Indie Studio Startups: What Every Aspiring Founder Needs To Know With Raph Koster

January 5, 2024

Indie Studio Startups: What Every Aspiring Founder Needs To Know With Raph Koster

Raph Koster is the CEO of Playable Worlds, a computer games company specializing in gamification, online games, and game development. As a veteran game designer, he’s been professionally credited in almost every industry area. Raph was the lead designer and director of Ultima Online, one of the first MMOs to reach $1 billion, and Star Wars Galaxies. Raph is also the Founder of Metaplace, a metaverse company that he exited and sold to Disney Playdom. His book, A Theory of Fun for Game Design, recently revised for a 10th-anniversary edition, is an undisputed classic in the games field. Raph is revered as one of the most celebrated social designers of Sandbox Games, and in 2012, he was named an Online Game Legend at the Game Developers Conference Online.

Here’s a glimpse of what you’ll learn:

Raph Koster discusses Playable Worlds and its mission
Insight into how to attain startup funding
What Raph seeks in potential hires
How did Raph break into the video game industry?
Learning how to pivot during a merger and acquisition
Raph’s 10-year forecast for the gaming industry
What was Raph’s experience during his tenure at Ultima Online and Metaplace
What makes a video game fun to play?
Raph’s tips for building and engaging effective communities

In this episode…

Are you a video game developer who dreams of starting a studio? In recent years, the gaming landscape has seen a dramatic increase in the number of independent game studios. Although founding an independent studio affords creative freedom, it is a risky industry that requires careful consideration.

According to gaming pioneer Raph Koster, the success of independent studios has always been impeded by factors such as smaller marketing and distribution channels. As a result, indie games heavily depend on word-of-mouth and critical acclaim to succeed. Additionally, due to rising costs of development tools and the need to hire more talented developers, indie studios face increasing pressure to reduce costs. Raph forecasts that studios might try to maintain quality by using AI to perform pathfinding and animation tasks. Another hindrance is the surge of games as a service, which is a safer investment for publishers. Although GaaS generates more revenue over a longer period, other genres might receive less funding.

Join Lizzie Mintus for this episode of the Here’s Waldo Podcast, where she talks to Raph Koster, CEO of Playable Worlds, about gaming startups. Raph discusses how to raise startup funding, a 10-year outlook for the gaming industry, and what makes a video game fun.

Resources Mentioned in this episode

Sponsor for this episode...

This episode is brought to you by Here’s Waldo Recruiting, a boutique recruitment firm specializing in the video game industry that prioritizes quality over quantity and values transparency, communication, and diversity. We partner with companies, creatives, and programmers to understand the why behind their needs and provide a white-glove experience that ensures a win-win outcome.

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We understand that searching for the best and brightest talent can be overwhelming, so let our customer-first staff of professionals do the leg work for you by heading over to hereswaldorecruiting.com.

Episode Transcript

Welcome to the Here's Waldo podcast, where we sit down with top visionaries and creatives in the video game industry. Together we'll unravel their journeys and learn more about the path they're forging ahead. Now, let's get started with the show.

Lizzie Mintus: I'm Lizzie Mintus, founder and CEO of Here's Waldo Recruiting, a boutique recruitment firm. This is the Here's Waldo Podcast. In every episode, we dive deep into conversations with creatives, founders, and executives about what it takes to be successful. You can expect to hear valuable lessons from their journey and get a glimpse into the future of the industry.

This episode is brought to you by Jerez Bueldo Recruiting, a boutique recruitment firm for the game industry. We value quality over quantity, transparency, communication, and diversity. We partner with companies, creatives and programmers to understand the why behind their needs. We provide a white glove experience that ensures a win outcome.

Before introducing today's guest, I want to give a big thank you to Wallace Poulter for introducing us. Thank you. You are such a good connector.

Today we have Raph Koster with us. Raph is a veteran game designer and the founder and CEO of Playable Worlds. He's been the lead designer and director of Ultima Online, one of the first MMOs to reach a billion dollars, and Star Wars Galaxies.

He founded a successful metaverse company called MetaPlace, sold it to Disney Playdom, and he is wildly respected as one of the greatest social designers of sandbox games. His book, called A Theory of Fun for Game Design, is one of the undisputed classics in the games field and was recently revised for a 10th anniversary edition.

Thank you so much for being here today. Let's get started. First of all, can you tell us a bit about playable worlds and maybe tease a bit about what you're doing?

Raph Koster: Sure. I founded Playable Worlds in 2018, along with Eric Goldberg and really trying to set out to reinvent what can be done with online gaming and with MMOs in particular.

