T=Machine

Someone asked me:

How many people play online games globally in 2008?

A simple answer

…and with a quick mental calculation I estimated 1 billion *unique registered accounts*. (I’ve been tracking and calculating this stuff a lot recently). That wasn’t good enough - they wanted something to put in a press release, so they wanted a methodology and verifiable data.

So, I went and did the calculations properly, and found:

There are approximately 1.5 billion unique registered accounts (virtual players) of online games around the world in 2008.

They still needed to see the methodology and the figures, of course … here goes!

Some … wrong … answers

Someone at Techcrunch claimed last year that “217 Million People Play Online Games”, by misusing the research that they were referring to. You only have to follow the link to the *press release* of the actual research to see how wrong that is.

The research merely claimed that 217 million people visit a selection of American and European websites that have content that talks about online games, and which *in some cases* actually have some web-games on their site.

The majority of online games were not included in the research. The figure isn’t particularly useful on its own.

A simple question?

The first thing to realise is that there’s no sensible way of answering the question literally. A couple of years ago, Raph Koster did an updated version of the explanation for this problem (it needs updating again by now to take account of how the industry has continued to evolve since he wrote that last version). If you haven’t read it, and want to understand the details of why people argue this stuff endlessly, go have a quick look at his post.

But there is a sensible way we can re-phrase the question to become one that we CAN answer:

How many unique virtual identities are there that are playing online games this month?

Virtual Identity … what? No, that’s not what I wanted to know about

Actually, maybe it *is* what you wanted to know about.

In the real world, we never actually count people for anything (except if we’re physically smuggling them past Border Control, I guess); instead, we count Identities: verifiably unique records that each correspond to no more than one person.

In the real world, one ID does not equal one physical person, even though it is “approximately” that way (bear in mind that even governments have so far proved incapable of legislating + enforcing that concept, despite having tried for the last few thousand years).

In the online world, the concept of Identity is abstracted. This is all the fault of “computers” and especially “programmers” and “database vendors”, who couldn’t cope with the amount of info required to fully represent a single Identity (and as time went on many realised that they did not want to). They cheated. And so, from the earliest days of the internet (and before - back in the days of BBS’s), everyone has had multiple ID’s.

On average, each of you reading this probably has something like 200-300 separate online identities. On average, each of you reading this probably BELIEVES you have something like 2-3 separate online identities. Factor of 100 difference (have fun counting them…).

Those virtual identities are the lifeblood of online services. They are countable, they are serviceable - and they are uniquely and individually chargeable (even when several of these identities may represent just one real-world human: if the identities are separate, then you can charge multiple times, and many people really do willingly pay several times over!)

Many of those identities are “inactive”, and unlike people, the corpses of Virtual Identities do not naturally rot and disappear, they live forever - and can be brought back to life at any moment by the owners. They’re all real - they are still verifiably there - so for now we’re going to count all of them.

(personally I prefer counting “active identities within the past month”, but more on that in a later post. Counting in billions is fun for now…)

How many virtual identities play online games?

Start with the big guns, going from their own official announcements.

Individual games: 400m

Kart Rider = 160 million
Habbo Hotel = 100 million
Neopets = 65 million
Maple Story = 57 million
Club Penguin = 20 million
Runescape = 10 million

+ others I didn’t bother looking up

Subtotal: 412m

Publishers who declare registered directly: 1200m (or 800m)

Then add in the big publishers, going from their official announcements

9You = 120m
Acclaim = 3m
Bigpoint = 30m
CDC Games = 140m
CJ Internet = 23m
Disney = 12m
Gameforge = 60m
Gamania = 10m
GigaMedia = 9m
Gpotato = 2m
HanbitSoft = 8m
K2 Network = 16m
Mattel = 11m
Moliyo = 7m
NCsoft = 2m
NeoWiz = 7.5m
Shanda = 700m (*)

(*) (note: using the active and paying ratios below, this would be approx 150m or 300m, which is such a huge difference (and stands out as massively anomalous compared to industry standard - even for other Chinese operators) that I’m going to treat it with extreme suspicion and go with 300m instead)

Subtotal: 1158m (or approx 800m if we downgrade Shanda by 400m)

