Is there room for a big splash to be made at the “deep end” of online gaming? The newly public Zynga has been making waves with free online casual games, or the “shallow end,” dominating the Facebook platform, and relying on analytics and in-game purchases to drive revenues and engagement. EA and others have been rushing into the casual gaming fold, buying up digital game developers like Playfish, Chillingo, Firemint and PopCap. But, EA is also taking a longer-term, diversification view, showing that there’s demand for richer, more complex MMO online gaming experiences, snatching up KlickNation in December.
Trion Worlds, a lesser known game development company headquartered in Silicon Valley, yesterday gave even further evidence that the “deep end” of online gaming is alive and well, announcing that it has raised an $85 million round of strategic growth equity financing from Ontario Teachers Pension Plan and Bertelsmann Digital Media Investments. The round adds to the $100 million the startup has already raised from investors like Time Warner and Trinity Ventures.
That’s not bad considering Trion has only released one game. But, that one game, Rift, a MMO fantasy role-playing game has been a huge hit for the company, with more than one million players activating accounts in less than four months. And Trion said yesterday that its North American and European revenues surpassed $100 million in 2011. It seems yet more evidence that there is a thriving market for these large-scale, dynamic multiplayer online games, and the early success of Rift already has Trion thinking about an IPO, according to Reuters.
The success of Rift has led the company to begin developing two more game projects, including a realtime strategy game, End of Nations, designed in conjunction with Petroglyph Games, and Defiance, which sees Trion embarking on an ambitious partnership with the Syfy Channel to create an experience that is part TV show and fictional drama and part online action gaming. How gamers play the game will influence the show, and vice versa. (You can read more in our prior coverage of Trion and Rift here.)
Of course, being a one-trick or even a one-platform pony no longer cuts it in today’s wild world of gaming, as it’s become tough for game developers to become profitable off one hit, especially for those developing complex, MMO online games that cost millions to make. They’re riskier investments. What’s more, unlike other social games, Rift makes money not by freemium, the now go-to revenue model for online gaming, or by in-game purchases, but instead by monthly subscriptions.
This can be more lucrative than the former, with consistency in returns, but with online gaming and distribution plodding along towards free, it behooves the gaming startup to find other sources of revenue (and develop a lot more games) if it wants to stay in the game for years to come — and pursue an IPO. (Though, of course, $185 million in funding doesn’t hurt.)
This was the thinking behind Trion’s recently announced Red Door, a platform initiative that will allow the startup to run online games developed by third-party publishers, and presumably sell them through a consumer-facing storefront. Trion will likely be charging game developers to use their technology, which allows third-parties to create games with massive, scalable and synchronous gameplay.
As we touched on last year, the value proposition of Trion’s unique platform is its distributed computing framework in which gameplay, characters, and interactions between players are housed in the startups’ server cloud and are broken down by function — rather than location, like most other games. This means that, for example, one set of servers handles non-player functions in the game’s world, while another processes encounters with “bosses.” This allows Trion to remodel less-played portions of the game, activate more servers for scale, or make changes to the game in realtime — right in front of players — without having to patch their machines.
Leveraging this software/hardware, in which Trion has invested tens of millions, to sell to the developers of MMORPGs could have big potential, and with a whole pocketful of new capital, Trion now has more flexibility to tinker with its business models, continue scaling its infrastructure and developing further platform initiatives. And it wouldn’t be a surprise if those games showed up on mobile.
For more, check out Trion at home here.