Cloud technology has come such a long way. The things that we can do with simulation, really bringing more living worlds into being than what we've been able to do in the past. It's really a new canvas. It opens up new forms of gameplay. The kinds of dreams that players have had for their virtual worlds for decades now, can actually be built. Whereas before, it feels like we've been in a mode where the worlds were very Static players couldn't have a lot of impact. So we're setting out to change that.

Lizzie Mintus: You're an inspiring CEO. You're a classic CEO. You're like the perfect big picture vision. I'm excited. What made you decide that you were ready to start another company?

Raph Koster: Oh, gosh. Post selling the prior company, it sold to Disney, and I worked basically as an internal consultant within Disney, right? Which means you don't get to really work on your own things. And at heart, I'm a product guy. I like making things myself. It was a thing where I was there for a few years. And then after that, I was pretty tired. And I ended up doing six months off and then I got pulled into doing consulting.

It was fun. I was helping out lots of companies. Activision, Wooga, Google, Facebook, you name it. But again, I got the itch to make something for myself. And it's been a while since I had been doing a classic, full on, massively multiplayer game.

There was a period where I did things in mobile, a period where I did things on web games, Facebook games, et cetera, but it had been a while and it felt like the market and technology was ripe. So a lot of it was about waiting until it was the right kind of business circumstances to be able to do the kind of dream game that I wanted to do.

Lizzie Mintus: And so was it your idea or your co founders? How did your partnership come to be and how did you decide what you wanted to do exactly.

Raph Koster: Oh, yeah, that was all me. Eric serves the role of the business person primarily. So no, I put together the high level game design plan, high level technical architecture plan, high level story and lore plan, high level marketing plan. I put together all of those things before even deciding to actually go found the company.

I'm very much sort of a synthesis person who ends up thinking about all those different angles at once. And so I ended up putting all of that together and then approached Eric, and we went from there.

Lizzie Mintus: How could Eric say, no, you have one of the plans all laid out.

Raph Koster: There's always the questions of, is this something that you can fundraise for? Is this something that there will be an appetite for. In the funding community, that's not the same thing as whether there's an appetite in the player community, right?

Lizzie Mintus: What advice do you have for people with fundraising? It's such a hot topic right now, and I suppose always, but I feel like a lot of people are trying to crack it. So how do you ensure that what you're creating is fundraisable?

Raph Koster: Yeah, I would say it boils down to the fact that quite a lot of endeavors within the game industry aren't what are typically classified as venture.

The way venture capital math works, they put in a bunch of different investments. And out of their hundred investments, they're hoping that maybe one pays back all of them. So they're very much investing, assuming sort of an exponential curve. It's possible for an individual game to do that, like those exist. There are Minecrafts in the world, but it's a lot more common. And this is the way they tend to think for it to be about more than just a product. Mitch Lasky likes to talk about it in terms of, is this a feature? Is this a product or is this a company?

And I think one of the challenges is that the game industry is biased towards things that are a product. They're rarely pitching a feature if they go out to raise venture, but they're often not thinking in terms of how do I pitch this as a company? What is the long term idea? The reason why this is more than just a single product bet, because that's what then can provide the kinds of returns that VC is looking for.

I think that a lot of folks in games are coming from pitching to publishers. Publishers don't think that way. Publishers have a different kind of mentality. They're not necessarily looking for something of that scale. In fact, it can be a turnoff for them. It's probably the commonest thing I see. I get asked to look at pitches to help out startup companies a lot. And it's the biggest thing. You have to be able to tell a story that is about how you can drive a new segment, or you can build a moat around your product because nobody else can do what you can do. And then from there, develop it into a new genre or, that you have access to a market nobody else does. It's stories like that, and a lot of game studios don't tend to think that way.

Lizzie Mintus: Thank you for the perspective. Hiring is always a challenge. And I say this as the owner of a recruiting company, and throughout the years, I feel like you get better and I'm sure you can look at pitches or you can look at people and you're like, this is going to work. You have a sense after a while, but what do you do look for in your early hires? And what kinds of things do you think about when building a team?

Raph Koster: Oh gosh. I actually think this is something that's a skill. I don't necessarily claim to be great at it. So maybe you shouldn't ask my advice. What I look for is buy into the vision of what we're trying to do. And maybe that's wrong because after all, startups often need to pivot a lot. And if you two went into that, then that could be a problem. What I want is that shared enthusiasm. I want everybody to be pulling in the same direction. I want there to be a constructive conflict where people go, you got bear right in order to help us get to our destination. So for me, a lot of it is about that.

I want people who are flexible thinkers. I want people who are, ideally, people who are good with other people. As a boss having to manage constant conflicts, it takes away from actually building the thing. Yeah, those are probably the biggest things.

Lizzie Mintus: Hiring is hard. I hired my own team. And it's so funny because I'd be such an expert. But yeah, just figuring out what questions are right for you and your culture.

