Few major media markets are as lopsided as the online swords-and-sorcery game genre. World of Warcraft, owned by the Activision Blizzard division of Vivendi SA, has a population of 12 million players, each paying at least $12.99 per month to go on group quests for virtual treasure and glory. Westwood, MA-based Turbine, the maker of the next most popular subscription-based online fantasy games, The Lord of the Rings Online and Dungeons & Dragons Online, doesn’t release membership numbers—but the data I’ve seen puts it in a very distant second place. In a recent Boston Globe article, Brett Close, the CEO of Maynard, MA-based 38 Studios, which is developing its own online fantasy game, tellingly called fantasy-based MMORPGs—that’s gamer lingo for massively multiple online role playing games—a market “where there is a Coke and no Pepsi.”

Well, if you had a new cola and you wanted to compete with Coke, one strategy you might consider would be giving away your drink for free. And that’s exactly what Turbine plans to try. Starting on September 9, Dungeons & Dragons Online will join the ranks of free-to-play online games. In the new hybrid version of its game world, called “Eberron Unlimited,” most regions and adventures will be free and open to everyone, while a few premium areas will be reserved for “VIPs” who continue to pay a subscription.

It’s a strategy that game developers in other countries have been pursuing with notable success for years—the free UK-based MMORPG Runescape, for example, is reported to have more than a million players, and South Korea-born Maple Story has an astonishing 15 million. But American game companies have shied away from the free-to-play model, in part because their game systems weren’t built to allow alternative forms of revenue generation, such as microtransactions, in which players fork over small amounts of cash for virtual goods such as costumes or weapons for their avatars.

But one of the central elements in the free version of Dungeons & Dragons Online—which will replace the current “Stormreach” version—is a new Amazon-like interface where players can shop to their heart’s content, using “Turbine Points” that they can buy with real cash or earn by spending time online. And that’s not all that’s changing inside Eberron, as the mythical land that is the game’s setting is called. The overhaul, which has been in gestation for 18 months, includes so much new content and so many new features that the company recently delayed the relaunch by more than a month to allow for more testing and preparation.

(In a story later this month, I’ll write more about the games themselves, which senior producers Fernando Paiz, Kate Paiz, and Aaron Campbell demonstrated for me at length during a recent visit. This story focuses on Turbine’s business model.)

The risk Turbine is taking is that a massive influx of new free players might increase the burden on the company’s servers, and that nobody will buy anything. But it’s making an informed wager—based in part on observations of the company’s legion of beta testers—that players won’t be able to resist buying an extra sword here and a spell there, and that the revenue from microtransactions will more than make up for any loss of subscription revenue.

“Eberron Unlimited is an extraordinary event for us as a company, and industry-wide,” Jim Crowley, Turbine’s CEO, told me. “Nobody else is taking what we’d call a true premium online world into this free-to-play model, and removed those barriers to entry like we’re doing. We think it’s a great way not just to grow our business but to expand the overall pie.”

This isn’t quite a bet-the-company moment for Turbine, since it is not altering the $14.99-per-month subscription price at its premiere property, The Lord of the Rings Online. (The company says that game world, which is based on the famous J.R.R. Tolkien trilogy, doesn’t lend itself as naturally to a microtransaction-based model.) But it does reflect … Next Page »

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Westwood, MA-based video game developer Turbine announced Monday that it will open a new studio in Redwood City, CA. The company, best known for creating the massively multiplayer online game The Lord of the Rings Online, said opening a Bay Area office would allow it to tap into the large pool of game development talent on the West Coast. The new studio’s creative director will be Dave Brevik, co-founder of Flagship Studios and a former director at Blizzard Entertainment, creators of the World of Warcraft franchise.

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We reported on April 30 that Turbine Entertainment, publisher of The Lord of the Rings Online and other popular massively multiplayer online games, had raised $40 million in a Series C venture round, bringing its total financing to some $90 million. Now Turbine has confirmed the news, adding one bit of additional information: Time Warner is co-leader of the round, alongside GGV Capital. Existing investors Highland Capital Partners, Polaris Venture Partners, Tudor Ventures, and Columbia Capital also participated.

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According to a report yesterday at the financial news site PE Hub, Westwood, MA-based Turbine, publisher of graphically rich online role playing games such Lord of the Rings Online, has nearly doubled its venture capital pot through a $40 million Series C influx from Granite Global Ventures and partners.

PE Hub said its report was based on a regulatory filing that it had “discovered.” Turbine itself hasn’t announced a new funding round, and at the time this piece was published the company had not returned Xconomy’s calls requesting comment.

Reporters at PE Hub keep careful track of the paper “Form D” filings periodically made public by the Securities and Exchange Commission. These filings frequently enter the public record before the concerned startups and their investors have issued official announcements. And sometimes, as in the recent case of a reported $50 million investment in bioethanol company Mascoma, the companies never publicly acknowledge the information.

