An MMO as a multi-level marketing scheme?

There's a story behind this. The other day I was at a Home Show, you know the sort that has landscapers, spas, contractors, and all-things-home-related... or so I thought. I was approached by a gentleman who had a GREAT BUSINESS OPPORTUNITY FOR ME!!!

*gasp*

He gave me some literature and as I was about to walk away I saw the words "gamers", "new MMO", "1M subscribers the first year" and more stand out at me. So I turned back around, intrigued and most certainly skeptical. This gentleman then tells me that for a $250 start-up cost and for $50 a month I can be part of the first group of people for a new business opportunity. In return you get access to a new popular MMO game and 36 other games. Including a racing game, and a popular football game. (Their words, not mine). He tells me it's by a big name development company. I press him... which one? He doesn't know. He admits to me he's not a gamer and that he just saw this great business opportunity and surely I would like to be in on it too!

So I leave with no really good information to go off of but a website. I come home to do some research, turns out the new MMO is Stargate Worlds. A verified MMO that is indeed coming out in 2009 by Cheyenne Mountain Entertainment based out of Arizona. My first thought is, a development company doing a pyramid scheme??!! There's conflicting information on the web about whether Cheyenne is indeed behind this or not. They have a statement saying they are not affiliated and that they have no contractual relationship. Their official Stargate Worlds forum also has blocked/banned the url of the MLM (multi-level marketing) company. But then there's this blurb:

"The chairman and primary fund raiser of Cheyenne, Gary Whiting has decided to share the spoils of this phenomenon, and create an unrivalled opportunity, the scale never been seen before, where the games will go live, globally, after the first 200,000 Platinum members register in the network.

A Platinum member is $250 with $50 monthly subscription that gives you full access to STARGATE WORLDS and 6 other 3D online games from a Motor Racing Game (where you get to choose the car of your choice, and if you win the twice monthly tournaments, you also win the real version of the car.) To American Football Game [sic] (like Madden NFL) and other new 3D Fantasy Worlds, 15 Future Games & a 3D Social Networking site with Shopping Mall.

After the 200,000 Platinum members have been filled in the BINARY tree the Game will go on sale (est. May '09), and everyone who purchase [sic] the software for the game will be allocated pro-rata, so therefore evenly distributed among the 1st 200,000 platinum members downline."

Now it should be noted that this was presented to me slightly different. I was told about getting people to sign up underneath me, as a "downline". Then their money filters up to me. This is clearly the business model that is happening as by doing a quick search I am seeing members of this MLM give links with their names attached at the end for you to SIGN UP under them. So whether they saw the above model not working, or it's been slightly modified, or there's more to it then that is unclear.

Tentonhammer.com had this to say of it:

"So basically, once MMOguls raises $50 million, they'll take an attractive stable of games live and everyone will share in the box sales and subscription profits. Sounds fishy? For sure. But let's give this the benefit of the doubt and say 1) this is legit, and 2) it goes live as intended. I'm guessing that $50 is at or around the average gamer's online entertainment budget each month - would you fork it over for SGW and a bunch of no-name clones? Either someone didn't do much market research or they simply have bad intentions.

As to the truth behind of CME's affiliation with MMOguls, my sole amateur Internet sleuthing tool WhoIs shows that the domain is registered to an address in the same building (though not the same suite) as the address we have on-file for CME. It's worth noting that the MMOguls site doesn't mention SGW but does cast itself as owned by Cheyenne Mountain Affiliates, LLC.

Of particular note is that Star Gate Worlds doesn't have a Producer for their game either. Neither do they have a pricing point set yet for what the game or the monthly subscription will go for.

The literature they give you is also a bit misleading. Take a look below:

* The one-day record holder for a movie premiere was Spiderman 3, which brought in $59 million in ticket sales on its opening day. MGM’s James Bond movie just surpassed it last week with $79 million.
* Spring's opening blockbuster brought in $500 million in sales. It was the biggest entertainment opening ever. But it wasn't a movie...
* Grand Theft Auto IV, a video game, recorded sales of $310 million... on its first day.
* For the first time last year, the video game industry surpassed the movie industry in gross sales.
* 68% of households in the United States play computer or video games. Game software sales were $2.6 billion in 1996, and by 2006 they had reached $7.4 billion.
* In 2007, the industry sold 267.8 million games. That's 540 games sold every minute.
* Forty-seven percent of video game players are between the ages of 18 and 49. The fastest growing demographic is the 50-plus crowd.