I like what you said about enthusiasm and passion can't really be taught. I mean you can be passionate about, like you are or you aren't for the most part, right? Figuring out how you can discern that.

Raph Koster: Yeah, I actually avoided using the word passion because sometimes people use the word passion as shorthand for, here's a worker we can exploit. I want people who will care about what we're doing, who aren't just hired guns, I want them to be emotionally invested in it because better work comes out when people are emotionally invested in what you're trying to accomplish.

Lizzie Mintus: And they're able to have their own opinion. Like you said, and push back and contribute that way if they're into it. If they're just checking in and out yeah, it seems good.

Raph Koster: That's exactly right. Yeah.

Lizzie Mintus: You've been in the industry for over 30 years. Tell me about how you broke into the video game industry.

Raph Koster: Oh, not that it's a useful story for anybody breaking in today, right? It was so different back then. I was in graduate school getting a fine arts degree in poetry, actually. And at the same time, I was working on and playing a lot of text based online games, because that's what was around in the early 1990s.

One of the programmers that I worked on games with was hired to do a pilot project at Origin, which was at the time a famed studio owned by EA in Austin. And He recommended me and my wife for positions in this skunk work project that was just getting started. He and I had actually shared my first video game credit before that, which was a shareware game that was published by Morathware back when you would buy a CD ROM with a hundred mahjong and board games on it and we had done a game for one of those together.

So that was actually my entry point. It was a classic case of being prepared and then getting lucky because I was prepared. The pilot project was for one of the first big massively multiplayer games and the studio was looking for people who had expertise and online worlds and the place to go find those people was in these text based games.

So I was prepared, but I got really lucky that my friend happened to land that gig and then recommended me in. And he landed that gig through luck because they had gone to him for a different thing altogether. And casually in conversation. He mentioned, Hey, so yeah, this is actually a kind of thing I enjoy making. And they said, Oh, we have a pilot project.

It was very much a luck favors the prepared, but also the, who you know. It wasn't a connection that had a lot of power. It was a connection that was coming in as a newbie, just like me.

Lizzie Mintus: I think a lot of people's stories are about knowing somebody and yeah, you're in the right place in the right time, but you also seize the opportunity and you're doing something you're passionate and you're putting yourself out there a little bit.

So I think that those things still land true today. If you apply to a bunch of jobs, you might not get it, but if someone can recommend you and you're passionate about the product, you're a lot more likely to.

Raph Koster: You're a lot more likely to. Who and networking still matters a lot, but the scale of it is so different because back then what ended up happening was, the expertise that we had built working on these text mods, the text based games, was relatively rare. And we'd actually built it to a notable degree. We were working on a very respected one of those games, a game that people pointed at and said, wow, that game's really impressive, right? We were really well prepared, but even then, I ended up leading the design of that game when I was 25 and it was a giant project.

I think that probably wouldn't happen today. I think that's pretty unlikely. It was just a smaller industry.

Lizzie Mintus: It's grown a lot. It's still growing. Even with all the layoffs, it's still enormous.

Raph Koster: Yeah. I guess it is technically the first contraction year the games have had since probably the Atari crash, maybe? But the trend lines remain pointing up. I know,

Lizzie Mintus: I think that's so important for people to remember. And now's a great time for new studios and just time for innovation and trying things you wouldn't. A lot of people are more risk averse right now, right? A lot of the bigger players. So if you're a riskier and smaller, maybe like your studio.

Raph Koster: Yeah. I think that the challenge there right now is actually that money to get going is pretty hard to come by. If you are in a position where you can get going without needing a lot of capital, now is a really good time to go try doing something. If you need capital, I think it's a little bit challenging.

Lizzie Mintus: Very true. A16z has speedrun. There are different ways now that you can get in, but yeah, to actually fundraise is everyone's biggest problem.

Raph Koster: Yeah, it's a bit of a challenging environment at the moment. I think it's a little easier actually if you're really small down at the seed level. I think It's more available there.

Lizzie Mintus: Definitely. But there are a lot of studios starting right now and I'm optimistic.

Raph Koster: I just got asked actually. Edge Magazine did a big anniversary article and they asked a bunch of developers, what's your 10 year forecast. I gave what people are portraying as a fairly, as a grim or dark view of the future. And I guess it's a matter of opinion. The things that I pointed out were that game dev costs are continuing to rise, even for indies.

The stats on whether or not you can build a successful indie studio have never been great. It is a little bit of a, you've got to get lucky and you've got to make a great game. There are more games out there now that are good than ever before. It's a golden age for games. That means competition is also pretty stiff. We're seeing budgets at the high end continue to push into just astronomical territory.

So it's an interesting time because the compensation for that developers and publishers are doing is moving more into the service games, but those are hard to put together and they're expensive and it's a big cultural sort of adjustment. It'll be interesting to see, I worry that means that other kinds of game genres that don't give that kind of ongoing revenue might suffer because they won't get as much investment.