In addition to Menlo Park, CA-based Granite Global, according to the PE Hub report, Turbine’s Series C round involved existing investors Highland Capital Partners, Polaris Venture Partners, Tudor Ventures, and Columbia Capital. The $40 million round, of which Turbine has called down only $25 million so far, brings the total venture capital stake in the company to more than $90 million.

On April 23, Turbine spokesman Adam Mersky told Mass High Tech that the company planned to make an announcement about its future products within two weeks. MHT speculated that because the job-listings section of Turbine’s website contained positions for console-game designers, the company might be making a jump from online-only games to titles for consoles such as the Xbox 360, Playstation, or Wii.

Last week former Turbine CEO Jeff Anderson (whom we interviewed last October) launched a casual online sports gaming company called Play Hard Sports, with $5 million in backing from New Enterprise Associates.

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GamerDNA, the social network for video gamers that just 10 days ago announced a new name, a broader mission, and a new pot of venture money from Flybridge Capital Partners, is continuing its expansion streak. CEO Jon Radoff said today the company has acquired Chicago-based It Can Talk Inc., which owns an Xbox community website called 360voice.com.

It Can Talk’s staff actually started commuting to the Cambridge, MA, offices of GamerDNA (then called GuildCafe) in late March, but the acquisition wasn’t completed until last week. When Radoff told Xconomy that GamerDNA would offer an “autoblogging” service that tracks the game play of Xbox 360 users, he was talking in part about technology pioneered at 360voice.

Here’s how the company’s About page puts it: “Using unique technology, the data from your Xbox Live gamercard is transformed from a snapshot into a rich history of your gaming, told in blog format from the perspective of your Xbox. This allows for conversations around specific daily achievements and events like gamer score increases and your most played games. In addition to the blog content, users can interact by leaving comments, compete in gamer score challenges, and gather badges for various site and cross-game accomplishments.”

It Can Talk’s founders are relocating to Cambridge, and the company’s CEO, Trapper Markelz, will become GamerDNA’s vice president of products.

“With GamerDNA, we’re creating the platform for a gamer’s identity,” Markelz said in an announcement about the acquisition. “Using technology we created at 360voice.com, we’ll be feeding your achievements and experiences into a gaming history you can express throughout the Web.”

This is GamerDNA’s second acquisition. Last November it bought Uberguilds, which hosts guild sites and fansites related to various massively multiplayer online roleplaying games such as World of Warcraft.

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A few weeks ago we profiled a call-center-software startup whose name, Exony, stands for ex-Sony, in reference to the herd of employees who left Sony to start the company. Boston’s video game industry is building up an ex-Sony club of its own—Curt Schilling’s Maynard, MA-based 38 Studios. The company announced today that it has hired Travis McGeathy, former lead designer of Sony Online Entertainment’s Everquest franchise, as systems design lead for its own massively multiplayer online game, code-named Copernicus. 38 Studios design director Jason Roberts and director of community development Steve Danuser also hail from Sony Online Entertainment.

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It’s a big day for the company formerly known as GuildCafe, which is announcing a new name—GamerDNA—and a new $3 million funding round from Flybridge Capital Partners (see main story). I interviewed GamerDNA founder and CEO (and avid gamer) Jon Radoff about the changes earlier this week; a lightly edited transcript follows.

Xconomy: When we first talked about GuildCafe last year, you’d just gotten a seed investment from what was then IDG Ventures Boston, now Flybridge. From the news about the Series A round, it sounds like some validation of that seed investment occurred.

Jon Radoff: When we first did the investment we had established some metrics and measurements around user acquisition and the virality of the site, as well as a number of business development milestones that would indicate it was a good company, and those things basically happened. That got Flybridge excited about investing in the company.

X: It sounds like with this new investment and rebranding, you aren’t exactly repudiating what you were doing with GuildCafe, but you are taking the business in a very different direction.

JR: What really worked out great with GuildCafe is that it’s been both a terrific utility for people who play MMORPGs—in the sense that it’s a place where you can pull your whole gaming group together, keep track of your members, communicate with your players—and also a great way to sign up members for the social networking part of the site. The GuildCafe core function of guild hosting is going to continue, and we’re going to build on top of that. But we’re expanding our reach into some of the other markets which we haven’t done much with yet. That would include the console market, the Xbox 360 in particular, as well as other types of PC games that are not as associated with guilds and gaming groups but make up a big part of the average gamer’s experience.

The idea behind GamerDNA is to provide a means of identity—a place where players can record all the stories around all of the cool stuff they’ve done, be it achievements, accomplishments, or experiences they’ve had. The thing you usually have at the end of a game session is just the saved game file, which gets lost and forgotten. What we’re doing at GamerDNA is creating a place to record all the neat things you’ve done with games and to have a whole story around your gaming experience. That becomes the catalyst for having events and tournaments as well as socializing around the site.

