Interview: David Simmonds on the Business of Entropia Universe

By Steven Crews | November 19, 2007 | | Filed under: Features

The MMO Gamer: Going back to something you said a moment ago, you allow players to purchase land in the game and then charge people for access to it?

David Simmonds: That’s right. This is really part of the entrepreneur side. There are many land lots that have been sold inside of Entropia Universe. They range—actually quite expensive now—they’re up to between $10,000 and $40,000. And this is real money, real American Dollars.

But, they’re actually making revenue from this land. They’re drawing people in, they’re advertising, much the same as in the real world. If you’ve got some land in the real world which is a hunting area, what do you do? You have to advertise it, you have to make it fertile, you have to look after this land, and then obviously you’re charging people to go on it. It’s much the same here.

In 2004, we had a treasure island which was put out on the internal auction for a starting bid of one dollar. The final sale price was $26,500. The guy made his money back after eleven months. So, a very good business plan he had. And now he’s making money every month out of that land.

He was actually in the 2004 Guinness Book of World Records for the most expensive virtual item. A year and a half ago, we had a virtual asteroid which goes around the planet, and it was put on the internal auction for one dollar, and the final sale price was $100,000.

The person made it into a virtual entertainment area with hunting and mining, with a big social part. His name is Jon “NEVERDIE” Jacobs, and you can go and listen to cool music and see great videos and things like that, and go out hunting as well. He made his money back in eight months. He reports this himself, and we know that he’s making between $15,000 and $20,000 per month.

There’s different extremes… entrepreneurship inside Entropia Universe is a very big thing, we’re talking about real money. Being an entrepreneur you don’t have to be in that kind of bracket. The person picking up dung and making fifty cents, a dollar a day, that’s an entrepreneur as well.

The MMO Gamer: I’ve read recently that you’ve issued the first license for a “virtual bank” inside of Entropia Universe. How are you planning to manage that?

David Simmonds: That was great. We put five banking licenses out on the internal auction, and they all had a starting bid of one dollar. The total sale price was over $400,000 for the five banking licenses.

You can see that it’s not the price which we put on the banks, it’s what our users have decided what they’re worth. Now these banks have come out and are live, they were bought by one real-life bank, and Anshe Chung, who is a celebrity in Second Life and is moving over into Entropia Universe as well, one of our celebrities who is John “NEVERDIE” Jacobs, a Russian payment provider which wanted to get involved, and another entrepreneur.

Now these banks are up and running, the same as everything as Entropia Universe, we start off introducing certain services, and there’ll be a lot more services in the future. So we think this will be very good for the future of Entropia Universe, and the future of entrepreneurship inside our world.

The MMO Gamer: On the subject of entrepreneurship, you speak of buying land, and opening banks, among other things, as “investments.” Do you issue a prospectus for the game?

David Simmonds: No, not for those. We put the items out with a starting bid of one dollar. It’s down to our users who are bidding against each other to work out what the market value is.

We’ve been talking about the things inside Entropia Universe which are big things. But, the average gamer doesn’t have a hundred thousand dollars to put into a game, or thirty or forty thousand dollars. You can come in to Entropia Universe, and most of our users are coming in, starting for free, looking around, deciding they like it, and then they say well, “What would I normally do for a game? I’d go and spend forty or fifty dollars.”

So, they put that in, get themselves kitted out, and then carry on and put in ten, fifteen, twenty dollars a month. And you can have a great time inside Entropia Universe. And, because there’s no subscription charges, you can take a break for a month, two months, doesn’t matter, you can always come back and all of your stuff is still there. It really is open to everybody.

The MMO Gamer: Where does, for instance, the IRS come into this equation? Do people pay taxes on any income made in the game, or report their losses?

David Simmonds: No. In our EULA, though, it states that everybody is required, themselves, to state to their individual country what their earnings are. We’re very much like any other internet business, you have to do that.

We’ve got customers from over 220 countries, so it’s very hard for us to know the tax laws in each country. But, we’ve been talking to the IRS, we’ve been talking to the FBI, we’ve been meeting them in Washington, we’re very interested in keeping in close negotiations with them and having them knowing what’s going on.

We’re talking to the Swedish—maybe you don’t know, but MindArk is a Swedish company—and the Swedish tax authorities have been with us, and they’re very interested in giving information to our users, whether they’re from Sweden or not on aspects of tax.

The MMO Gamer: The last time we had a chance to speak to MindArk, you were planning on a large-scale expansion into China. How has that been going?

David Simmonds: That’s been going great. With the expansion going into China we’re incorporating the CryTek 2 engine. You can go on the website, entropiauniverse.com, and see the Flash. It’s amazing. The new graphic engine is so realistic.

When we introduce the Chinese planets, and when we open up space, the CryTek engine will be include in that expansion, as well. This is expected to be middle to late of next year.

Another exciting thing which is happening, we’ve got game developers—which you would think would be competition to us, another game developer—but instead of them making their own platform, and making their own game or virtual world, they’ve chosen to come to our virtual world and use the Entropia Universe platform to build their own planet, which will have their own rich content.

