Over at Adrian Crook's Free To Play blog, there's a great new piece up analyzing how traditional retail models are (and will continue to be) affected by the rise of a Club Penguin generation. Here's an excerpt from the article, inspired when Crook noticed on a family trip that his young cousins were playing online mixed-model games more than retail:

What does this say about where the North American PC market is headed?

Based on overwhelming anecdotal evidence, it’s clear to me that the younger set (under 20) is embracing free to play and virtual goods games because the budget and engagement model is tailored made for for them. And as the younger set is further weened on the same virtual goods business model that’s already dominating Asia, retail only pay-to-play PC games will be ignored en masse.

In some respects, North American companies have begun adjusting to the F2P/virtual goods wave. With gifting sites like Facebook and HotorNot.com, microtransaction services like Xbox Live and casual MMOGs like Puzzle Pirates, one might argue that we’re at least keeping up with the pack in this emerging space.

But what are traditional North American game publishers (EA, Activision, etc) doing to adjust to this new, non-retail, online-centric business model? Are they seeding their own internal virtual goods projects? Building virtual goods into their existing or upcoming products? Acquiring early movers in the space?

At least right now, the answer appears to be “none of the above”.

Crook notes that the traditional North American "partner and acquire" approach just can't work in this market, and that's a good point -- can you imagine how much it would cost an American company(assuming it's possible to price such a transaction at all) to buy one of the Asian giants of the virtual goods space?

GigaOM's Wagner James Au recently visited Beijing, where he spent some time with HiPiHi, the "Chinese Second Life" we heard about somewhat recently. From his detailed impressions:

For a Second Life user, the most striking thing about HiPiHi is how similar its interface is – reverse-engineered is probably the more accurate term. (This despite the fact that Second Life’s confusing user interface is easily its weakest selling point.) Xu said he conceived of the basic idea before even knowing about Second Life, but it’s abundantly clear he and his team have modeled a lot of HiPiHi on it. Like Second Life, content is streamed from the networked HiPiHi servers — which comprise the world — to users’ computers.

Residents can shape their environment with a library of prefab, customizable artifacts (furniture, homes, etc.), or for the more ambitious, in an atomistic creation system that very much resembles Second Life’s tool chest. (Albeit without a scripting system, though Xu’s team promised one will be available in October, when HiPiHi is slated to be launched) The 16,000 or so beta users/testers are drawn from the Chinese regions, but Xu said English and Japanese versions will launch later this year.

A key distinguishing feature of HiPiHi, Au says, is that subscribers retain the underlying IP rights to all of their in-world creations, which would separate it from all other MMOs thus far. According to Au, HiPiHi founder Xu Hui is working with Creative Commons China to create a CC-licensing system for user creations in time for HiPiHi’s commercial launch.

What about the most obvious questions we've had about HiPiHi -- how will it deal with China's heavy-censorship government? Au explains:

Xu said cybersex in HiPiHi will be OK, as long as it’s done in private; political talk on the other hand, will be prohibited. To do this, Xu will run user chat through a keyword-filtering system derived from China’s Great Firewall. Zhang said the beta users are already voluntarily watching what they say.

“It’s self-censorship,” he offered. “They know what kind of words will be very dangerous.” But while you can’t type, for example, “Falun Gong” in chat, you’ll probably be able to game the filter by creatively misspelling the banned meditation sect. And the filter, the HiPiHi team acknowledged, won’t be able to block non-textual acts of dissent — say, protesters wearing user-made Falun Gong T-shirts.

[Via GigaOM]

A mysterious blog, "Confessions of an Ex-Arena.Net Employee" -- sniffed out by the folks at WarCry -- has set tongues wagging. Arena.Net is responsible for the popular MMO Guild Wars, which only charges for the game itself and is free-to-play thereafter. Gold-farming or the exchange of real-world money for in-game items or gains is a ban-able offense -- but the self-styled ex-employee is claiming that the folks behind the scenes are actually working with the gold farmers to profit secretly from those sales.