X: From what you’ve said so far about creating an online destination for gamers across many different games, it sounds a lot like what some other companies such as Rupture, Ugame, and Raptr are trying.

JR: There is certainly competition in this market, and it has heated up since the time we did an initial seed investment. But I think our position in the marketplace is quite a bit different than the other people building sites. They are focused on the statistical nature of game play—what your score was and how you compare to other people. That is a piece of what we’ll be doing, but we’ve discovered that the real hard-core statistical aspects of game play are not what appeal to broad swaths of gamers. They really want the more personal element—”Here is what I did in the game and here is how it touched me and how that particular game experience spoke to me.” I don’t think that is something that any of our competitors are doing.

X: Don’t several of the consoles, particularly the Xbox, provide some opportunities for online socializing within the game platform?

JR: Not really. The main thing they’ve got is matchmaking functions. If you are looking to play with someone or against someone in the game—someone with a similar level of experience for example—all of those platforms provide some matchmaking functions. Xbox Live has really paved the way for that. But what they haven’t done is … Next Page »

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The video gaming and PC gaming industry is big. A whopping $19 billion big in 2007, which doesn’t quite equal revenues from movies ($42 billion) or books ($35 billion), but still accounts for a major chunk of what U.S. consumers spend on media content. So it’s no surprise that there’s a growing list of companies going beyond the games themselves to offer services that help gamers meet other gamers, learn about the newest games, and generally get more out of their gaming experiences.

Now GuildCafe, a Cambridge, MA-based startup whose social-networking site formerly served just one corner of the gaming market—guild-oriented, massively multiplayer online role-playing games (MMORPGs) such as World of Warcraft and The Lord of the Rings Online—is morphing into a much bigger entity that intends to go after the general gaming market, across all games and platforms. GuildCafe announced today that it’s changing its company name to GamerDNA—and that it will use a $3 million Series A investment from Boston’s Flybridge Capital Partners to build a Web-wide, “genre-neutral” platform that gamers can use to document and share their gaming experiences.

GuildCafe.com, where thousands of users gather to plan group-based campaigns inside Blizzard Entertainment’s World of Warcraft and a handful of other MMORPGs, isn’t going away. But it has already become the staging and testing area for some of the features that will become the core of GamerDNA, such as “autoblogging” of players’ adventures using data collected automatically from sources such as the Blizzard Armory, a huge, publicly searchable database recording activity inside the World of Warcraft game world.

Founder and CEO Jon Radoff, himself a longtime gamer, says the new GamerDNA platform will be launched late this spring, and that it will include a central website where users can create personal profiles tracking their achievements across many games, as well as widgets that will allow users to access or modify their profiles from other websites. The long-term goal isn’t necessarily to create a grand “uber-destination” site for gamers, according to Radoff, but to provide underlying services and code that make a gamer’s personal data, history, and experiences portable across the Web—hence the “DNA” reference.

“The essence of the GamerDNA brand is that it’s very personal to you as a gamer,” says Radoff. In his vision, the community will be a place to capture “the things that you care about or that you’ve done….That identity then becomes something that is portable across all kinds of communities and games.”

This isn’t a totally untrodden path: a number of startups, most notably Napster founder Shawn Fanning’s Rupture, are trying to build communities that help gamers manage their identities across various games and that tap into data and statistics from the games themselves. But Radoff believes GamerDNA’s emphasis on gamers’ personal experiences will give it a unique spin—and Flybridge apparently agrees. The firm’s $3 million investment follows on a $600,000 seed round announced last summer.

“Great companies are built by people who really understand their customers,” Jon Karlen, a Flybridge general partner, said in the company’s press release today about the rebranding. “We’re excited about building a place for gamers, led by a team of seasoned entrepreneurs who are also avid gamers themselves.”

For the whole scoop on GamerDNA, check out the full transcript of my interview with Radoff, in which he details the company’s plans for driving greater engagement between gamers.

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38 Studios, the Maynard, MA-based game development studio founded by Red Sox pitcher Curt Schilling, has decided not to reinvent the world. The virtual world, that is—the one it’s creating as part of the massively multiplayer online-gaming experience it plans to debut in late 2010. The company said yesterday it will license a suite of world-development tools and game servers from BigWorld Technology, which has offices in Canberra and Sydney, Australia. BigWorld supplies the technology behind online role-playing games such as Stargate Worlds.

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GuildCafe, a Cambridge-based social networking site for players of massively multiplayer online roleplaying games such as World of Warcraft and Lord of the Rings Online, has acquired Uberguilds, which hosts about 20 high-profile guild sites and fansites related to various MMORPGs, the company announced last week. Terms of the acquisition were not disclosed, but Uberguilds founder and CEO John Findlay is expected to lead a program to enable independent websites to integrate with GuildCafe’s social gaming platform. We profiled Guildcafe, which has backing from IDG Ventures Boston, in July.

