Exclusive Interview: Wowhead and Affinity Media

I was actually running Wailing Caverns with a few guildies from IctfB on last Friday night around midnight when I heard the news: Wowhead had sold for $1 million to Affinity Media, the company that supposedly ran IGE, the notorious goldsellers. We'd received a tip from someone who claimed he used to work for IGE, and we rushed to get the story up and also make sure it was right-- word was that Affinity didn't own IGE any more, and that Wowhead had maybe sold because of that.

Still, in the week or so since, players have had plenty of questions. Did Wowhead sell out to goldsellers? Did Affinity really sell IGE and are they really out of the goldselling business? And why did Affinity want to buy yet another database when they already owned both Allakazham and Thottbot? And perhaps most importantly, what kind of changes would come for Wowhead?

WoW Insider got a chance to sit down for an exclusive chat with both John Maffei, president of the ZAM content network at Affinity Media, and Tim Sullivan, CEO of Wowhead, to talk about Affinity's past, the sale of Wowhead, and what's coming next. They wanted to clear up questions, and we wanted to get answers. To read the full, exclusive interview, click the link below.

WoW Insider: John, why don't you start by giving us a little history of Affinity Media? How did it start, and where did it all begin?

John Maffei, president of the ZAM content network at Affinity Media: Sure. So I think everyone is pretty much aware by now that IGE was a company in the virtual trading space. At one point, and this is before my time-- I didn't start until September of 2006-- it became pretty apparent that we were going to try and diversify the business into multiple different areas. So one of the areas obviously was content. We obviously were thinking about US content assets as well as China content. When we thought about auctions, there were obviously some pretty big auction places that we were looking at over in Korea. So I believe in early 2000 [Update: Maffei meant to say 2006, as that's when IGE purchased Allakazham]-- I don't have that time exactly right, because, I should have that note for you, but the idea was-- right before they purchased Allakazham-- was that it made sense to have a different company, because we had so many different assets.

Previously, I've gone on record as saying this, the company recognized that there were some people who didn't approve of IGE and that business. And it made sense to separate those assets. Because they won't work together, and-- lots of reasons, number one, I think it was better that they have barriers in between those businesses, but also there was no synergy between the trading business and the content business. So why would those businesses be attached?

WI: So what is Affinity now-- is it all content, or what is the situation like?

JM: Content is certainly the biggest part right now. I think I said this in the Gamasutra article-- we do have an interest in Korea in the C-to-C auctions base, and--

WI: Explain that real quick. Consumer-to-consumer?

JM: Yeah, consumer-to-consumer. I mean basically that's like an eBay model. I mean it's an eBay model where we don't actually go and buy and sell any items. We build a marketplace. It's like you go to eBay, there's a four or five percent commission rate for doing a transaction if you're a seller? It's a similar kind of model for any kind of auction platform. It's the idea of bringing buyers and sellers together, whether physical goods or virtual goods. There's some sort of fees for facilitating those transactions-- that tends to be a very small fee. And the benefit to the consumer is that there are things like ratings systems, for who's a trusted buyer, there are payment instruments that allow people to go and easily exchange money. For example you and I can't exchange credit card information, but if we do a transaction over eBay, it's really simple for you to pay me over Paypal or a system like that.

WI: And that's for both virtual goods and real goods?

JM: No, the businesses that we have are primarily virtual goods.

WI: Including gold, then, specifically. Not just items in game, but also gold as well?

JM: Yeah, I think you can buy-- the Korean market is obviously a significantly different market than in the US. It's very much more active than the US. The gamers are extraordinarily passionate and play a lot. But my understanding is, and I don't operate that business-- I don't speak Korean, so it's not easy for me to go to the website and check it out. But obviously there's both object exchange and currency exchange.

WI: So that's still a section of Affinity Media. But of which the Wowhead division is a different section.

JM: Completely, 100% different. There's a big focus on content-- obviously, the US content business we're very excited about, I think we've made a bunch of statements about that. We have an auction division, with Korea being really the foothold for that. And formerly, we used to have this division called IGE, which we no longer have.

WI: So it sounds like you are still involved in the RMT, the real money trading business, overseas, but not any more in the United States at all.

JM: This is what I would say on that: I think that right now, there is almost no market in the C-to-C auctions in the United States right now. It's very small. And there are legacy things involved in the company in previous times, but we are not involved in any sort of material way in the United States in the C-to-C auction business. However, I will say this. I think if the opportunity arises, where publishers are willing to go and we have the option to go work with publishers-- and again, we're not involved in this division, so I don't own the business, so I can't say this 100% for sure, but I think there is an opportunity, absolutely, where I think that there are some publishers who-- especially those guys who make free-to-play games-- who see a benefit of having a marketplace where consumers can go and exchange assets. And Sony clearly would be the guys who went and built Sony Station Exchange. And they issued a large whitepaper and talked about all the benefits of having that, as well as what the challenge is. So I think there is a definite business opportunity for someone to partner with the publishers to help run those exchanges.