There's no way of knowing whether the ex-employee is for real, but as the folks at Metaversed point out, it raises the issue of security in virtual worlds administration. Users with connections on the inside or a way of accessing employee information could be devastating to a virtual economy, especially if security is not strictly ensured at every level. To that end, Steven Davis of security software developer SecurePlay responded at his PlayNoEvil news site by highlighting five major ways in which he feels virtual economies might be leaving themselves open to exploitation (as paraphrased here from Metaversed):

1. Companies whose model involves profit from sign-ups could possibly benefit by mass-banning users for gold farming related offenses.
2. Employees at any level may collude with gold farming companies. (It's happened before.) Securing access privileges, auditing, and staff management are critical.
3. Larger gold farming companies could target smaller ones for banning with a little help from game company employees to eliminate competition.
4. A game company could give a "head's up" to preferred gold farming companies about upcoming mass bannings. The farmers can switch accounts and lay low for a bit and stay in business while the game company looks great in public.
5 Employees know the technical vulnerabilities of the system better than anyone, and can advise select individuals of how to best exploit the system.

[Via Metaversed]

Acclaim has announced that its free-to-play fantasy MMO, 2Moons (which recently entered open beta) is now opening its virtual item shop. In a press release received by Worlds in Motion, Acclaim says it's signed up roughly half a million users who will now be able to use Acclaim Coins to purchase virtual goods and gameplay enhancements.

The store adds special items like a "Traveler's Backpack" that gives a player 50 more inventory slots, as well as potions, boosters, clothing and other character customizations. Acclaim says it plans to update the shop in the future with more new items like rideable mounts, guild-wide special effects, and more special outfits.

Acclaim's also kicking off the new store launch with "2Moons Killer Events” to give players a chance to earn double experience points to quickly level up and enter random drawings to win special prizes such as gaming hardware, enhanced weapons, and Acclaim Coins packages that can be used in any Acclaim game.

“2Moons has been a fantastic project that’s already proved Acclaim’s free-to-play model is what gamers all around the world have been waiting for. The number one request we got from the gamers who have been testing the game was to offer them more customization, so the item store will immediately help there,” said David Perry, director of the game.

A new post on Cisco Systems' Virtual Worlds blog identifies the key motivations for online gaming behavior in order to highlight how they can be used for collaborative professional environments. It's a slightly different approach than Shufflebrain's Amy Jo Kim took when she laid out her "Five Commandments of Gaming" (Collecting, Points, Feedback, Exchanges and Customizations). Cisco's list, and comments, are in this following excerpt:

1) Achievement - provides goals, challenge, reward, analysis of complex problems, and status
2) Competition - provides challenge, success, reputation, ego and status
3) Socialization - provides a way to help others, create friendships/relationships, collaboration, group-wide enthusiasm for a task, communication channels
4) Exploration - allows discovery of new information/ideas, distraction and escapism
5) Immersion - allows customization of the user or environment, allows personalized style

When we look at most corporate collaboration environments, they often lack many of these elements. The problem is that adding many of these elements are often deemed to potentially invade privacy or require too much input from end-users that may not feel properly motivated to participate.

So the challenge is finding creative ways to incorporate motivational factors into our Collaborative Environments such that users feel a need to engage with them and clearly understand the benefit they get (and the company gets) from their participation.

[Via Clickable Culture]

Not so keyboard-savvy? Fear not. Apparently, David Stubbs and his team, called WiiCade, are working on enabling the Nintendo Wii's motion-controlled remote to work in simple multiplayer Flash games piped through the Wii's Internet Channel. Playing online with motion control? It's possible! Clickable Culture's Tony Walsh (CC's definitely another "blog to watch," by the way) got a little hands-on:

David demonstrated a couple of simple multi-player Flash games, both of which performed pretty well (a bit of control-lag noticeable), considering how severely the Wii's processing power is tapped--the little white console is not only running the Opera browser, but that browser is running Flash, and some sort of Java-enabled layer through which Wiimote signals are accepted and passed back into Flash. Probably I'm butchering the explanation--all I really care about is that Wiimote-controlled Flash games are now easier for anyone to create, thanks to the WiiCade team.

