Last week’s Escapist has an interesting interview with Robert and Richard Garriott, which can be used to extrapolate the direction that NCSoft is pursuing. The revelation that’ll make the kiddies talk is that Richard likes to buy online gold (this is perhaps unsurprising, as Richard is the definitive example of a game player who has more money than time).

[Richard said], “I buy virtual gold all the time,” he says, adding, “I have no problem with it. I’m a supporter. I understand that my position on this is different from our sole corporate perspective. But anyway, I participate in it.”

But that’s not what interested me. Robert actually brought the unique perspective.

[Robert said], “A long time ago, we looked at the business, and we said churn is the biggest expense for our business, just like a telephone business.” Churn is industry lingo for turnover rate, the number of people who leave a game each month. “If you switch your [phone] carrier, it’s a giant cost and lots of people churn very rapidly. And in the online game space, basically, people churn every ten months…Rather than fighting what they saw as an obvious industry trend, NCsoft decided to go a different way and embrace it. “As games become more casual, churn rates go up. So, we knew the churn rates were going up, so we started saying, well, how can we make churn our friend?

This is interesting to me because, in my experience, churn tends to accelerate as the player gains experience with more MMOs. I hear anecdotal evidence all the time about how people played UO for 2 years, EQ for 1 year, City of Heroes for 6 months and SWG for 3. It’s possible this has something to do with the level of competition (UO had none), or with the percieved quality or unique experience each game provided.

But I think an even greater factor is a more personal one – people’s tolerance of the MMO experience drops the more they play. They have lower patience with grindalicious play patterns, and retention features like player housing has less effect in your fifth game than it does in your first. WoW’s retention level appears to be back near the UO and EQ numbers – largely, I suspect, because it’s so many players’ first MMO experience.

Back to Robert:

The answer proved to be fairly simple. “We felt we’d put a portfolio of products together, which we’ve been doing,” he says, getting into the secret of turning churn lead into subscriber gold. “If we incentivize and then somehow change the probability slightly, that instead of someone stopping playing Lineage and then going to EverQuest, the probability is slightly different that they might go to City of Heroes. And how can I change that probability?

This is an interesting take. Many companies have tried to build a ’smorgasboard’-like approach to their business model before, but they were targetting a different line of reasoning – they wanted to have games that appealed to as many different customer profiles as possible. NCSoft is instead trying to make a line of games that more effectively lock up one demographic.

Interesting stuff. Especially once the article goes on to discuss how NCSoft is, at the same time, pursuing alternate business models.

“We don’t care if it’s ‘you buy an episode and then there’s never recurring billing,’ we don’t care if that is ‘the whole game is free and instead you buy virtual property.’ We don’t care if it’s a subscription-based game, and we don’t care if someone invents yet another business model. They’re all fine.” He uses the Korean parent company for an example, saying, “They’re launching what is called NC Coin, which allows us to do micro-billing. You’ll be able to play arcade-style games for a quarter.”

Ping ponging the players through different billing models seems like a way to lose people in transition from one game to the next. Something like Sony’s Station Pass would be a more effective way to keep players captured in your service. All the same, the thought of not panicking about churn but figuring out how to leverage it is one that I think is something worth more consideration.