[Update: Post-interview, Maffei sent this note to clarify: "To be clear, we are in the C2C auction business. Affinity Media as a company is thinking about how we offer US publishers services for those who want to facilitate a secondary market (like Sony has) via a C2C exchange. 99%+ of the auction biz is in Korea. This hasn't really taken a foothold in the US yet." ]

WI: Why do you think something like that has happened in Korea, but not yet over here? Why is it OK over there but not here?

JM: I think it's just that the market tends to be more ahead of the time over there-- more people game, more people are involved in the marketplace. It's a very efficient way for consumers to exchange assets. So I imagine at some point that will become a decent model over here. I think it's just finding a way where publishers feel like it's an overall benefit. And there are lots of arguments about why there should be a secondary market, in terms of how it keeps people interested in the games. And the other thing is that I think that if there is an interest in the secondary market, and they say that, "we want to facilitate this," they'll want to provide a safe trading environment.

WI: But you would say that there's not an interest from, specifically, publishers. Do you think that there's an interest from players over here in the market?

JM: No, I think it's a little more complicated than that. I think that probably publishers who are very interested in it obviously feel that there's a benefit in secondary markets, and I talked about this in the Gamasutra article-- some publishers think that having a secondary market creates an interest in the game, where people are more actively involved in it. So I think that obviously if you can have someone be on your game for longer, and be involved in that game, it's a very positive thing because you keep people on the subscription. And I think that consumers are interested in it as well, too. It's just that they're not used to it now. And obviously people are very familiar with the eBay model. You as consumers like eBay, is what I would say. They're pretty popular with auctions.

WI: So for the record then, like you said, there will be no gold ads appearing on Wowhead.

JM: Oh no, we talked about the ZAM content network, and-- the point I really want to make is that these are 100% different divisions, and that we operate them completely separately. The content business is a profitable business. We don't have any touching of any sort of gold ads, anything like that. Ever since Allakazham was purchased, I don't think there's ever been a gold ad on Allakazham-- one might have slipped through because of some kind of Google Adwords or something like that, but generally the policy is absolutely no gold ads. There will never be any gold ads on Wowhead, and certainly on any of those other properties. We've been pretty hardcore about that. And you know we want to do what our gamers want, so we've got a great audience of gamers who love using these sites, and we want to deliver the content that they like and we want to stay in this environment. And if they're not into it, then we're not going to deliver it.

WI: So going into that, then-- you had purchased Allakazham and Thottbot already. Why did you decide to purchase Wowhead, which is a third database of the same type?

JM: It was an extraordinarily innovative team who built Wowhead. I think that they literally just did a phenomenal job on Wowhead. And we saw that the market really liked their content. They had that huge growth in their traffic, and so a certain amount of people out there thought that was a really robust WoW resource. We know we have people who love Thottbot, we know we have people who love the Allakazham experience, and clearly there was a bunch of people who thought the Wowhead experience was phenomenal. And we really wanted heavily into this content business, and that's the business that I'm solely focused on-- I don't work on the other side of the business. I address it, because I think it's positive that people know what our thinking is, and why. I want to dispel some of the rumor and innuendo that's out there. But so hey this is great, the more traffic we can get, the more unique users, the greater ability we have to go and build that advertising-- excuse me, that content network, to different business models, whether it be advertising, whether it be subscription. The more traffic it has, the more opportunity we have to go and do very cool things. Because when you have traffic, we can monetize the business. We can go invest in other games, and do other really, really fun things.

And that's why we feel so passionately about these Wowhead guys is because these guys are such hardcore gamers, they understand the space so well-- they deeply understand what users want, and that's why I'm so excited to be working with them.

WI: Tim, from your end of it-- we really appreciate your site, and he's exactly right, the gamers love it, and they think it's a great resource. How long have you been thinking of selling the site? Have you considering investors for a while, or was this a surprise?

Tim Sullivan, CEO of Wowhead.com: I wanted to touch on what you asked John before, and that's why Wowhead when Allakazham and Thottbot are already assets.

WI: Sure.

TS: One thing I've found is that there are a very large number of users who will use Allakazham for one function, and Thottbot for another, and Wowhead for another, and each site has its own way of presenting content to users, and one site may have a presentation method that's different from another site, and that user may like that message, or they may like Wowhead for looking at quests, or Thottbot for looking at comments, or the other way around. Or they may like the color scheme of Allakazham, but I've really found, speaking to a lot of people online, and to a lot of people face to face that certain people use certain sites for different reasons, but there are a lot people who use both sites, or all three of the major database sites, and so adding an asset of Wowhead onto Thottbot and Allakazham really does complement everything all the way around.