So it sounds like there are still strides to be made in the tech, but imagine a console-based online world that could be navigated via motion control? Something simple like Sherwood Dungeon, with its hack-and-slash swordfighting, could be a lot of fun this way!

[Via Clickable Culture]

At GDC China, Netease (Journey to the West)project manager and game producer Xiaojun Hui led a discussion called "Virtual Worlds Construction," which focused on how to embody Chinese culture and atmosphere through virtual worlds, and how traditional cultural influences shape the way the Chinese play online.

Highlighting the difference between online games and stand-alone games, Hui noted that online gamers spend much more time than standalone on a given game. The best metric for designing virtual worlds, he said, is the concept of time variance, as the MMO experience changes over time.

Virtual worlds are also more complex, he said, owing in large part to the interaction among multiple users. According to Hui, the most important factor is survival of the users.

When constructing virtual worlds, Hui advised considering some issues that have nothing to do with games -- billing, social norms and tax rate, in addition to how to solve the problems of disadvantaged players and how to design incentives for users.

"Virtual worlds are not games," Hui said. "Trying to apply game design principles doesn't work - [you] have to look at the real world for paradigms."

Hui discussed the importance of understanding users' needs, and the need to understand why they play. In his opinion, people go into virtual worlds because their real lives are "empty" -- in those cases, what's the source? Speaking of the Chinese market, Hui believes that after the Chinese economy opened up in the 1980s, the resulting economic inequality left people feeling unsatisfied. And he thinks there's a resulting spiritual emptiness, too.

"Why do you go on vacation to the mountain regions, or to Tibet? It's so you can regain that feeling of fulfillment in life," he noted, adding mirthfully, "When you go to Tibet you don't see a lot at all - no wife, no house, no kids - you forget about all those troublesome things!"

Hui believes, then, that empty people can be enriched by following Buddhist concepts to help them realize their needs in the virtual world. He even posited whether virtual worlds could be used to solve Chinese employment problems, since users feel fulfilled by completing virtual tasks.

Virtual worlds can be socially gratifying to the Chinese, Hui noted, because of the influence of traditional culture. "Chinese are keen on human relations," he said. "The minute someone starts playing on a server, the first thing they do is form this inner circle. So playing is joyful to us because we are playing with real people."

[The preceding article originally ran on Worlds in Motion sister site Gamasutra.]

Habbo.cn, the Chinese Habbo, has shut down, according to the following message on its site:

Dear visitors:
unfortunately we have some bad news for you: since August 24, 2007 Habbo.cn has been closed at least temporarily, and possibly for a long time. :( Our Habbo Staff is currently working hard to find a way to continue the service in the future - you will be informed about the situation as soon as we know. We are really sorry about this. Meanwhile you can choose to visit other Habbo services all over the world.

[Via billsdue]

Console video gamers are demanding the same kind of dynamic, connected online interaction that's taking off all around the PC world; Microsoft's implementation of Xbox Live Arcade for its 360 console turned out to be a stroke of genius, letting gamers create profiles, share leaderboards and make their achievements visible to everyone, in addition to enabling them to download demos and play multiplayer gaming. As the Xbox 360's major competitor, Sony's upped the ante with PlayStation Home, which envisions the console gamer in a full-scale virtual world, avatar and all, and in sneak peeks shown off at recent gaming conventions, promises to allow socialization as well as dynamic 3D representations of all of the essential features of connected gaming, all against the backdrop of a fleshed-out virtual world.

PlayStation Home began beta-testing this summer, shrouded in secrecy; though Sony has showed demonstrations of Home, few journalists have gotten up-close-and-personal with it, and what demonstrations were given have historically been tightly controlled. But recently, game news mecca IGN got to chat up an anonymous mole who's been participating in the beta testing, and that informant dished tons of dirt on how Home is progressing -- and how it's not.

