TRION RAISES $70 MILLION; SERVER-BASED GAMES ARE THE FUTURE, SAYS LARS BUTTLER

Are consoles going bye-bye? Server-based gaming means that ultimately, the devices don’t matter. We speak at length with Trion CEO Lars Buttler about the huge funding he received and his vision for the future of games.

By James Brightman September 23, 2008

Trion World Network, led by co-founder and CEO Lars Buttler (former vice president for Global Online at Electronic Arts), has yet to launch a product, and yet their vision for server-based gaming has clearly impressed investors. Today, the company has announced that it’s raised another $70 million in Series C funding, which incredibly brings the company’s funding total to more than $100 million (since 2006).

The latest round of funding was co-led by a large global financial institution and Act II Capital. Additionally, all previous investors participated in this round, including DCM, Trinity Ventures, Rustic Canyon, Time Warner, Peacock Equity (a joint venture between GE Commercial Finance’s Media, Communications & Entertainment business and NBC Universal) and Bertelsmann.

Investors have cheered the server-based model that Trion believes will drive the future of the games industry.

« Trion’s server-based games model is driving the future of interactive entertainment, » said Peter W. Moran, a general partner of DCM. « Trion is liberating games and other forms of digital entertainment by taking them out of the package and putting them online where they constantly evolve for the end-user. Benefits for gamers, developers and publishers are seemingly endless. »

« Trion is set to redefine today’s electronic entertainment sector through its ability to develop compelling broadband-connected games, innovative entertainment content and strong business relationships like its co-development deal with the SCI FI Channel, » added Tom Byrne, managing director and group head, Peacock Equity. « We are focused on gaming as an attractive space and are pleased to deepen our relationship with Trion as they bring together the best of gaming, the Web and television. »

For Buttler, the latest round of funding is not only a huge vote of confidence, but also affirmation that the industry is going to make a fundamental shift away from retail. « This signifies a shift away from static retail products and towards games as dynamic services which will be simulated increasingly ‘in the cloud’, » he said. « With its industry-defining server-based games platform, worldwide publishing capabilities, an ever-growing network of AAA development studios, unrivaled partnerships in media and technology, and now significant capital in the bank, Trion is uniquely positioned to be a leader in the next cycle of electronic entertainment. »

GameDaily BIZ sat down with Buttler in New York prior to Trion’s announcement. We could tell that he was truly ecstatic about his company’s strategy and the major funding he’d just received.

« The market is in this huge transition from the first big business cycle in games – the first 30 years – where you really had games as retail products. It’s packaged software; they can’t be changed once they’re done. [Now] thanks to broadband and connected devices it’s become this huge business opportunity called games as a service, or server-based gaming. All the big publishers, including Microsoft, are talking about server-based games as the next big thing, » Buttler began.

One of the reasons investors have give Trion a big vote of confidence is that the company has created the Trion Platform, a large-scale technological architecture that empowers companies to run « super high quality » games server-side. This is not the same thing as streaming the games, said Buttler, but it’s very close. All the components that really drive the game – such as physics, transactions, world data, player data, AI, etc. – no longer reside in an individual client, PC or console, but are instead on a server.

We asked if this should be considered a major threat to retail just as digital distribution could be, but « It’s not so black and white, » said Buttler. « Whenever you create a new channel, the first thing people do is take their old content and distribute it in the new way – and this is really what game distribution online is all about today. It’s still games made for the traditional packaged goods market mainly, but now they are also sold online. … That’s the first step only. It’s analogous to when cable TV started – the first thing that happened was NBC and ABC were put on cable. We go much, much further and basically say, ‘Content itself and all the business models around it and the development model is changed by broadband – not only distribution.’ It doesn’t make sense to take games made for a retail environment and just sell them online. »

He continued, « Once you move games onto central servers, you really change the development paradigm, the gameplay paradigm, the business paradigm, and then distribution is just one piece of it. So you can make a server-based game and still sell in retail – a time card or a code, or even game graphics on a DVD. It doesn’t mean that retail is our enemy, but it means we go much further than just distributing old game content in a new way. At the same time, because it’s server-based, you can decide to give it away for free; I’m always joking that you can have the AOL model, where you essentially give the client away for free.

Buttler also argues that Trion’s model is a great way to fight piracy and at the same time open up other kinds of business opportunities. « A true client server game cannot be pirated. If someone gives away a traditional game’s client, that is called piracy. If someone gives away a Trion server-based game client, that is distribution. The game begins at that point because that client is then connecting to essential server architecture and only in that connection between the client and the server can you play the game. That then unleashes subscriptions, items, micro-transactions, true interstitial advertising – all those beautiful business models that you can have in a server-based game architecture, » he said.

Another reason that Buttler is so optimistic about this server-based approach is that the current business model of traditional games has led to « very low operating margins because the development costs go up and up and up, and you only have retail. » All these problems are addressed by server-based gaming, he said.

While Trion is clearly a facilitator with its server platform technology, Buttler stressed that his company is first and foremost a developer and publisher, and he doesn’t view the Trion technology as middleware per se. Trion currently has two major studios – one in Redwood City and one in San Diego – and the company is also working with independent developers. Trion is also truly platform agnostic since it views the server of course as the platform.

Currently, two projects (which were previously announced) are in the works at Trion. One is fantasy-themed MMORPG led by Jon Van Caneghem, a Computer Gaming Hall of Fame member best known for creating the long running RPG and strategy franchises Might and Magic and Heroes. The other game stems from a partnership with the Sci-Fi Channel, which will see the two companies co-develop a « dynamic, connected video game franchise » published by Trion and a television show to air on Sci-Fi. We pressed Buttler for launch dates, but all he would say is we’re getting « closer and closer [to making that announcement. » He did confirm, however, that the Van Caneghem game would be the first to launch.

If Trion’s vision for the future of interactive entertainment proves true, it could very well mean the end of « consoles » as we know them. If the server is all that matters, then perhaps all most consumers would need is a sort of set-top box. That wouldn’t necessarily eliminate innovation like we’ve seen with the Wii, however. « What you can have is exciting devices, input devices, that can have the form of a guitar or anything you want, » said Buttler. « The peripherals and devices connect to very powerful servers that really do all the heavy lifting. »

Filed under Couverture Média.