Friday, June 6, 2008

Pondering the future of SOE…

The Ancient Gaming Noob (TAGN) has an excellent entry up about the future of Sony Online Entertainment (SOE). If you live in a cave, you might not have known that SOE are the owners of half a dozen different MMO titles including SWG, EQ, and EQ2. TAGN points out that back in March, the controlling parent organization for SOE changed from Sony Pictures to Sony Computer Entertainment (which is the Sony company that owns and operates the Playstation series).

He remarks that the recent “Back to Norrath” campaign that provides a free subscription to returning EQ and EQ2 players can likely be attributed to this recent change in corporate ownership. His theory is that reporting directly to a successful gaming company is better for SOE than reporting up through the Movie and Television company. The logic being that gaming companies know gaming and SOE will be less likely to behave irresponsibly if they have to report up to a parent company with more subject matter expertise.

That’s entirely possible and a damn good theory. For the sake of SOE, I hope that’s true. I don’t play any SOE games and the three that I have tried, I never really liked for more than maybe a 100 hours at the most. Still – I think competition is a good thing for innovation and I know lots of people HAVE enjoyed those games. So I wish SOE all the luck in fixing the ship and sincerely hope that TAGN is right.

In my experience within Corporate America, I can’t say that this type of realignment always works out that way. Truth be told, it’s actually pretty common for companies to report up to entities that have no idea how to run their business. And honestly, that’s not entirely a bad thing. In many cases, the most innovative companies that experience excellent growth are built from the bottom up, not from the top down. The “top” is often quite distanced from the reality of a situation and unable to provide anything more than a “big picture” perspective. That picture is important to the overall direction, but the best ideas aren’t going to come from that top guy. They are going to come from the trenches and hopefully your company has process and management in place that solicits that feedback and learns from it. The best leaders don’t tell their people how to do their job, they simply enable those people to do it unencumbered.

In these types of SOE realignment scenarios, the far more common response is for the new parent to come in and tell it’s latest acquisition “how they do it” and expect them to do the same. The fallacy is that because the businesses are similar in nature that they are the same. To make matters worse, the top decision makers are often distanced from reality. The combination of that distance and the “we know better” mindset can be a recipe for disaster. Alternately, the company can really benefit from the efficiencies and resources of the new parent. For example, in this scenario, perhaps both units are able to leverage many of the same artwork and sound people.

Either way, the end result is often an entirely new charter and direction for the original company. Organizations that were in one business suddenly find themselves in an entirely new business that’s similar and yet quite different then the old business. Of course, that’s not entirely a bad thing and may actually be the intent of the original acquisition. A failing business in one industry can often be guided to a new thriving industry through this painful process and become extremely successful in it’s new role. This is a pretty common tactic in the tech industry as a way of expanding into other markets. Fans of the company aren’t always pleased with the new direction, but it can be a healthy thing for the company as a whole.

If we simply extend that logic to the new organization structure for SOE, then as TAGN suggests, we might see SOE start working on and developing MMO games for the Playstation 3. This makes a lot of sense and strikes me as the most logical reason for the reorganization. Even if that wasn’t the intent, it will likely be one major result of the reorganization.

And the more I think about it, the more I think making console games might be the very best thing for SOE. The relative market sizes between console gamers and PC gamers isn’t even comparable, so the opportunity is HUGE. It’s also a very appealing genre for Asia and Japan marketplaces. In it’s current state, SOE is barely competing with EVE and simply getting dwarfed by WoW and the upcoming hype surrounding WAR and AoC. In addition, they don’t really have a noteworthy new MMO title planned that has garnered any excitement.

As I said, these types of realignments often end up with an entirely new charter and direction that is similar and yet quite different than the original. It wouldn’t surprise me one iota if that new direction was console games for SOE. It also wouldn’t surprise me that the next MMO to break Blizzard’s subscription record was an MMO on a Sony console.

In the end, TAGN and I are very much in agreement about where SOE seems to be headed. The difference is that I think it will be a painful process where they will “unlearn” many of the things that made them successful as they focus on consoles. Don’t worry about them killing any cash cows, though. As TAGN wrote, I doubt they will shut down anything that is making money.

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