Everybody will always say, we should be doing a service game instead of a consumable game, because for the same amount of dollars, we have a higher return. The linear narrative games, I don't want them to suffer or go away. So yeah, it's an interesting time.

I think AI is going to be a really interesting factor because I think a lot of studios are probably going to be driven to adopt it just for cost reasons, regardless of how they feel about it ethically.

Lizzie Mintus: I would agree. I think more and more people are looking at cheaper places because it's expensive in America, but it's not as expensive in other locations.

And I know just from a development standpoint, there are a lot of tax credits, places like Montreal, or you could go somewhere far cheaper. So I think the places that games come from will shift a little bit too. Obviously there's the big players, right? And they're not going to go away, but maybe other places will start to develop more and the dynamic will change.

Raph Koster: I think we've been seeing that and in gradual slow motion over the last even 20 years. Certainly, the idea that outsourcing is a major way to do things, has been rising. If you look at some of the larger projects that are out there, whether it's a Fortnite game or an Ubisoft game or whatever, those make huge extensive use of outsourcing.

And a lot of that outsourcing is, whether it be Asian studios or Eastern Europe or whatever, it's definitely become an assumed mode once you get above a certain scale of development.

Lizzie Mintus: The amount of people that work on a title is crazy too.

Raph Koster: Yes. Just random stats, I've heard Fortnite's team is like well over a thousand. I hear that Baldur's Gate 3, I think was 450 people. There's are rumors out there of AAA major franchises with budgets that are at three quarters of a billion dollars. Those are big numbers. And of course, as a creative big numbers often means less creativity.

I spend a lot of time playing indie games where you can find a lot more of the experimental stuff. But I also want the Indies to be able to eat. I want them to be able to make back their money. So the rising costs, being even down at that end is a worrisome trend to my mind.

Lizzie Mintus: Yeah, absolutely. Tell me more about your Ultima Online days. I'm sure you get asked this a lot, but tell me about launching the game and how you overcame them.

Raph Koster: Ultima Online was an experiment. It was a skunkworks project back then. Origin had wanted to do an online version of Ultima for a long time.

I imagine plenty of your listeners may be too young to remember the heyday of the Ultima series, but it was the Final Fantasy of its day. It was one of the premier role playing game brands and franchises that existed. It was hugely influential. Some of the things that we take for granted today in role playing games that came from Ultima and from the kinds of things that are provided- some of the earliest versions of crafting party based gameplay, the notions of things like NPC schedules and day night schedules, and the first morality systems and video games.

A lot of these things were pioneered by the Ultima series. So it was a name to conjure with, right? It was a big deal to take Ultima into this brand new realm of building an internet game around it. And the internet itself was also a new idea to most people. Pictures on the internet didn't even really come along until 94 and early 95 is when origin started working on this idea.

It was a brand new kind of thing and Origin was not the only people who jumped in feet first to try to take the old text based mods and make graphical versions of them. There were other titles, Meridian 59, The Realm, and so on. But what that meant was that Origin had no clue how to build a game like that.

It was completely new to them. It was new to virtually everybody in games. There was a segment of online game developers, but it was nowhere near the mainstream. So there was an awful lot to discover. We had so many things that we had to invent. We were put in on a separate floor in a little separate area where the rest of the floor was occupied by an ad agency or an architecture firm or something like that. Real estate, I don't know, something completely not games that we ignored.

And so we would surface in their lobby, come out of the elevator, immediately bear right and go into our little hallway and closet area down in the corner. And when I say hallway and closet, literally, my wife and I worked in a supply closet. The artist sat in the hallway, cramming three, four engineers into a room on folding tables. It was very much a skunkworks project. They even then, the ad agency or whatever moved out and they demoed that floor. And we had the only part of that floor that was still standing. The rest of the floor was completely empty.

And they'd knocked out all of the drywall, all of the glass in the windows. You could walk off the building to your death. And we would surface onto this bare concrete and then head over to the one enclosed area and it was winter. And we were typing with fingerless gloves, in order to develop the game because our server machine sat directly under the thermostat and it was always overheated. The air conditioning was blowing in the middle of winter and we were all freezing.

It was really a great team bonding experience, but also this really was a skunkworks project. And we built the earliest versions of the game and just posted up a web page, which was a brand new idea.

Posting up a web page for a game, we put up an FAQ I'm told it was the first web page Electronic Arts ever had. We didn't tell marketing we were doing it, so they didn't know. We had been given a budget. They were forecasting we would sell 30,000 copies lifetime ever. And we'd been given like this little starter budget of 150,000. We got this alpha test up and running and we couldn't afford to send CDs out for anybody to test the game with. So we posted up on the website and on usenet on forums and whatnot saying, we've got this game, send us five bucks. We can send you a CD and you can try it out.