First, the mole tells IGN that Home is currently still limited to the four areas Sony showed at last year's GDC: The user's apartment, of which there is still only one layout available; the lobby, which is apparently "quite large," with places to sit and chat and screens to watch; the movie theater, where users can see game and movie trailers on 10 different screens (at present), and the game room -- according to the mole, the most popular room, with 6 pool tables, 4 bowling lanes and arcade machines.

Sony had promised that gameplay and socialization could connect seamlessly; users could invite one another in the game by way of pop-up invitations from friends. However, this feature is apparently not developing according to plan; the mole tells IGN: "This feature has not been implemented yet. None of the new features or areas outlined at E3 have made it into the beta. None. There is no support for in-home parties."

What about the avatars? Home's look is on the cutting edge of next-gen graphic vividity, so it should be interesting to see how individual looks roll out. The mole says clothing and hair selection are still limited, but that face creation is highly detailed, with the entire facial structure fully customizable -- the way he describes it, it sounds similar to what we found when we visited Entropia.

The mole also found that you can't yet play back hard drive content like music and video in your apartment as Sony'd projected, either -- "You are restricted to pre-set photos for picture frames. The ability to play back video and audio of any type has also not yet been included. TVs or Stereos do not appear in the list of available types of furniture," the mysterious informant said.

There's also no "trophy room," the Home equivalent of an achievement display that had been promised, where titles users play would generate awards that pop up inside it.

Just about everything else that appeared in the GDC demonstration is available in Home now, though, reports the mole to IGN -- "This includes arcade games, bowling, pool, furniture placement, character customization, etc. The features that are in home do work well. All the games are fun to play, and promote communication. Placing furniture is relatively painless and there is a good assortment of furniture to choose from. The physics work as promised."

Communication tools are also good, it seems, supporting both Bluetooth voice headsets and keyboard, with a voice volume that, quite pragmatically, depends on how close your avatar is to the speaker's.

And the informant's overall rating? Despite the issues the mole cited where Home still seems to be lacking, the dirt-disher likes it overall. "Home works," he told IGN. "What I mean by that is it's easy to go in and socialize and have a fun time doing it. People generally have a good time. It has a very open atmosphere, so you can pretty much walk up to anyone and start chatting with them. I've made friends in Home that I play online games such as Resistance or MotorStorm with. The Home beta has left me very excited about the final product, as it should be even more enjoyable when everyone I know has access to it."

[Via IGN]

Recently, we reported that the Korean Software Industry Promotion Agency (KIPA), aiming to pave the way for Korean MMOs to enter the global market, had slated six new MMOs for the second half of this year, all to be available on their Game&Game global platform. According to a press release received by Worlds in Motion, the first in this series, the anime-styled fantasy MMORPG Pi Story, is now about to kick off its closed beta on August 31st.

The announcement was made by Pi Story's developer, NCONY, a team comprised of developers, marketers and operations managers with backgrounds in MMOs like Ragnarok, Lineage, and Silkroad Online, which have proven Korean games can find a loyal home among American audiences. Pi Story is the team's first effort, and it's recently finished its 3rd closed beta test in Korea.

"We wanted to target a time that was convenient for game users in Europe and North America," explained Tom Suh, communications manager for NCONY Enterprise. "We hope that this closed beta test will allow us to determine what our players want, and to make changes to accommodate their wishes and truly localize our game product for the global market."

The closed beta test will run from August 31st to September 5th, from 6 P.M. to 7 A.M. GMT.

Next-gen console game and virtual world development company Trilogy Studios has announced it has raised $3.2 million in its latest round of independent equity funding. This new round comes on the heels of a "significant" investment in its virtual worlds endeavors from Chichen Itza Ventures, the lead investor in There.com producer Makena Technologies.

Trilogy and There.com have enjoyed a long-term working relationship, partnering up to build MTVN's Virtual Pimp My Ride (a collaboration it recently reaffirmed) on There.com's technology, and now Makena CEO and There.com producer Michael Wilson will join Trilogy's board of directors.