The last recession the United States had was after Sept. 11, when technology demand crashed. Despite that, sales of video games during that period increased 43%. 2002 became a record year in video games, posting $7 billion in sales. And it's happening again...

So put the two phenomenon together, add Rewards and Incentives to the mix, and you have a Social Network “at Play” that will have a huge upside and the stickiness to last!!

Notice how vague any of the numbers are. First off MMO's are only 11% of the video game market, 2/3's of these players come from Asia and not the US (which is the audience this company is marketing too). (source) So it's a much smaller audience then they would have you believe. Not only that, but every person I could find online who had signed up for this MLM (multi-level marketing) is not a gamer!

Is this what desperate MMO development companies are turning to? Can you imagine Guild Wars 2 following a business model such as this?

I did purposely leave out the links to this company, though anyone with enough google skills won't have a problem finding out about this, it is an MLM though. I know there are different opinions out there on these type of programs from Amway/Quikstar to others, most people are very skeptical of them.

Is this what we want MMO's becoming? To log into your game and no longer are you discussing the latest class or profession. No longer are you trying to find a group to complete the latest quest or to try to sell the latest drop you got from a monster. Instead, your chat screen is flooded with people asking how they can convince more people to be in their downline. Business strategies such as buying email addresses, posting signs on streets, buying a booth at the latest home show will be discussed in detail. Is this the future of gaming?

Pathetic and idiotic.

The internet has become a plague of scams and deceit, from which people or shady organizations can make huge sums of money.

The fact is, that literature is meaningless, and a pretty clear indicator of ill intent. It isn't just vague, but entirely off topic. Usually when people talk in circles, they are simply trying to divert your attention from the truth; a lie.

Money upfront tactics for something not yet arrived is just as shady as the information regarding the opportunity. I am simply glad you realized how absolutely sad and pathetic this is... However, you suggest that many gamers are not gullible, which I must disagree with. The majority of online gamers are fools, who jump at the idea of any game based on a popular, marketable concept such as Stargate.

Whenever people come across some sort of pyramid structure/scheme, they should walk away.

It does sound some what fishy.

I feel it's almost to be expected. MMOs are at their base roots, huge chat rooms for millions of people. Combine the fact that many require a fee to play, and you're going to get economic opportunities. Add in human deception, and it's natural.

The article posted in OT about the EVE online banker shows just how MMOs can tap real world events in a frightening manner.

The internet's capabilities from fraudulent activities have truly been barely breached. Give it another decade, and much more frightening things will arise.

Fishy sounding it does yes!

I think it is a great idea...and certainly will pick up speed and become more mainstream with many other companies joining in . While in this instance I do feel the 50.$ example is steep, I'm pretty sure that price will come down quite a bit. Wouldn't you love to receive cash for signing your buddies up?! I USED to refer people to GW all the time...back in my nub days and thought it was actually a good game..;/. But if I had made some cash for helping to promote the game, after all OUR word of mouth advertising is much more important to sales than a flashy box or web page,I wouldn't feel so lame for having bought all four chapters! no...just kidding. Sign me up...I know a lot of disgruntled/disenchanted GW players that I can make some cash off of! ....teehee...just kidding..but seriously...

I actually have read several reports discussing how video game sales rise in USA when economy gets rough. It certainly makes sense... more people sitting at home being bored. Americans always have more expendable cash than other nations...when our economy is bad...everyone else is doing much worse.

:/ It's the same in all of these internet marketing schemes. They come out with a big bang, saying "this is an amazing product, we have a huuuuuge market, come buy our product and see." They get amazingly high sales in the first couple of weeks from all the desperate internet marketers out there looking for their lucky break, and it fizzles, leaving the producers with happy fat pockets.

That looks to me like a different way to sell a mediocre product, not necessarily to the gamers, but to the poor suckers who get excited by the numbers. Pretty low imo.