WI: So, have you been thinking about selling the site for a while, or was this a surprise?

TS: Well, it's kind of a melding of minds, I guess you could say. We've grown very quickly, and our goal has always been to service the community. We're gigantic fans of World of Warcraft, and fans of Blizzard in general, all the way from the first Warcraft, to Starcraft, Diablos, all the way to World of Warcraft. And Affinity and the ZAM network have a lot of opportunities that we wouldn't have by ourselves alone. We're kind of a grassroots network, we're building up from scratch, and we don't necessarily have the reach that a larger gaming network would have-- we don't necessarily have the resources or the ability to monetize traffic. Just like John said, the ability to wrap a business model around a website, such as advertising or subscription revenue, allows you to generate revenue, and in turn, reinvest that into the gaming community in general. And the acquisition is going to allow Wowhead to do that in a much better fashion than we could do on our own, so I think it's a really good choice, and I think it's an exciting opportunity for the whole gaming community moving forward.

WI: Cool. How did this deal come about? Did Affinity come to you, or how did this begin?

TS: I'd heard of Affinity, I talked to the Thottbot people. I followed closely the acquisition of Allakazham at all the different stages, and I did a whole lot of research on my own. When I first heard about Affinity, I heard everything else that people heard-- was it related to IGE, are they going to run gold ads on websites? I've been keeping an eye on Thottbot and Allakazham ever since the acquisition happened. I try to keep things very controlled, and sure enough I noticed that there wasn't any relation to IGE, there wasn't any gold advertising, there wasn't any RMT pushing to the users-- really, there was a very clean, community-oriented business model. And that's something I really liked, and I was looking to take Wowhead and kind of join it to a larger network, and I basically looked around at who occupied the market space today, and Affinity basically dominated everything. The way they interact with the community is very clean and honest, and that's one thing that I was very concerned with. I kept an eye on them for quite some time, and sure enough, speaking with John, who's a fantastic guy to work with, very to-the-point, very honest. He's a person who will tell you exactly what's on his mind, and he gives you the honest truth up front, and he's been an absolutely fantastic guy to work with. And I'd been doing research for several months before contacting him, and I'm a normal guy, I'm very honest, up-front, and I'm very happy with how things have worked out so far, and I feel very secure about Wowhead in the future.

WI: And John, how--

JM: I am also, and thank you Tim, I appreciate all those comments, I actually feel exactly the same way. I really have been just a fan of the space, and one of the things I actually do is I look all the time at what websites are up and coming, and who really are the best sites out there. And how could you avoid the Wowhead phenomenon? These guys have just been phenomenal. They have an unbelievable site, and they just were impossible to ignore. I've been chatting and talking to him on a friendly basis, contacting and chatting with him for months at a time, and clearly I think things were working in our direction, we were able to go and show him hey, we're really serious about the content space, the content business, because we love the content business, and we think the ZAM network is really going to be amazing, and we think the guys at Wowhead are just nothing but super positive on that side.

And, you know, he had some concerns about our past affiliations with IGE-- we have sold the business, but we actually told him, they're different businesses, we're very interested in investing in the content space, and this is where we really want to focus on.

WI: But how long have Affinity and IGE been different businesses?

JM: Springtime. Since the spring.

WI: A few months ago?

JM: I kind of said this, and I'll say it again, hey it's a private transaction, and I don't want to go give a bunch of details, but as a guy who's running the content business, I'm pretty pleased that we're no longer running IGE. Because some gamers don't like that association. It's only a positive thing.

WI: So Tim, when you were considering Affinity Media, was IGE still with them?

TS: At the very early stage, I think there was still-- this is from the knowledge that I have, and I can't say with 100% accuracy, but these are the observations that I've had--

WI: Of course.

TS: But when I first heard of them, I did know that there was some relationship. But the thing that kind of intrigued me was that there was a relationship between the companies, but at the same time, Thottbot and Allakazham had no type of RMT and no type of gold ads. I've been following along with Allakazham specifically and the founder of Allakazham stated over and over that there would never be any time of RMT or goldselling ads, or anything like that. And I was very doubtful at first of the relationships between the companies at the time, but from what I've seen myself is always been a clear seperation between the content network and the RMT network, and now it's basically been a gigantic step further, where the IGE company was sold off.

WI: So the obvious question is, if IGE was still a part of Affinity, would you have sold to Affinity?

TS: That's really a tough question. The answer would really depend on the position of the person running Affinity, and the amount of trust that they would instill in me. It's important to me to not expose the Wowhead audience to a whole bunch of RMT type of advertising. That was basically my bottom line. And so if Affinity was going to do that, then I wouldn't.