Publishers who declare active or paying: 100m

Then add in the big publishers who declare “active” or “paying” accounts instead of “registered”:

As well as just general industry knowledge on this stuff, I have official figures from half a dozen publishers that let me calculate Registered:active or Registered:Paying ratios, so from averaging those I get conservative multipliers of approx:

Registered / Active = 4
Registered / Paying = 40

Gaia = 24m (6m active)
Giant Interactive = 68m (1.7m paying)
NetDragon = 14m (3.5m active)

Subtotal: 106m

Facebook + Web gaming = 200m

Then look at the big Facebook games-publishers, and the online gaming sites from the comScore study:

Yahoo Games = 53m
MSN Games = 40m
Miniclip = 30m
EA Online (inc. POGO ?) = 21m
SGN = 40m
Zynga = 55m
…
Others (from comScore report) = 78m

Subtotal: 173m

Final tally

There are approximately 1.5 billion registered identities in online games in 2008

How many “real people” is that? Well, as noted above, the percent of registered accounts that are active is around 25%, so I would guesstimate (really really rough figures now!):

There are approximately 375 million people in the world who play online games.

The theoretical current maximum playerbase for a subscription MMO would be somewhere in between those two figures (plenty of people pay for 2, 3 - or as many as 10 - accounts, as Raph noted).

The theoretical current maximum playerbase for an F2P game would be the bigger of the two figures, obviously.

WoW (World of Warcraft) still has a long way to go, people…

Exclusions - what did I miss?

There are plenty of operators that are not counted in the above which run games in countries not often associated with online gaming (e.g. Vietnam, Russia, etc) - and yet their figures are significant (I’ve been tracking them for a while and they’re growing very fast).

I didn’t bother including them because even in aggregate right now they probably wouldn’t be able to shift that 1.5b figure any higher.

There are also some who are using a combined service only part of which is games, e.g.

Tencent = 350m users of the IM client which integrates many online games

…which I haven’t included at all. Feel free to take my headline figure and add that on! (and add back in the 400m accounts from Shanda that I discounted / didn’t believe)

NB: Jussi and I have pooled our data, but will be looking at different aspects of it going forwards. Should be interesting…

Background

Roughly a month ago Jussi Laakkonen published a list of $350 million invested in year 2008 into virtual worlds, casual MMOs, and casual & social games. Based on US-centric sites, it missed out the majority of European deals. So, inspired by Jussi’s excellent idea, I then posted my own list of European deals I’d been tracking (which also included some extra things on the fringes of Jussi’s initial set). We decided that the right thing to do would be to put those lists together.

The extra things I’d been tracking were mainly in MMO investments, technology vendors, and support services (e.g. payment providers). I also wanted to add in mobile gaming (especially in light of what’s happening with the iPhone, the iPhone investment fund, and the Blackberry investment fund). These are the areas I’ll be looking into more in the future.

Analysis on T=Machine

I’ll be doing some followup posts over the next couple of days, Jussi’s zooming ahead with his - check out his blog to keep up with his comments too.

Followup posts will all be tagged under “jussi vc deals europe”

Jussi’s Analysis

Jussi’s posted a great summary of the core data.

The data

The data on VC investments has been collected from publicly available sources including but not limited to

* VentureBeat
* PaidContent
* Virtual World’s Management
* Avista Partners’ video game briefing
* TechCrunch
* CrunchBase

The data was gathered by Jussi Laakkonen and Adam Martin. The data is most accurate for year 2008. Year 2006 and earlier years have been only covered sporadically and typically only for companies that have received follow-up funding in years 2007-2008 (IIRC the European data is complete from the end of 2005 onwards, as it started from around the time of Mind Candy’s first announced funding). The data is provided AS IS and the authors make no warranties or guarantees about its accuracy.

Download the spreadsheet:

* Excel format
* CSV format
* HTML format

(a FAIL using web-based meeting tools)

1) Make it look fun and interesting and seemingly inclusive:

“MiniBar is a social evening in East London which offers people a chance to snaffle some free beer while discussing p2p, Creative Commons, web applications, social networking and general Web 2.0 (3.0) mayhem & fandango.”

2) …but require that signup has to be done in two separate places for two “halves” of the event:

“You can come at 5pm … You need to register separately here for this part.”