Or start one of their own...

Make money by giving money to Generic Well-Founded Game 3000!!!!!

Nice research into the guts of the scheme though. Get rich quick? Somebody is, but it ain't the mindless people on the outside putting their money in.

lol
Bill~
"Let make a Television show with all of the great features that kids love!"
"Boys love T-Rex, so lets base it round a T-Rex."
"Girls love ponies, so lets make a secondary character a pony."
"Kids love spongebob, so lets add spongebob."
"Kids like action, so lets add action."
"Kids like footfall. Lets add football."
"Kids like Ninja's. Can't go wrong with Ninjas."
"Kids love shooting games, mine play halo."
"Kids love Harry Potter, lets add him."

"Ok, here is the storyline. Joe the T-Rex tries out for a football team. Pony the pony is cheering him on. When they are attacked by gun-blasting Ninjas and spongebob absorbs the bullets and dies. Then Harry Potter summons Joe and pony (Who loves each other) to his dimesion to stop the evil power."

Mindy~
"Bill, you are !@#$ing retarded."

Bill~
"Gary Whiting, what do you think?"

Gary Whiting~
"Add a sex scene between the dinosuar and pony and it's in. We will charge people $250 sign up fee and $600 year fee. Lets make it $50 a month to seem less scary."

Mindy~
"Your not going to buy this crap are you Gary?"

Gary~
"It's more brillient then sueing Arena-net with a crappy patent. Lets do it!"

There, that's all I needed to read. Why else would such an amazing offer be somewhere other then a gaming convention, but to sucker in folks who actually know nothing of gaming?

The typical pyramidal scheme...

Its like a mosquito lamp; show off bright lights and all the bugs will get drawn in to their deaths.

There has been rumors that the company developing stargate worlds is running out of money.

http://www.days-since-cheyenne-mount...been-paid.com/

That is indeed a fishy MLM "Business". I will have to google it just to see if there is any more detailed info on it.

Personally i am an IBO through Quixtar, and i actually make a nice lump of cash each month off of it (believe it or not). But As for this one, 50$ a month??!!? what does that pay for? R & D? Obviously not marketing. Seems to me that there is nothing tangible on which these investors can see a return.

To OP, did the solicitor at the Home and Garden show tell you what you are getting for your 50$ a month with 250$ up front? Surely its not the opportunity to beta the game. Then IF/WHEN the game is released to the mass public, you get .000001% of the revenue?

Another question, If the game is finished and playable, what prevents the game from just hitting a small test market? And why would they still need so much more funding for a game that is already finished and playable?

How many "platinum" members will fill the pool? In other words how many suckers do they need to launch the title?

I guess you cant blame Kevin Balentine for trying to save his drowning business. Who knows, maybe the company wont flop. And maybe the "investors" might see a huge return.

I doubt it will be anything like the examples given. GTA IV? seriously. GTA has been a huge title since liberty city. I even remember GTA on my PS1. Comparing the video game industry is like comparing global warming to lack of pirates.

Buymoore:

Kevin Balentine, Senior Marketing Manager at Cheyenne Mountain Entertainment, offered this official word of explanation:

"At Cheyenne Mountain Entertainment, we have always been upfront with the media and our fans that we are a start up. Like many start ups, we face the same cash-flow issues that all pre-revenue companies face. We have maintained a core of dedicated investors, but the new economic realities are forcing us to seek out additional sources of funding and that's what we're doing."

Looks like there's some shady dealings at the top, but then again... website details can be faked

Would this be the truest and most pure definition of vaporware?

LOL Cheyenne mountain ?

I almost ended up working there once but got an offer back in California where it isn't F***ING 120 DEGREES OUTSIDE.

I've known about them working on SW for a long ass time, but I didn't think they would pull something like this.

Funny shit.

I hope you don't mind reposting this over at StarGate-Gamers Inde.

Wow, I had such high hopes for the game. I just can't see a game associated with a pyramid scheme being that good.

Where's Richard Dean Anderson when you need him?

The Bernard Madoff of gaming.

This one? No. Similar? Yep.

