The Tip.It Times

Issue 199gp

Growing Pains

Written by and edited by Tip.It

Starting a company is a whole lot of fun. It's also a whole lot of hard work. There usually aren't many people involved though, so it's easy to make decisions. You don't have all that many customers, so it's easy to provide good personalised customer service. Running a large company isn't all that difficult either – although there are a lot of important decisions to make, large companies have policies that take a lot of the work out of much of the decision-making. You still need a CEO or president with a clear vision of where the company should be going and a good map of how to get there.

What's difficult to do successfully is to guide a company successfully from small startup to major player. This is where a lot of companies fail, and many of those that don't fail get sold. This is the situation that Jagex finds itself in at the moment. Their start-up days are behind them. They're a recognised force in the MMORPG field. They are making a lot of money and the founders of the company have probably become quite wealthy in the process.

However, it takes a different kind of leadership to run a successful established company than it does to run a start-up. The entrepreneur who can make decisions on the fly, who can fix issues with the product and the company bathroom, who can make both coffee and corporate policy is rarely the type of person who's happy in a corporate environment. This is where it often goes horribly pear-shaped. If the company survives the transition from startup to established corporation, there's very often no place in it for the entrepreneur who started it. An established company needs a CEO or president who is a good leader – someone who can inspire and motivate the employees, and who can delegate most of the day-to-day running of the company to others. Entrepreneurs tend not to be good at delegating, not particularly fond of corporate policies (and often not very good at playing by the corporate rules). When their company becomes established and their main product is stable and selling well, it's no longer a place where the entrepreneurs want to be. There's no longer a job for them there.

I believe that Jagex may have reached that awkward stage of transition and the rule changes and apparent change of market focus are the result of some fledgling corporate decisions, instead of being the personal choices of the founders. It seems to me that there has been a change in Jagex that is inconsistent with their previous attitude towards the players. I believe that Andrew and Paul understood their players in a way that whoever is now making corporate policy doesn't. As a result, we're getting decisions that probably make a lot more money for the corporation, at an enormous cost of player goodwill.

Originally Jagex was aimed at exactly the right place in the market: the late-teen early 20s gamers. These are people, not that much younger than, or that much different from, Paul and Andrew themselves, with money to pay for membership, time to devote to playing the game, and a personal maturity to "play well with others". These are the people who will push the limits of the game engine, not by breaking the rules, but by playing hard and fair. That's not to say younger players can't do just that, but in general, the very young players lack the emotional and cognitive maturity that comes in late adolescence. The decision to market the game to a younger age group was, I believe, somewhat short-sighted. Younger players typically have less money to spend and more parental control over how it is spent. This means that Jagex becomes more dependent on advertising revenues to cover the cost of maintaining the free worlds. While a 15 or 16 year old might still be playing the game at 18 when they can get their first credit card and pay for the game themselves, it's unlikely that a 12 or 13 year old will maintain their interest in the game that long. Thus Jagex becomes dependent on a steady stream of new players who will play for a few months or years, mostly on the free servers, before losing interest or moving on to other things. That again, is just a fact of adolescent psychological development – it's a time when there is a huge amount of personal growth and development and thus many rapid changes in interests.

One of the fallacies of current economic philosophy is the concept of perpetual market growth. All markets have a maximum size, after which growth slows down to the point where there are almost as many customers leaving the market as are joining it. We saw this take the PC industry by surprise with the dot com bust in 2000/2001. All of a sudden, the market for personal computers reached saturation point. Everyone who wanted a PC at home had one. In a matter of months the market went from being a huge growth market, to being a pretty static replacement market. Several companies went under as a result, and a lot more had to make some serious changes in how they did business.

Jagex has seen phenomenal growth for several years, however that's leveled off somewhat now. Not because RuneScape is "lame"or Jagex did something wrong, but because the online games market is pretty saturated and most of the people who want to play online games have subscribed to as many as they feel they have time to play and cash to pay for. Growth now is going to come from players moving between games, along with a slow trickle of new players as kids get old enough to play. That might well have been the rationale behind Jagex positioning itself more towards the younger end of the MMORPG market.

Several things can happen at this stage of Jagex's development: they can stick with being a kid's game, they can re-focus on their original target market, or they can flounder around, unsure where they belong. Whichever direction they head in, sooner or later the founders are going to get tired of being corporate. If the company makes the right decisions over the next few months, it will continue to make good money, and the game will continue to be worth playing. Becoming too corporate, too much of a "suit" company will probably spoil the game. Either way, I would not be in the least surprised if Andrew and Paul left Jagex and started over with a new company building a new game. After all, they're entrepreneurs, not suits, and entrepreneurs like starting things and building things, not sitting in offices making corporate decisions. But even if Paul and Andrew stay at the helm, Jagex still needs to think about what sort of company it wants to be when it grows up, what sort of products it wants to offer and what market sector it wants to offer them to. These are huge and difficult decisions and I'm sure that some of the issues that have surfaced in the past few months are the result of these growing pains.

Did You Know...

...that you can run simply by holding down the CTRL key and then clicking on the spot you want to run to?

Do you have any thoughts or comments about what you've just read? Want to discuss this article with your fellow RuneScapers? We invite you to discuss the article in this forum topic.

Do you have any thoughts or comments about this week's articles? Want to discuss these articles with your fellow RuneScapers? We invite you to discuss them in this forum topic.


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