And we paid back the pilot project money just off of the alpha. And that's when EA realized this is going to be big and sure enough, it was. It ended up being really big. yEah. Very much an experiment that turned into a home run swing, I guess is how I'd put it.

Lizzie Mintus: Okay, so EA realized it's going to be big. People like your product. Walk me through launching it, and there's always so many ups and downs.

Raph Koster: For the time, it was an enormous and very ambitious game. It still looks ambitious if you look at descriptions of it. And we crunched like crazy. And 14 hour days, including weekends.

Lizzie Mintus: And I'm imagining you in your fingerless gloves, really cold, timing away, sleeping under your desk.

Raph Koster: I did sleep under my desk. They did move us downstairs after a while. And they actually put the mainline Ultima game that was in development, Ultima 9, they put that on hold and assigned over that entire team to us, which that team hated because they didn't know online games and they wanted to be making their game, not ours. So it was politically very uncomfortable.

There'd be screaming matches in the hallways. It was just a culture misfit. The crunch was horrendous. That kind of schedule for a year on end or whatever. And we managed to build that game in just a bit over two years, which was from when the team got fully assembled, there was pilot time before that.

It was just a brutal amount of crunch. The kind that today would be in the headlines. But we managed to get the game out despite having to invent a lot of stuff. Game time cards. That idea that you could go to a store and buy a game code and use it to add subscription time, that was like a weird idea.

And we had to generate the codes for the cards. We needed to generate random numbers for it. And so our exec producer literally generated them by wiggling his mouse on the desk for hours. There's so many stories like that. It was the first game to do a large scale VPN deployment worldwide.

The first game to having a map big enough that multiple servers were managing it and you could move across different machines in the cluster. Because it was one of the largest video game worlds that had ever been made. It was the first game, first major mainstream game to give you character customization, pets, player housing, crafting, just a whole host of things that we were inventing. Fishing, you name it. All in the goal of making a simulated online world.

The ideas went on to have huge ripple effects, but the game comes out and it's super buggy and so much so that there was even a class action lawsuit against us. Because the box said, this is an online game. You can play it 24/7. Some opportunists basically said, but it's laggy. So it's not real time and it has server downtime for maintenance. So it's not 24/7. and there was actually a class action lawsuit. It really pioneered on a whole bunch of different angles, I guess, is how I'd put it.

Lizzie Mintus: How did you figure out how to attract new players after you had so many people who've been playing for such a long time?

Raph Koster: It was actually the fastest selling EA game to that point because the hype for it was really high. Nothing else like it had been seen. There were other games, there were even other graphical MMOs that had come out, Meridian 59, The Realm, and so on, but Ultima Online had the power of the brand.

It had way higher production values. It was also just a much more ambitious title. There was just hype and excitement around, wow, we're getting to play something that hasn't really been seen. There's an interview out there with David Bowie going, have you heard of this thing, Ultimate Online or whatever? Robin Williams was a player, and so on.

It was a little bit of a cultural moment. There were think pieces in Wired and the New Yorker. The New Yorker sent a reporter to come look at, Hey, they're trying to build an online society. It was a bit of a watershed moment.

Attracting players was not the problem. Keeping them was.. We allowed players in the game to kill each other because we basically wanted to build an entire simulated world. So we had all of those kinds of things. We were hoping players would form governments, form police forces, do all of that kind of stuff.

And it turns out it's way harder to build civilization than it seems. Not too long after launch, we had a population larger than San Antonio. We had an exchange rate to the US dollar better than the Italian lira. And we had a Lord of the Flies murder rate that was through the roof. Within the game, like the worst offender was personally responsible for killing over 3000 other players. Many of them quit.

So the challenge very quickly became about, how do we manage this? It was new. It was the first time that any game had hit scales like that ever. And so it was just enormously difficult. We had been trying to think like game designers and suddenly we had to start thinking like a government.

We had to start thinking and inventing things like, we need new forms of customer service policies. We need ethical codes of conduct for our game masters, because early on there were serious challenges with misbehaviors and game masters doing things like trading in game benefits for real world things like money or favors.

All of this stuff and it was just this overwhelming new challenge. And it took quite a while, right? Today, there's a whole host of SOP, standard operating practices that are in place because of the lessons.

Lizzie Mintus: I know there's so many SOPs today, but how can people think today, especially with A. I. and all these new technologies about building effective communities that keep players engaged?

Raph Koster: A lot of these are actually quite difficult to learn for studios that aren't coming from a service game background. I often say it takes five to seven years to really wrap your head around what it means to be in a service, as opposed to a package good mode.