3) …and make the location a Secret, known only to the special few:

“Location
This location is shown only to members”

4) If someone attempts to signup for the (free) event, deny them, and demand 250 letters explanation (no more! don’t you dare go over 250 chars!) for why they are important enough / l33t enough to be allowed to come:

(the way meetup.com works, I can’t access this page from cache to copy/paste the text, sorry - you’ll just have to take it from me that it’s pretty abrupt, demanding you justify yourself without offering anything in return, or any kind of explanation of WHAT you are supposed to write, or WHY)

5) Finish your event description with not one but TWO content-less/broken links, and describe them as “more info”. For bonus marks: forget to hyperlink one of them:

“More Info at: OpenBusiness.cc and barcamp.org/minibar”

(the first domain there is hotlinked to: http://www.openbusiness.cc/minibar/)

NB: http://www.openbusiness.cc/minibar/ == a empty webserver directory on a webserver allegedly running Apache version 1.3.39 (!) - not impressive for a web/internet event.

NB2: http://barcamp.org/minibar == a webpage with adverts for 50 odd totally unrelated items, e.g.

“angled bob hair style
black braided hair styles
jc penny free shipping
trendy hair style
victoria secret free shipping”

(yes, really - Victoria Secret and JC penny. For a supposed BarCamp about startups and internet companies. Um … OK.)

I guess that’s another Web 0.1 example, then…

I was looking through presentation slides the other day, and saw this:

“As children develop, they make greater and greater efforts to adapt to reality, rather than distorting reality, as in make-believe play.”

The implication, contextually, was that ultimately as a child becomes an adult, their reality becomes fully adapted, and no longer distorted. That might not be the intended implication, but it’s interesting: I’ve been fighting against this since, well, since forever, really. And spending your life constantly distorting reality it seems to me is neither a bad thing nor a limiting thing.

Because it trains you to be good at two things: seeing how you might change reality, and believing that you CAN change it.

At one end of the spectrum, distorted realities make it much easier for you to visualize what is “possible” instead of what is merely “probable”, and that’s the essence of spotting opportunities.

Entrepreneurship and Seeing Change

(good) Entrepreneurs are constantly seeing new ways to “change the world” in ways both small and large. Often the change is small, but the effects are large, or vice versa. It’s often said that “you cannot teach Entrepreneurship”, and while I beg to differ, I have experience of actually trying it, and huge experience of arguing the concept with people. Mostly, the argument against the teachability of entrepreneurship is rooted in the inability to “make” people “become able to” see Opportunities.

I think one of the primary differentiators for having/not having that ability (irrespective of whether it can be taught) is the extent to which you see:

The world as it is

as opposed to

The world as it could be

and even

The world as I would like it

Looking at the Entrepreneurs themselves:

• Good entrepreneurs, in my personal experience, see the world always as It Could Be.
• Bad ones usually see it as They Would Like It To Be.
• Great ones ALSO see it as They Would Like It To Be
• Non-entrepreneurs see it As It Is

…with the difference between Great Entrepeneurs and Bad Entrepreneurs being mainly that the former *also* see the world As It Is, and hold the two visions in their head at all times, simultaneously.

Because the Great Entrepeneurs, while constantly (many times a week) spotting things that They Would Like It To Be, also - constantly - imagine how they might transform the world As It Is, usually by a series of steps, into that target. The Bad ones simply employ the tried-and-tested Hope plan:

1. Have Idea
2. ?
3. Profit

…which - let’s be honest here - occasionally works (usually if you simply get massively lucky with timing / outside events).

Entrepreneurship and Effecting Change

Why are some people better able to see how to make their desired changes come true?

I believe it’s largely driven by two skills. Firstly, the obvious one highlighted above - that the more practice you have of thinking about how you might change reality to fit what you want it to be, the better you will be at that process.

“Better” here means that you will

• have more ideas for each transform in the chain
• be better at recognising “good” and “bad” transforms
• process suggested transforms - and transform-chains - more rapidly (quick accept/reject)

The second skill is believing in yourself and your ability to change the world. Often, the successful changes that Entrepeneurs effect are surprising to most people - they question how that could even be possible - while *in practice* not being so difficult to achieve. Usually, this is because normal people see only the beginning and end of a sequence of changes.