We are a universe, we’re an open universe, so all of our users will be able to go and visit these planets. It’s going to be really exciting. This is just one of the partners we’re talking to, there are a lot of different companies that are interested in opening up their own presence inside Entropia Universe. But, as I said before, we’re very careful with who we take in. We’re not a three-dimensional website, but we want our users to be interested and want to come in.

The MMO Gamer: In terms of the Chinese expansion, is everyone playing on the same server, or do Eastern players have their own separate worlds from Western players?

David Simmonds: With the Chinese planets, because, maybe you’ve read, they’ve estimated that within two years they’re going to be having 150,000,000 accounts and 7,000,000 concurrent users. That’s very ambitious.

The MMO Gamer: Yes… it is.

David Simmonds: They will be hosting their own servers. But, as I said, Entropia Universe is an open platform, so you will be able to travel to these different planets. The Chinese system is really exciting, it’s not going to be one planet, they’re going to have education, ecommerce, gaming, of course, and there’s going to be a lot of different planets you can go and visit.

Some of them will be harder than others for a normal person to visit. That means it’ll probably cost more money to visit some planets than others. You’ll have to travel in space, exactly the same as you would in the real world—hopefully—in the future, we’ve got a lot of planets to go to, some are harder to get to and some are easier.

The MMO Gamer: So if the Eastern and Western worlds are linked together, will the PED [Project Entropia Dollar, the game’s unit of currency] hold the same value in both areas?

David Simmonds: Absolutely. As I’ve said before, Entropia Universe is an economic platform. Any partner which comes in and uses our platform will have to be under the umbrella of Entropia Universe.

The MMO Gamer: How do you anticipate that working out? Taking into consideration the income disparity, and the fact that the Yuan is currently trading at around 7:1 to the US Dollar?

David Simmonds: We’ve been talking to the Chinese, and as far as we can see there’s not going to be any problem with that. I’m not really sure—haven’t really thought of that—but, as I understand it there’s going to be no problem.

The MMO Gamer: In terms of some of the censorship requirements of the Chinese government, do you anticipate there being any problems on that front?

David Simmonds: No, we don’t. Every game, or real-world country has different types of censorship, America included. In our game we have certain things you can do, and you can’t. In the real world, we have to have rules and regulations so it doesn’t become anarchy and chaos, and we can see that is what happened in some virtual worlds, as well.

From what we can see, from some of the press releases coming out of China, they’re going to be using Entropia Universe as their platform to come out into the Western world.

The MMO Gamer: So, in other words you don’t anticipate any problems getting through the Great Firewall of China?

David Simmonds: Absolutely not. The company which we’re working with, CRD, is partly owned by the Chinese government. So we’ve got absolute confidence that there are no problems going forward. It’s really exciting for us.

The MMO Gamer: Ever since the game first launched you’ve had one of the most unusual business models in the industry: Giving the game away for free, and charging real currency for items and equipment, and then allowing people to later cash real currency back out.

The game has been around now since 2003, so you’ve had four years to evaluate the system. How has it been working for you?

David Simmonds: It’s been working out fantastic. We find it’s really what our users like. In the development stage which went from 2003, we wanted to grow Entropia Universe at the rate which we wanted to.

We feel now, with the CryTek engine, and China, and opening up space that we’re ready, really, to come out into the world and really show where we are, because a lot of people don’t know about Entropia Universe.

All you have to do is look at MindArk the company and see we’re very successful. The company’s been profitable for the last twelve quarters, and you’ll be seeing very shortly an announcement that we’re going to be—part of the company, obviously not all of it—is going to be floated on one of the main stock exchanges.

The MMO Gamer: Was there anything we didn’t discuss in this interview you would like to tell our readers before we go?

David Simmonds: I think there’s a great deal we didn’t discuss, but I don’t think we’ve got enough time to get through all of the exciting stuff with Entropia Universe.

The MMO Gamer: Pick the most exciting.

David Simmonds: The most exciting? Adrenaline. You don’t get any kind of adrenaline from any kind of game that you do from Entropia Universe. Any other game that’s subscription based, if you die one time, ten times, a hundred times, ten thousand times, it makes no difference. You’re still paying your fifteen dollars a month.

Inside Entropia Universe, it’s consequences. It’s your choices which decide what’s going to happen to you. And when you’re out there and you’re hunting and you get that big, big, hall of fame pot, it’s amazing, and you don’t get that adrenaline from any other game. Come in and have a go.

One more thing: Entropia Universe is hard. It’s a hard life in Entropia Universe. If you’re the kind of guy who wants to be top dog in half an hour, don’t even bother downloading it. It’s a hard life, it’s a long slog, but it’s going to be worth it in the end. There’s a lot of stuff inside to explore.

The MMO Gamer: And it’s a hard life here at E for All, too.

David Simmonds: Absolutely.

The MMO Gamer: Thank you very much for joining us, and we look forward to speaking with you more in the future.

David Simmonds: Nice talking to you as well, thanks very much.

You can find additional information about Entropia Universe at the game’s official website: http://www.entropiauniverse.com

Now, if you’ll excuse me, I’m off to collect dung.