However, the whole time I looked at Allakazham and Thottbot, it was very clear to me that they were sticking to what they were saying and that is that RMT and these content networks were going to remain separate.

WI: All right.

JM: The point is we're super, super, super committed to investing in the content business, and I think it just shows-- the fact that we purchased Wowhead, and the fact that we're getting rid of some other assets, should indicate where the focus of our company is.

WI: Beside the gold ads, another question that our readers have is what plans Affinity has now that they have three databases under their wing. Do you have plans to consolidate them at all, or are you going to make changes to them?

JM: We haven't really discussed that right now. I will tell you the argument for-- we know we have literal userbases on all three. So I'm going to spend a lot of time with Tim and we're going to figure out exactly what we think the optimal strategy is going to be. I know right now that there are people who are so passionate that Wowhead is the best experience, Allakazham is the best experience, Thottbot is the best experience, that we have to be really careful that we don't disenfranchise people who have a particular love for one of these sites or another.

WI: Yes, when I was doing research, I was very surprised to see that even though Wowhead has had a huge jump in traffic, Thottbot hasn't really dipped. And so I do think that there are people who go to all three sites. Do you think that there's room for three databases inside your network?

JM: Yeah, absolutely we do, and again I think that we have to be smart about how we utilize our resources. There's no lack of things for us to do. So today we know that we have three heavily trafficked sites, that I think are the three best sites on the Internet for MMO gaming. But that said, we do have to think very carefully about how we invest in the future, and we'll optimize our strategy, and make sure that we can go and invest in all the areas we want to invest. But for the time being, Allakazham, Thottbot, and Wowhead will remain independent entities, and I think our users like it that way.

WI: Okay.

TS: I wanted to amend that-- I think that the bottom line is, and I'm going to put the words in John's mouth, so if you want to correct me, feel free, but I think that the bottom line is that we're looking to do what the community would like to have happen. So if there's a strong urge in the community to move one way or move the other way, then, I think, at least based on my experience with them, that they're very much pro-community, pro-content. If the masses like having three sites, if they like having two, if they like having one, if there's certain qualities in each of them that they want to see combined, I think whatever makes sense to maintain a really high level of content and a very efficient level of content. I think, just based on what I would know, that that would probably be the route to go.

WI: Cool. And as a last question is just about the future-- John, you mentioned in ZAM specifically that you wanted to go to more games? What else are you planning to do with the ZAM content network?

JM: You know what, let's do another interview with that, after we're ready to announce some plans. I think obviously we obviously think there are a ton of great games coming out, which we want to have a very large presence in. Tim and I have been talking a lot, and between him and I, I think we've got a lot of decent ideas, and I think between some of the other players in our ZAM network and some contributors to the network have some compelling ideas, and we don't want to share what we're going to do too early. But it's amazing how similar Tim and I are thinking about some of these issues, and areas that we want to grow into.

WI: Tim, for Wowhead specifically, what are you guys going to be working on from now on? Do you have new features planned, or what's the plan for Wowhead in the next six months?

TS: Well working with John has really opened up some amazing opportunities, and what we're doing now is we're sitting down, getting all the teams together, and we're going to have a face to face conversation and say what sort of features does the site have, and what kind of things did we have planned. Definitely we kind of have a vision of where the site can go, and now with Affinity Media, there's a lot more resources, there's a lot more talent, there's a whole other group to add to the team. I think our next step is for us to all sit down together and kind of figure out the future vision for Wowhead and some of the features to add on. We have a list that could pretty much go on forever.

JM: I've actually seen new features, so don't think that Wowhead development is dropping. I mean I'm hearing every day from the team, and they're sending me new features. I keep saying this but this is one impressive trio of guys-- they're pretty darn talented. And I think one thing we can say is that we're lucky enough to have a company that's done well enough that we have an opportunity to go and move quickly to kind of partner with the best talent. And I think we've clearly partnered with the best talent.

TS: And one thing I want to mention is that one of the success indicators or factors for the Wowhead site is the closeness that we have with the community. For the Wowhead site, a lot of our improvements and innovations have been directly implemented from emails that we've received from users. So as a followup to the conversation that we're having now, if any user ever has an ideas or any concepts or anything like that, we actually have a feedback email posted right on the site, and we actually get a lot of good ideas from users. The ideas come in, we modify slightly and kind of apply, and some of them, we'll prepare questions and send them off to a bunch of the users that we have. So a lot of the things that we have coming up now are absolutely fantastic and a lot of things are based off of feedback that we have with the users.

WI: And I guess you'll tell us about those when they are coming out.

TS: Yup.

WI: Great, thanks very much to both of you.