on the web pages you visit."

This was always going to be an ambitious goal, but it was very difficult to create a cohesive experience with a mix of radically different art styles for the avatars.

In successful services such with Nintendo Mii or Habbo Hotel, there can be plenty of diversity in look but yet a single unmistakable avatar style glues the whole experience together.

However in Lively, you had tiny bears hugging tall skinny cartoon girls, while pigs walked around in circles.

The goal - total freedom of art style - may have been worthy, but put them all together in a chaotic 3D chat environment and the net effect was chaotic and off-putting for users.

5. No profile to call home

It's an irony that a service that pushed the outer limits of web technology, the most basic social web features such as a profile page, were conspicuously absent.

Nearly every successful online game or web community has a profile page or home screen, as the center of the social experience and to build your own virtual identity - be it for role playing or just making friends.

IMVU's profile pages are buzzing with user expression and customization, MySpace and Facebook have built their social businesses entirely around profile pages. Yet surprisingly, Lively, which billed itself as the next step in the "social web," didn't support web profile pages at launch.


Does the demise of Lively spell the deathknell for virtual worlds?

I don't believe so.  Whilst there has been some excess in hype in parts of the industry, for many players abundant opportunity is still there.  The rapid growth of other virtual worlds from IMVU through to Buddypoke and Stardoll and growing revenues seem to bear that out.  Not to mention the massive growth in MMO revenues in the past three years.

However in Lively's case, Google made several big and small mistakes.  Combined with a confused business model and no long-term commitment from the Google mothership, this ultimately doomed the otherwise promising service to brief and inglorious lifespan.

The problems could have been fixed and focus found for Lively.  IMVU's first year was plagued with bugs and issues; but as Silicon Alley Insider put it succinctly, in Google's case they didn't even try.

27Oct/080 Interviews Raph Koster of Metaplace

Raph Koster of Metaplace gave a video interview with during last month's Austin Game Developers Conference. It was embargoed until just recently, so here it is now. Thanks, Raph!


Leigh Alexander, News Director of Gamasutra, Talks Free-To-Play Trends

Leigh's been a friend of since its inception, when she was kind enough to run several of our articles on the site she managed at the time, Worlds in Motion (a Gamasutra "sister" site). Since then, Leigh spent some time at Kotaku before rejoining the Gamasutra family as News Director of the main site,

Leigh recently gave us some of her time at Austin GDC, doing an excellent video interview that fell victim to random audio difficulties. But because the content of that interview was too good to let die, we conducted a written interview with Leigh after the show.

Here is that interview:

You are a well known commentator on the virtual world space.  How did that happen, how did you get to where you are today?

Haha, I am? I guess that's one of the benefits of getting in somewhat early in a space that emerged quickly and got a lot of people excited about it. I was fortunate to be chosen by Simon Carless as the first editor of Gamasutra's sister site Worlds in Motion focusing on online worlds, and I suppose I learned a lot by covering the space and talking to the people who are pioneering it.  I also planned the inaugural Worlds in Motion Summit at GDC in February 2008, and while I didn't have a hand in the track you saw this year in Austin, a lot of the ideas came from there.

How was the Worlds in Motion Summit this year?

It was good! Austin was sort of an interesting climate for it, because surprisingly some of the presentations I thought of as "Worlds in Motion's Arena" were taking place across the board during the main conference. I'd hoped that some of the concepts and methodologies finding success in online social spaces would start proliferating across the game space, but I'm surprised it's happened so quickly! Still, I think we brought some unique stuff to the table.

What were the big issues and stories in the MMO/Virtual World space in 2008?

It seems to me like 2007 was the year that a lot of people, from investors to developers to consumers, realized we had a full-fledged phenomenon on our hands. This year, I think, is the year that a lot of fledgling products will be tested. As we're looking at what's launching successfully and what's not, and what's taking off and what's foundering, I think the biggest issue is for individual products to evaluate their substance a bit and perhaps specialize their focus a little. For a while, I think a lot of us operated under the idea that having the word "social" in your product description was enough, and now, I think a lot of these online spaces, even if they operate wholly in a "free" environment -- free to play, driven by user-generated content, and free of any kind of video game linearity, are seeing that they do need some kind of backbone in structure, and for that they look back to the game industry.

We're also seeing a quality bump start happening, I think. For example, even looking at Facebook, at first a Facebook user could get about a billion requests to add apps per day -- now that the user's maybe tried one too many "advertising in disguise" games, or one too many low-quality apps, the industry is having to adapt to a savvier user for whom all this is not so new. One of the ways in which new entries to the social gaming space can differentiate themselves is by presenting a really polished experience that's clearly grounded in good game design.