Most p2p already give benefits for people who recruit new customers or make old ones resubscribe (i.e WoWs month free for resubscription of friend). Even f2p item-shop MMOs usually give some item shop credit for successful referals too.

I can very much imagine anet giving players incentive to recruit new players in similar manner with, for example, free expansions.

this is just a very big, get rich quick for the guy starting it, scam.

pyramid scheme = bad

Wow, this is a pretty big story. And funnily Stargate's Goa'ulds have pyramids!

I can understand innovative business models (based on micropayments or rewards for bringing new players to the game) but that one crosses the line, and by a margin. It's illegal in many countries for a good reason.

It's like those time-share type deal. You invest in money in hope of getting it back from future returns.

Hopefully no one is dumb enough to actually pay this guy money for a game that isn't even coming out!

The problem is that these pyramid scheme may have taken upon your friends, and these friends are willing to back stab you and drag you down to hell because of their stupidity or greediness.

The internet is a good to have when looking up information and seeing things are "too good to be true". Because when it is too good to be true, it is.

And thus, the line between friend and enemy can never be seen in the real world.

Isn't the US government going to do anything about this? This is a scam plain and simple!
Sad story man.

i wouldnt generalize like that. Personally i am in a pyramid structure and i'm finally to the point to where i am making more money than i put in. My high school buddy who introduced me is already paying all his bills with his business.

Most Pyramid businesses are in fact schemes. but that doesnt mean they are all bad.

Truthfully, i gave it about a year of hard work then lost all confidence because it wasnt paying off. So i quit grinding the business for a year until i saw the results from my High school buddy. I decided to give it another year of dedication and finally im starting to get satisfying results. I see growth every couple months with me putting in less and less effort.

From my point of view, i think the reason people are so skeptical against MLMs is because they take soo much exclusive dedication and the satisfaction is extremely delayed for the majority. But in the end, if you are with a good company, your business has the potential to grow with out you babysitting it anymore. Residual income is funny that way

Aaah, good, old success story.

While it took you two years to start making interesting profits, someone got very rich at the top of the pyramid. I think the problem doesn't lie in the market structure of a pyramid, rather than the way it's commonly used to exploit people. In the same amount of time, you could have done a much more profitable work for yourself, except if you're sitting at the top of the pyramid (meaning you exploit of a lot of people).

Of course people will defend the concept by saying that it's "free economy" and no one is forcing you to do it. But it's like drugs or MMO grind, if you're not cautions, you're dragged into this quagmire and it's too late until you've realised what you've lost (they always mention the very little work that this requires of you).

It's not a baby you're talking about, it's a nasty sucker. As I said above, there are plenty of original market schemes, but pyramid schemes are terrible.

The thing with pyramid schemes is eventually they run out of investors to keep supplying the cash flow needed to support itself. The last people in will never get their money back and all comes crashing down.

edit: Fril you beat me to it.

Even market structure itself is wrong, because it is based on exploiting people on lower tiers. Without incentive of "army of underlings that pay your bills", there goes incentive to grow pyramid. Making it useless if one hopes to actually sell stuff sales.

Anyhow, people reading what Daze posted also should read this: http://www.vandruff.com/mlm.html

Bingo. Pyramid schemes create no social equity/utility. There is no benefit made as it is no real product, either a good or a service. In the amount of time it took to turn a profit off a pyramid scheme, you could have put that same amount of time into a real job that produced a tangible benefit to society.

This isn't even a real pyramid scheme. Most of them have some "real product" to entice buyers. This company has pie-in-the-sky to offer. Give me $250 up front and promise me $50/month and someday I will give you an MMO that will earn millions.

Considering the fact that every touted new MMO in the last few years has failed dismally, that's very expensive wishful thinking. No wonder they are marketing it to non-gamers who are unaware of the realities of the gaming world.

Or when the economy goes bad and the money dries up.

Everyone, I have moved the discussion of Quixstar to it's own thread in our Off-Topic forum. It was steering the thread away from its original topic of how this relates to gaming. So you can continue your discussion here:

http://www.guildwarsguru.com/forum/s...php?t=10352343

Thanks Indy. I could see it becoming off topic.