To take a simple example that illustrates the kind of “impossible” being “possible” given some clever changes that I’m talking about, look at Freeserve. (NB: this is based on my memory of events more than 10 years ago, much of which I found out 2nd or 3rd hand, when trying to understand how Freeserve had achieved something that had eluded all the other ISPs - so take this as an example in theory, it may not be accurate in practice! Incidentally, there seems to be VERY little public history on Freeserve, how it started, and how massively it changed ISP / internet access in the UK - I’d be interested if any readers have seen any articles / interviews about the details of its inception?)

Freeserve … the first “free” ISP in the UK

When Freeserve was created in the UK providing “free internet access” in the 1990’s, it seemed impossible. They even provided a cheap local phone number that could be used anywhere in the country - so it was cheaper on your phone bills than calls to your subscription ISP!

Ahem. Except, it wasn’t the cheapEST kind of local phone call, it was partway between an “ultra-local” call (very cheap) and a “national” call (expensive).

And, in an unprecedented move, Freeserve had managed to get the telephone company to give them a share of the revenue from that particular phone number. For reference, at the time, if you wanted to get revenue from the telco for running a phone number, you had to get a number on the “very expensive” plan, where the telco would charge the consumer as much as 10 times the cost of an already expensive national-call.

Of course, given the huge volume of calls that then went through to that number, the telco made a huge profit out of the scheme - so it worked out in their best interests, and everyone profited. (although I have no idea how this was negotiated, or whose idea it was - and “persuading a telco to change their revenue model” is itself a problem I’d usually classify as “impossible”, so I’m guessing there was another, similar, chain of small changes that lead to this being acheived).

About two years before this all happened, I was working on a project to create a new ISP, and I’d got as far in breaking down the steps as to see that you HAD, somehow, to find a way to remove the “dual-billing” model from consumers (pay once for internet access, pay twice for the per-minute, uncapped (!) phone call too). I didn’t have the confidence to believe it was possible, and after running through some fairly crazy ideas (including looking into internet access via broadcast radio for downstream, and home modem for upstream), I gave up and moved on. With hindsight, at the time, I realised that I’d have hit upon the change-the-telco idea within another couple of months, and that I’d have had a clear year to find a way to ACTUALLY get a telco to change, and still be able to launch before Freeserve.

(for the record, that event finally kicked me into realising that the world-changing ideas I had all the time, and thought through as often as multiple times a day, were actually all realisable (potentially). Many people I know, potentially good entrepreneurs both older and younger than me, still don’t believe the world can be changed to their tune, they can only see the world As It Is)

How to … Influence People

This is a big topic; whole books have been written on it! (OMG!!1!!!!0).

But just to select ONE of the most powerful weapons: imposing a personal view of reality onto the reality you find, and living and acting as though your view of reality is the real one, and keeping at it until everyone else gives in. The real beauty of this being that if the only differences between your reality and the real reality are the beliefs of people, then it becomes a self-fulfilling dream.

This is basic sales-technique: it’s usually more effective to sell people on a shared belief than it is to sell them merely on a bunch of facts and leave them to guess for themselves whether those facts are real or not. But it takes a particular kind of personality to be good at imposing their desired reality (if that’s all you do, it tends to come across as mere bullying), and also at making it stick.

IMHO, people who spend more of their time adapting reality are much better at the “making it stick” part.

Conclusion

So, ultimately, one of the things that makes a great Entrepreneur is huge practice with very much NOT adapting to reality, but instead adapting reality to their own ends. And it helps in ways beyond the obvious (spotting new opportunities).

If you want to be a great entrepreneur, I’d recommend you start dreaming more, and make your dreams more vivid and concrete, and try to change the world to fit them, rather than the other way around.

PS: from reading this post, all of which has been written between going from that slide of the presentation to the next, you may come to think that it can take me a long time to read a presentation. You’d be right. This is partly why I’ve taken to transcripting in real time every conference talk I attend (and usually publishing them on this blog) - the smallest comment can spark off so many thoughts that I miss the rest of the talk, and it’s a way of giving me a chance to hear the whole talk.