The partnership aims to merge the spheres of online social worlds with gaming, in large part to enable media companies to monetize their brands in online worlds through avenues like microtransactions, sponsorship and advertising. Trilogy says it will allocate the funds to expand the company's virtual world and casual MMO business.

Trilogy was originally founded in late 2005 by former Electronic Arts Los Angeles executives Rick Giolito and Mark Skaggs, along with former Vivendi Universal executive vice president Michael Pole. Worlds in Motion talked with Michael Wilson about the partnership and what There.com can learn from gaming vets.

"Virtual worlds are amazing social platforms; that’s what we built our virtual world about. The things we're known for -- PG-13, IP protection, and how all PCs can run There -- were all things designed to make the platform available socially to more people," he explains. "The thing is that in virtual worlds, just as in real life, people look for entertainment. Just standing around socializing -- there’s more to life than that. You go to movies, watch TV, entertain, play games, go to school, et cetera. We’ve been trying to bring a lot of that to our platform, because we think that’s important. It's the reason we partnered with MTV – they certainly know how to get a lot of people to spend time in front of the TV!"

So how will Trilogy help? "We look at their sensibilities, and ask how we can bring that to our platform. We're coming out and saying that the skills that the game industry has been honing for 20 years, we need them in these social virtual worlds. The fact we’re embracing it so much is important," Wilson says.

Wilson said that the first project the partnership will tackle is improving the worlds There.com has built for MTV. "We’re going to look at bringing “player compulsion loops” to the table," Wilson said.

Compulsion loops? "I’m going to point at World of Warcraft, because everybody knows they're really good at this," Wilson explains. "We study them all the time, because they do such a good job. There is something in their platform that compels you to go and do stuff; you want to do it, and keep doing it. Eight million people do that for World of Warcraft. So this whole compulsion element with the whole design of gameplay is part of a 'secret sauce' to make these worlds successful."

He elaborates: "Giving people interesting things to do, achieving status, being able to display that status, whether that's with exclusive merchandise or, say, a dog that nobody else can get. These are the sorts of things you can engineer to make the world more interesting and get people interested in spending time there; that’s where compulsion comes from.It's a great adjunct to the social nature of the world; you’ve got people meeting each other and now 'how good am I' at various parts of this game, at making clothes or holding events, becomes a way to have your own status to start conversation."

Since many people have historically seen the world of game design and internet socialization as being related but disparate, what's it like to work together now? "It’s great because they come from a completely different side of the world; they focus very much on art and gameplay and it’s really a lot of fun," Wilson says. "The cool thing is that, when we started getting art assets from them for Pimp My Ride, they were so tight, and good, because they know that the gameworld is very demanding. So it’s a great thing, and for them, I think they like hanging out with us because we’re MMO-plus-user-generated content."

He adds: "We take our partners very seriously. We try to do fewer quality relationships than many non-quality relationships."

A rather sensationalized editorial in the Shanghai Daily calls for a governmental ban and a player boycott on all unmarked virtual transactions, to stop player theft by "black hats" and "crackers" who steal virtual goods or otherwise disrupt online economies. "This virtual thievery is very real and does not bode well for the future of the young robbers who are plunged into online larceny," the article says, continuing:

Young men who should have been in college or even schools are hired to play online games at least 12 hours a day, in order to collect equipment, which the workshop bosses then would sell domestically or overseas.

There are no minimum wages, hardly any days off and no real beds for these online gameslaves. Overnight steamed rice is their daily fare.

Numb and dull in real life, over-excited in virtual fights, who could make better slaves for this postmodern industry, whose motto is to turn persons into batteries for the matrix, to squeeze the real world for the sake of the virtual one?

Government and society should take effective measures to restrain the online game industry. A good idea might well be to ban the transactions for virtual items through those e-shopping Websites.

Gameslaves? Numb and dull? Ouch.

Over at Gamasutra's job listings, it looks like a new San Francisco startup is hiring a game designer to build a new MMO. The company, ProductCore, describes themselves as "kid-friendly," and specify they're looking to make an "addictive casual" game. Wonder what it'll be like?