In order to build strong communities, first, you need the players to actually have dependence on one another, which runs contrary to a different desire, which is making your game accessible and easy to get into. Those two things are somewhat contradictory, and you have to learn to strike a balance. The primary predictors of people sticking with your game are actually the friends they make. That's the number one predictor.

The level of investment they have into things in the game that they can't take with them is another. And one of the weird lessons, for example, is these are role playing games, often players develop a persona. People pick up the persona and take it to another game very easily. That's easy. That happens all the time. So you have to find other things that they can invest into in the game, whether it's decorating their house or whatever. Even guilds. Very common to see entire guilds pick up and leave together. So yeah, you're in the business of building friendships, but friendships migrate out of the game if you're successful and then you lose them out of your game.

You need to think about building that kind of community interdependence pretty carefully. Character classes and different ways to play and all of that kind of thing. You need to think about how you as an operator relate to that community. Because if you are too distant from them, they lose trust in you, right? You need to be human for them to have trust.

This is the same issue as in the real world. Nobody trusts the politicians in Washington, but maybe you trust people that you know, right? It's very hard to trust people at a distance, remote, faceless, etc. So finding ways to earn that trust.

A lot of that is about consistency, whether it's consistency of updates, but also when people misbehave, do you have clear policies? Can people rely on the fact that you're not going to be arbitrary and capricious? Keeping your promises, which one of the ways people do that today is by not making the promises. The less you promise, the easier it is to keep them.

There's just a whole host of these things that you end up needing to think about a lot. And it really does change how you design the games. Your instinct would be, if you come from packaged goods, it might very well be, we need a handheld narrative all the way through, and we need to control the player's experience, and we need them to be able to play entirely on their own because coordination with other people is a huge pain. All of those instincts are wrong. Every single one of them is backwards in one way or another. If you're trying to build a really long lasting service game.

Lizzie Mintus: Who do you think is doing it really right now?

Raph Koster: Oh, gosh. League of Legends, Warframe, Fortnite. Especially Epic. The story of Fortnite is of a studio that's gradually shifted over time. More into this mode. And in their case, I think they started that shift early when they moved from making the regular Unreal games and went into Unreal Tournament and when Gears of War developed into more of a co op online play game franchise. Those are things that help them make the turn towards running something like Fortnite. A lot of it is about making that turn. Final Fantasy is another brand that has made that turn successfully.

Then you have ones like Rockstar with Grand Theft Auto, where it feels like the audience made that turn for them. Even the last Grand Theft Auto, right? Online was not the point. But the players love inhabiting that world so much that they are the ones who have effectively driven Grand Theft Auto online almost more than the developer has.

Lizzie Mintus: And so many people are building games with their community now, which is really interesting.

Raph Koster: Yeah, that actually was something that we were doing a lot of even in the 90s. In the nineties, in the heyday of the early shooters. People like John Carmack and John Romero and Tim Sweeney were posting up what were called plan files, which was their developer diaries and they were sharing what they were doing every day.

On Ultima Online, we were very open with the community. Here's the features that we're working on. Here's the things that we're going to do. I think big budget marketing works against doing that because you want to save up all of your cool features for a big announcement. That means doing a big dollar splash and so on. But the grassroots way of doing it, of essentially co building with the community really helps if you're one of the smaller shops. But if you're not planning on doing a giant marketing drop. I'm a huge fan of it. We have been fairly stealthy with Playable Worlds, and just dribbling out little bits of info on our discord and that kind of thing.

But I'm looking forward to the moment when we announce and then we can really do a lot more of that collaborating with the player base on, Hey, let's make sure this is a game that you all want, right? in our case, we've been building for a while. We've been building fundamental technology. We're past that now. We're well into building game proper, but, it's getting to be time to start telling them what we're doing.

Lizzie Mintus: Any idea of when that time will come or you cannot.

Raph Koster: Not quite yet. One of the things about the connected world we live in now is that anything you say can immediately fly around the world. I think a big thing is. An awful lot of folks are driven by his kind of first marketing impression. So we need to make sure that we have a great video to show before we put something up. And that means we still got to tune up graphics and things like that. First impressions can be pretty powerful.

Lizzie Mintus: I want to hear more about founding MetaPlace and how you came up with that idea and what it evolved into.

Raph Koster: Sure. I did MetaPlace at the time I was Chief Creative Officer at Sony Online. For a variety of reasons, I was attending a lot of what back then was the Web 2.0 kind of thing. I was attending a lot of those conferences.

It was a moment when everybody was talking about participatory Internet, user generated content, people setting up blogs, and WordPress was just really starting to blossom. Second life was out there. It was a period where users build the web, it's not broadcast. That was the main idea. Broadcast won out over the long haul and all of that user generated stuff got corralled into the Facebooks and Twitter slash X's of the world.