So virtual worlds are starting to look to more game structures, and social/casual games are starting to look to more traditional quality levels, and traditional MMOs are now seeing how crucial social elements can be, adding the ability for gamers to dance and make music together. Just today, I believe, I saw an announcement that PopCap is adding a Bejeweled-style game to WoW, because sometimes even hardcore players would like that casual social experience. So there's a lot of cross-pollination now.

What do you see as the big trends that will emerge in the MMO/Virtual World space in 2009?

I hope that the cross-pollination will continue, wisely. At first there was a lot of excitement around certain key concepts, and what I saw as a rush to implement them, and now I think the trend will favor a disciplined and appropriate implementation of things like social elements and alternative revenue streams, or asynchronous options for multi-user environments -- because as Raph Koster said in a panel at AGDC, new products need to tailor their approach a bit to how people are already using the web. I think we'll see a lot more of that.

And strictly speaking on the MMO space, with World of Warcraft in the position it's in, and with MMOs such a high-risk and volatile space, I think that traditional online game companies making MMOs are increasingly challenged to find real staying power in the space, to hang in long enough to actually make some money and develop a user community, and they're going to need to get more creative -- I think they're going to start looking to these emerging trends a bit more to differentiate themselves.

What are the major challenges Virtual Spaces feature before they can truly go mainstream?

The major challenge is how we define virtual spaces! As I said, I think a lot of people are excited about "virtualization" without having yet a standardized idea -- or even a clear idea -- of what exactly this means, and what it'd look like, and who its users will be, and where we ought to apply it and where we ought not to.

We have all the ingredients for mainstream success -- browser-based interfaces that anyone can access, low barrier to entry in design that focuses, as Raph Koster said, on the everyday web user, and we even have mainstream cultural penetration. Your average consumer is already getting hands-on experience with multi-user, web-based interaction via Facebook and MySpace, which are now household names, and even something much more traditional like World of Warcraft is the stuff of evening TV. People are now wholly familiar with and comfortable with paying for things online, with having a user ID, with playing casual games. These things have penetrated our cultural fabric, and we've got the city all built to receive the new occupants, but I think where we're challenged right now is finding a broad implementation that's beneficial to others beyond those who have already adopted it. We'll be successful at that when we implement online visual spaces, and avatar-based interaction, for example, in areas where it's a definitive and clear enhancement on the way we already do things.

Do you think the free-to-play business model is now accepted by the North American mainstream?  In the West, its adoption has, at times, been met with suspicion and reluctance.  Are we past that and if not how do we get there?

I think the suspicion and reluctance originates primarily in the core video game community, and with designers who have come from a video game or pure MMO background. When games are free to play, they monetize in one of three ways, or a mix of the three: Through paid-for virtual items, through advertising, or through tiered subscriptions. Strictly looking at these options from a game perspective, each of them could possibly unbalance or degrade the gameplay.

For example, with microtransactions, players will likely only spend money on items that have an enhancing effect on their gameplay. So basically, the fear is that paying users will be able to have game advantages that non-paying users don't. There's the same suspicion of tiered subscriptions, a fear (that has been borne out in reality, somewhat) that the free players are being "ghettoized," treated as less valuable by the game operator or simply having a much more limited game experience.

In both of these cases, yes, there is a free option, but not paying becomes a penalty in the context of a gameplay experience. From the designer's perspective, allowing users to be able to buy game enhancements becomes really challenging, because they need to keep the game balanced in order to make it enjoyable to all, and to achieve this they're suddenly tasked with managing a highly complex economy, something they might not have bargained for.

There's always some core gamer resistance to advertising, as well -- the vocal core of the game audience is very sensitive to integrity and will lash out against games they see as selling out to brands.

This audience, I think, will never get "past" it. They have declared quite clearly their desires and expectations from their game experience and I think that there should continue to be products that address that. But there's a broad userbase that exists outside the hardcore gamer, believe it or not! That's something that it's hard to be aware of, acclimated as we are to a sort of "internet gamer community." The people that we see the most often, and that are part of our most immediate culture, are not necessarily the largest percentage of the consumer population.

Just as concerns advertising, there's been research done that finds that there's a kind of consumer that would like brands in their online spaces, to enhance realism. There's a kind of consumer that would prefer to pay in RMTs instead of subscriptions, and the current generation of kids and teens is growing up in an area where everything on the internet is free, period. They're going to continue to expect that. So the traditional audience might be hostile to a new way of doing things, but my impression is we're implementing some of these new concepts with the primary aim of welcoming in a new audience.