“Uberguilds has created a network of the top guilds and teams in several popular games; for example, the ‘Death and Taxes’ guild that’s part of their network is the number-one World of Warcraft guild in the U.S.,” says Jon Radoff, president and CEO of GuildCafe.  “We believe that bringing together well-known players and teams with our social gaming technology will be part of what it takes to become the standard platform.”

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Here at Xconomy we’re keeping a long list of recently funded, stealth-mode technology startups that have potentially interesting stories to tell but aren’t quite ready for real publicity. It’s certainly encouraging to see so many new ventures springing up in the neighborhood. But it can also be frustrating to realize that it might be weeks or months before we can bring our readers the real scoop. Conduit Labs, an online gaming company in Cambridge, is the latest addition to the list.

Conduit announced yesterday that it’s obtained $5.5 million in venture backing from local firms Prism and Charles River Ventures. Judging from CEO Nabeel Hyatt’s comments on the company’s new blog and his remarks to a few gaming and startup bloggers, Conduit will be using the money to build out a Flash-based 3-D online world that will combine elements of social networking and what Charles River’s Susan Wu calls “casual MMOs” or massively multiplayer online environments.

So far, we know more about what Conduit’s product isn’t than about what it is. It isn’t exactly a social networking site like Facebook, it isn’t a dragons-and-dwarves massively multiplayer online role-playing game (MMORPG) like World of Warcraft, and it isn’t a complicated avatar-based social virtual world like Second Life. It isn’t simply another multimedia instant-messaging system or bulletin board or wiki, either. It’s supposedly something that combines and transcends all of those. “Friends online playing together” is about as much detail as the company has yet divulged.

The vision is intriguing, but so vague that it wouldn’t really be of interest if not for the mix of past achievements among Conduit’s founders. Hyatt is the former chief operating officer and VP of product development for Ambient Devices, an MIT Media Lab spinoff that showed how small wireless devices such as the Ambient Orb can convey timely information in intuitive, non-distracting ways. Dan O’Brien and Michael Sheidow worked together on Asheron’s Call, a pioneering 3-D online role-playing game for Windows PCs that attracted more than 100,000 subscribers and paved the way for the mega-hit MMORPGs Everquest and World of Warcraft. Dan Ogles is the brain behind Guitar Hero, the 2005 Playstation2 game that completely changed expectations about home gaming consoles, requiring a new level of physical and social interaction that’s been picked up and amplified by Nintendo Wii. (The company hasn’t specified titles for O’Brien, Sheidow, or Ogles. The “About Us” section of its website merely says “We’re Dan, Dan-o, Mike, and Nabeel, veterans of a mix of web and MMO companies.”)

Conduit’s environment will emphasize gaming, but with unspecified mechanisms that promote the sort of bonding that you might experience while out bowling or shooting pool with your mates. “We want to deliver a completely new kind of massively multiplayer experience—one that requires minutes, not hours, to access and learn, and one that is as rich and social as real-world activities like shooting hoops or jamming in a band,” Hyatt blogs. No subscription will be required: revenue will apparently come from advertising and microtransactions involving virtual goods.

We’ll bring you more as soon as we’ve had a chance to speak with the principals directly. For now, the best writeup about Conduit is over at CMP’s blog on the business of virtual worlds, WorldsInMotion, which scored a long interview with Hyatt. He told CMP that Conduit expects to open an early version of its online world within six months.

UPDATE 27 August 2007, 5:00 pm: As part of my reporting for this story last week, I e-mailed two questions to Susan Wu, the Charles River Ventures partners who is working most closely with Conduit Labs. I asked her: “Why should Conduit Labs’s project be interesting to a) users of online games and/or social networks, b) followers of the Boston-area innovation scene?” Her very interesting answers just came back:

“1) Conduit Labs sits at the very compelling intersection of Web 2.0 and Massively Multiplayer Online Games. This space is one that is particularly interesting to me, because it marries the design philosophies of creating lightweight, zero barrier applications that are geared towards mass market audiences with very emotionally engaging, immersive environments. Better user experiences and new types of content will emerge, accompanied by different monetization strategies. What I am particularly excited about with regards to Conduit Labs is that they really understand a few key ideas: a) while Facebook is a superlative asynchronous social platform, there are no great synchronous corollaries today; b) shared experiences are the most powerful way to foster and build relationships, and c) like the Wii and Guitar Hero reinterpreted what it meant to experience social entertainment in a living room environment, there’s a new type of entertainment waiting to be invented using a Web-based form factor.

“2) The Boston area has long been discounted as an area ripe for consumer innovation. I think companies like Conduit Labs are proof that there are fantastic entrepreneurs and exciting ideas in the area.”

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