But back then it seemed like a thousand flowers were blooming. And there were a bunch of game projects at the time that were pursuing that. And with a Sony, I had been trying to get Sony interested in those and, they wouldn't nibble. And I really believed that web based gaming was going to be a really big thing and it was going to change the industry.

And for a variety of reasons, I ended up leaving Sony. And because I'd been going to all of these events, I was plugged into some of the venture capital world and ended up founding MetaPlace to pursue that vision of what games could be.

And the goal was let's build a platform for online worlds that works like the web does, that lets you have a thin client. So you can use one client to connect to lots of different worlds, that you can develop the games entirely in the cloud. And that means your one client can connect to many different kinds of games because everything comes down on the fly and then give that to users so that they could start doing the equivalent of blogs, but with little worlds. And have them all connect into a big old metaverse network. And if that sounds like Roblox to you, you're not wrong. That was what we were doing. We were basically doing that starting in 2006, which is also when Roblox started as well as a bunch of others that you've never heard of. It was in the air.

So we built that, we succeeded at building that platform and it worked. There were worlds that you could log into built by users, that connected to educational software like Moodle and you could run your college class in it and do your exams in it. There were worlds that connected to Amazon and you could run a full virtual storefront and walk around it.

There were worlds that could slurp Shakespeare plays off the internet in XML form, spawn the cast of characters, costume them, and present the play in real time on a virtual old globe stage. All of that stuff. And it was all built by players, by users, and it was awesome. And we were not making money. Arguably we were just too early.

There still isn't a platform out there that does all of those things. Roblox ended up succeeding. They had much deeper pockets than we did, but it took them 10 years to get to the point where there was really good user generated content on the platform, enough so that players who just wanted to play could find something entertaining.

And we ran out of money before we were able to do that. So we had to pivot the company to just making games. Here we had this amazing engine, and we started making Facebook farming games with it. But, that meant we were able to make AMAZING Facebook farming games with it. Stuff that was fully multiplayer when you visited each other's farms. You could chat, you could do things together. You could have pet animals, like pet dogs and whatnot. The visual bar was way higher than what the likes of Farmville was doing, and the result was that we were able to ship a couple of hit Facebook games, one a month.

And so we went from struggling company that was 48 hours from insolvency to making more money on the first day of opening the game that we had in the previous four years.

Lizzie Mintus: Wow.

Raph Koster: And it was a complete turnaround. And so we went from that to a three war bidding war to buy us. We made that pivot and literally we were getting approached for a sale in less than four months. We ended up being part of Playdom acquiring us as part of their roll up strategy and Playdom was in the process of being acquired by Disney. So I went through two acquisitions in 30 days, which was pretty crazy, a wild time.

We ended up with the technology moving into Disney Core Tech. It ended up being used for a couple of dozen games. And the most notable of those is that Club Penguin was ported over to the MetaPlace technology. And that enabled them to put Club Penguin on tablets on iPad. And it instantly 50 percent of the user base moved over to mobile. It was a wild ride.

And it's weird, like from a career point of view, it was the most financially rewarding to me personally, even though to my mind, the product failed. It goes to show you never know. Whereas many of the other games, like ultima Online made way more money in the end, but I didn't get any of it. You just never know.

I think MetaPlace is a little bit forgotten now, but in practice, like there's a there was a wonderful article written by a fellow at Microsoft Research who works in metaverse tech, and he just bluntly said in one of his articles -this is the closest thing we ever got. This is the closest thing the world has ever seen to an actual meta, and it ran live from 2007 to New Year's Day 2010. That's it.

Lizzie Mintus: I have so many questions for you. I want to know more about this pivot like that's such a. I'm stressed listening to you. Your days away from shutting down your company, right?

How did you decide to make this pivot and get everyone on board and get it going? Even though it was so clearly not what you were most passionate about, but it was what we did, right?

Raph Koster: Lack of choices clarifies your thinking, right? We were very close to running out of money. We had really significant division among the company leaders.

It was a screaming matches in rooms because we're hitting crisis points and it was very hard to see a path forward. One of those execs had been arguing for, Hey, we can get a bridge money and recap the company. I was playing an angle of, Hey, we had a purchase office offer on the table that would have come through prior to us hitting. So I was trying to play that one out as far as I could before we had to make the call. Then we ran math and discovered, if we want to treat our employees fairly mean that we actually have quite a bit less runway than we really thought. And so it really came right up to the very last moment.

Is this acquisition deal going to happen? And I vividly remember this was, it was with a really large Asian company. Everybody on the U S side had already signed off and it was going up to one decision maker on the other side of the Pacific. And they said, yeah, we don't understand web gaming and we're not going to do it.