Chinese developer Red Mushroom apparently also has its own virtual world with a retail toy tie-in, just like Webkins, Be-Bratz or BarbieGirls. BaoBao-BengBeng integrates a virtual world with its own microtransactions system -- while the game is free to play without a purchase, a feature code that comes with the plush toy and purchase-able items within the game provide additional content.

The animals available are all enormously cute, if a bit strange -- there's a policeman dog, a Hawaiian panda, a baby chicken who's apparently into bowling, a rapping lizard and a telekinetic goat, to name a few.

[CORRECTION: The article originally stated that the toys use a USB key or require a code to access the world; we've received word that all retail purchases are optional.]

[Via Ypulse]

Independent game studio Last Straw Productions announced keynote speakers for both days of the Indie MMO Game Developers Conference 2.0, which aims to provide content, community and contacts for artists, designers, programmers, and Indie entrepreneurs.

The Indie-themed keynote speaker on March 29th is "Indie Evangelist" Jay Moore. Previously, Jay was director of business development at online tool developer and game publisher GarageGames, where, among other things, he launched IndieGamesCon and worked to establish Torque as the game engine platform of choice for independent game developers.

The MMOG Design-themed keynote speaker on March 30th is industry guru and "founding father" of virtual worlds Dr. Richard Bartle, co-writer of the first MUD in 1978 and author of the 2003 book Designing Virtual Worlds, now an industry consultant and a professor of computer game design at the University of Essex, UK.

“IMGDC is honored to have such renowned industry professionals as keynote speakers. It doesn’t get much better than this!" Says IMGDC founder and director Jonathon Stevens states. "IMGDC 2.0 is going to be an incredible conference building on the passion and excitement we saw last year. Last year, we got you excited, this year you’ll leave IMGDC with a passion and love for an industry that desperately needs it!”

IMGDC will be held March 29th – 30th, 2008 in Minneapolis, Minnesota.

[Each day, Worlds in Motion will be taking a closer look at individual virtual worlds. We'll start with a nuts-and-bolts overview, then move on to an in-depth tour, to be followed up with a conclusion-- all with the aim of bringing you all the essential info and details on each world in the rapidly-developing virtual landscape.]

Let's investigate Dungeon Runners, the new MMO from NCSoft that brings a lighthearted twist to classic genre conventions. We'll start with an overview!

MTV's annual Video Music Awards, held this year on September 9th, are a huge event for the network, and this year they're taking the event to as many platforms as possible -- for example, simulcast on mobile phones with text message voting, and performances and polls online.

Of course, vMTV's getting in on the action, too -- MTV will create a virtual world specifically for the VMAs, available for free download from its VMA website. The world will recreate the various areas of the Palms Hotel's Fantasy Suites, including the basketball themed "Hardwood" suite, the glammed out "Pink Suite"and the crown jewel of the Palms, the incredible "Sky Villa," and MTV says it'll feature celebrity guests and in-world events in a week-long party leading up to the big show.

Unype says on its blog that its Unype Facebook application "lets Facebook users roam around inside Google Earth and see/interact with each other."

According to the blog, the free, no-download, cross-platform (Windows, Mac, Linux) app gets added into Facebook by users who click a button to enter Google Earth and "see other Facebook users as avatars moving around." Users also have the option to specify their Skype ID to voice-chat with other users inside Google Earth.

"We believe integration of social networks and virtual/parallel worlds will enable us to move from clicking on links/looking at text pages and clicking on more links, to ‘actually’ moving around in a 3D space and meeting other users in a much more natural way, just like we do in the ‘real’ world," Unype says.

Unype has apparently also developed Alice-brained chat bots that can live inside Google Earth, interacting with users and recording your messages while you're away. "The brain is completely programmable by a simple text editor and a little knowledge of AIML so you can customize it to say exactly what you would like it to say," Unype adds.

The avatar situation is still apparently in the early stages, but it'll be interesting to see how a marriage between Google Earth and Facebook might develop!

[Via Business and Games Blog]