Spending a bank holiday weekend as a level 99 magician might not be everybody's cup of tea, but when the alternative is a trip to Ikea with the family, the attractions of RuneScape, a sword-and-sorcery online computer game, are at least understandable.
On January 21, Martin Luther King Day in the US, when stock markets in the rest of the world were going into meltdown, a record 250,000 people logged into the realm of Gielinor, the creation of Jagex, a little-known Cambridge company.
A million people subscribe to RuneScape, paying £3.20 a month in Britain, and the equivalent of $5 (£2.50) elsewhere, for unfettered access. After the juggernaut of World of Warcraft - which has ten million subscribers - RuneScape is arguably the next most successful multiplayer game, although its ethos is completely different. There is no need to own special software to play it, as RuneScape runs on any browser using Java, although that means the graphics are simple.
Unlike Warcraft, the Jagex philosophy is to ensure that a large part of RuneScape can be played free. Fans, of course, get lured into paying; membership gives them access to more land, more skills and spells, and freedom from adverts. When Jagex allowed subscribers to create their own houses, such is people's obsession with property that 100,000 signed up as paying subscribers. The number of free players is still far greater: in all, six million have played over the past fortnight. Still, the paying players ensure that RuneScape is highly profitable. Accounts for 2006, the latest available, show Jagex making pre-tax profits of £10.2 million on sales of £16.8 million (a margin of 60 per cent). Geoff Iddison, the chief executive of the 400-employee company, says that “revenue and profits are growing at 35per cent”, making it worth well over £100 million.
Yet until recently, Jagex has been run relatively uncommercially: RuneScape has not been promoted; a game launch in 2007 never happened, and profits depend on spotty boys. “I'd estimate the audience is over 60 per cent male, aged between 13 and 18,” says Mr Iddison, probably overemphasising the female contingent.
The new boss came in from eBay to develop “a three-year plan” and dismisses talk of a sale. A US venture capital firm, Insight Venture Partners, may own 35 per cent, but the low-profile founders, led by the original designer, Andrew Gower, own the rest. “We have control and we don't need to raise any more money; we have enough for organic growth,” Mr Iddison says, adding that the plan at present is to see how much the company can be expanded.
RuneScape has already survived one test. Alarmed by the growth of people buying and selling RuneScape treasure on the internet - for example, a million gold (the game's currency) sold for $5 - the company acted to stop it. Imre Jele, head of RuneScape development, said: “We had a big problem with traders in China, and some of the former Russian states, using stolen credit cards to buy subscriptions, and then use bots [automated software] to farm gold. Not only was it cheating; it was getting boring for players to find a load of bots mining.”
Game designers wanted to ban so-called real world trading, but they grappled to find a mechanism to stop it. “What we realised is that we had to stop unequal trading in the game; where suddenly somebody would turn up with a million gold,” Mr Jele says, and so the company introduced a range of restrictions, for which the launch of a “stock market” was crucial. Now only people can trade items of similar value - and for the moment, real world trading is in abeyance. The price of a million gold shot up to $20 to $25 - and the clean-up cost RuneScape 60,000 subscribers.
This month, Jagex's drive for growth brings the launch of Funorb, a website aimed at “the time pressure gamer” on the view that anyone over 21 lacks the time to commit themselves to RuneScape. It will have 18 simple but highly playable 2D games. All can be played free, but extra levels will cost £2 a month. The hope is that Funorb will bring new people to gaming in the lunch hour, as Jagex tries to replicate Nintendo's success in expanding the gaming demographic. If it does, Jagex will one day be worth a lot of gold.