And the very next morning, brought everybody together and we cut the company in half. We pivoted immediately to the bridge strategy. And the other part of doing the bridge strategy was actually me falling on my sword and saying, if we are pivoting in this way, I am not the right CEO to do it.

And so as part of that, I stayed as chairman of the board, but I actually handed over the CEO role to somebody else because it was the way to execute the pivot. That was pretty challenging. That was hard. And then we had a very limited time and actually to my mind, we treated our existing customers, not very well. It was the first big argument I had with the new CEO. He wanted to make a clean break, giving them two weeks over the Christmas holidays to download all of their user generated content. And we got pretty badly beaten up in the press and I agreed with the press on that. But because I was of the face of the company, I couldn't say that.

And that was pretty painful too, because I was the one getting beat up over, oh, you talk a big game and now look what you did. It happens. Then we turned around and tried to double down and focus on building a game and we shipped one in about three weeks and boom, it was a hit instantly.

Lizzie Mintus: Wow. And I just listened to this panel the other day of four people who had sold their company and one who almost did. And they were just talking about what they wish they knew. And I'm not sure what you can say, but merger and acquisition is such a. Stressful time you're giving away your baby to somebody else to run with it, right? It's emotional thing.

Raph Koster: It is emotional, one way, it was a little less emotional because the baby I was selling was the changeling baby. Yeah, the one I did originally, in that sense, it was a little bit minimized, but there was absolutely this feeling of once I was there within, Playdom and within Disney, it didn't take very long before, it isn't your game team. Yeah, but you still are in charge of the tech side. And then, your next assignment is to transition the tech away and give it to people inside Disney. And pretty soon there, after about a year and a half, I was a vice president at Disney and I had no reports because I transitioned all of them off. I was a VP without portfolio.

And that's why I was like, why am I here?

Lizzie Mintus: Yeah, that's like a classic story.

Raph Koster: Yep.

Lizzie Mintus: I have one final question. Before I ask it, I just want to point people to your website at playable worlds. com. My last question is, what do you think makes the game so fun to play?

Raph Koster: I wrote a whole book about that. I think what it comes down to is people play games for all kinds of different reasons, right?

Sometimes people play them for comfort. They play them for meditation. They play them because their friends are playing them and they want to hang out with a friend. All of those kinds of things. But the bottom line, if you're thinking about what makes a game fun to play, it's because it's presenting us with problems to solve.

The trick to making a game fun is, it's got to have good problems for a particular player. Every player will have different kinds of problems they enjoy solving. Good problems that fit the player. Problems they can see their way to figuring out. They look at the problem. They go, I don't, I have no idea. Then they'll say the game's too hard and they'll bail.

Raph Koster: If they look at the problem and they go, that's easy. They also won't have fun. It's got to be at the right challenge. Because the thing that keeps a person in that sensation of fun is the feeling that they are learning as they go. They're figuring out new steps, figuring out new strategies, new approaches, new tactics, and pushing at the edge of what they know how to pull off.

That's what gives us that sensation of fun. That's why no game can be for everybody, because everybody comes to the game with different skills and different knowledge levels and preferences. But if you think about it that way, it means that there are certain things you can do for any sort of game to maximize the fun.

You need to make sure to give them a path in. You need to make sure that they get rewarded when they are figuring out steps along the way. You need to make sure that they can build on what they've learned previously.

And a lot of things plunk this. It can be through bad UX. It can be flunking it from the other angle. Like gambling has amazing UX usually, but the player is not actually learning. And so it's actually hollow after a while. So it's really at the heart of that. If you can ask yourself at every moment, can I keep the player learning? So can I keep them figuring out something new? That's the trick to giving them lasting.

Lizzie Mintus: Thank you for your wisdom and the quick cliff notes of your book.

Raph Koster: Sure.

Lizzie Mintus: We've been to Raph Koster, who's CEO of Playable Worlds. Raph, where can people go to learn more about you, read your book, work for you, contact you?

Raph Koster: Sure, to get in touch with me, the easiest path is actually raphkoster.com. I've been running that blog since sometime in the early 1990s.

And all of my talks and books and games and everything are all linked there. There's decades worth of accumulated design writing there. There are a couple of books out. Theory of Fun, of course. There's another one called Postmortems, which is histories of the various games I've made and how we built them and then what happened to them.

If you are a developer and you want to really dig in on that side, there's that. 700 plus pages. If you want to know more about Playable Worlds, we have a series of blog posts on playableworlds. com as well. Job postings and all of that are there. And there is a discord where we hang out with our prospective players and chat about the game that we're making.

So all of those are good places.

Lizzie Mintus: Thank you so much.

Thanks so much for listening to the show this week to catch all the latest from Here's Waldo, you can follow us on LinkedIn. Be sure to click subscribe to get future episodes. We'll see you next time.

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