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“It’s time to go to war.” That’s how Mark Jacobs opened a recent meeting with analysts at Electronic Arts as he talked about his new online game, “Warhammer Online: Age of Reckoning.”

Jacobs started Mythic Entertainment 13 years ago to make online games. He has done 15 such games since founding the company. In 2001, the company launched “Dark Age of Camelot,” which introduced “realm versus realm” combat among thousands of players. Electronic Arts bought his Fairfax, Va., company in 2006. Now, as general manager of EA Mythic, his team of 200 developers is finishing WAR, which is based on Games Workshop’s Warhammer fantasy role-playing-game franchise. That game will be EA’s biggest challenge to Blizzard Entertainment’s “World of Warcraft,” which has more than 10 million subscribers worldwide. The online version of Warhammer, Jacobs says, is all about going to war, both in the virtual sense, and in the real sense of competing with World of Warcraft.

VB: How is development going on Warhammer Online?
MJ: It’s going great. We opened a new phase of the beta. We have players running around a city called Praag with sticks and swords.

VB: Can you describe the Warhammer history?
MJ: The Warhammer franchise was created by Games Workshop in England about 25 years ago. It is the longest and best-selling of all of the fantasy games. It started as toy soldiers, which we call miniatures. It was a tabletop game. You would take the miniatures and do battle with them. Over 25 years, it evolved into Warhammer 40,000 (a sci-fi universe which THQ is working on) and multiple editions of the core Warhammer fantasy universe. They have sold hundreds of millions of toy soldiers. They have 1 million active customers. It can be found even in Asia now. They had a massively multiplayer online (MMO) deal with Climax.

VB: Did you stumble upon the MMO license?
Going back five years, one of my friends was working with Games Workshop. They were working with Climax. They wanted to meet with us to see how we make games. We always opened our doors to that kind of thing. Blizzard was one of those who came to visit us.

VB: You didn’t regret that Blizzard visit?
MJ: I’m really happy that Blizzard was so successful. I’ve been making online games for 20 years. I’ve been waiting for someone to come up with a mass market hit to expand the market. I don’t regret it at all. It was the best thing to happen to online games.

VB: And the license?
MJ: We showed the Games Workshop guys how we do things. The game went south. GW canceled the Climax license. They came to us and asked us if we would do it. I said no. I told them to take time, think about it, and get together when they were ready. We got a call months later. We eventually worked it out. We signed the deal at E3 in 2005.

VB: You were busy too.
MJ: We were working on Camelot and Imperator.

VB: What’s the status on Imperator?
MJ: We shut that down in 2006. I wasn’t as happy with it as I wanted to be. If you look at MMOs, the vast majority of them have been failures. I mean more than 90 percent. We learned a lot of lessons from Camelot. I learned there are times you have to stop development. Blizzard does that. They kill a lot of games before they get announced. We saw we had to be able to look at a project and decide that. I didn’t want to add Mythic’s name to the list of developers who failed miserably. I shut Imperator down and put the team into Warhammer.

VB: You’re listed as both lead designer on your games and CEO of Mythic throughout most of your history. How do you do both jobs at once?
MJ: I’ve always acted as lead designer and CEO. It is a total right and left brain nightmare. I’ve always told people I have a split personality. Not in the psychotic walking down the street way. I have to deal with spreadsheets for finances, legal issues, and M&A. Then I have turn that off and make something that is fun.

VB: What has changed under EA?
MJ: It was a long courtship. We always parted ways politely when we couldn’t do a deal. Then by the time we signed, we knew them well. Some things change for the better, some for the worse. In our case, we now have the No. 1 distribution system in the world. We have a company full of people who have expertise that we didn’t have. On the downside, it’s a large company and decisions take longer than I would like. I went in knowing that would be an issue. There is competition for mindshare inside the company. When you have guys like Will Wright, we have to convince them that what we are doing is good.

VB: What did you mean by going to war? It sounded like it had more than one meaning.
MJ: You’ve got it. Don’t you love double entendres? WAR is of course the name of the game. WAR’s topic is also about war. That’s why I chose the acronym. It’s not about picking daisies. It’s about realm versus realm combat, taking cities, burning buildings. They want to beat the heck out of the other guy and destroy stuff. And in terms of going to war with Blizzard, they’re No. 1. In the near term, no one is going to get close to them. I laugh whenever I hear a developer talk about how they will beat Blizzard’s numbers. But we think we’re really good at what we do. We aren’t trying to be WoW 1.5. We are trying to make the best realm versus realm game possible. Lord of the Rings has an expansion pack with a lot of realm versus realm in it. That’s fine. I like competition. Back in 2001, people said that Camelot wouldn’t compete with EverQuest. We did fine. The previews of our game say we’ve got a lot of innovation and fun.

VB: What are some innovations you would point to?
MJ: The first one is the public quest. No one has this. When players come into a game for the first time, they tend to be nervous. They don’t know anybody. How do you get them together? You can search for a group. That’s clunky. You simply wander into an area and are told you’re in a public quest area. If you help with whatever is going on, like preparing the way for others, you get credit. You just start joining in. Maybe then you start talking to those you’re working with. The socialization starts earlier in the game. If you log in and can’t find your friends, you can always find a public quest and get lots of rewards for it.

VB: What’s the state of the business model for MMOs?
MJ: I think it is both terrifying and fantastic. You have to spend a hell of money. At least $25 million these days. Bobby Kotick (CEO of Activision, which is the process of merging with Blizzard’s owner, Vivendi Games) said you need to spend $1 billion to compete with WoW. Nice try Bobby. You don’t have to spend a billion. But when we did Camelot, we did it for $2.5 million. Those days are gone. Blizzard raised the production values for RPGs online. Then there is the technical part. At any given time, there are 80 to 100 MMOs in the works. If the definition of success is 100,000 subscribers, then the successes you can count on two hands. That is an unbelievable failure rate. With 100,000, you make money. About 250,000 is a hit.

On the fantastic side, the world is getting connected. Asia is growing really fast. WoW has done very well but we are still nowhere near the point of saturating our market. The upside of these games makes it so attractive. In the past, South Korea was the only market. Now you have Japan, China, and Taiwan and the rest of Asia. They are starting to play the same games we do.

VB: I saw Real-Time Worlds got $50 million. Kingsisle just came out of hiding. What should they know about making MMOs as start-ups?
MJ: They don’t have to sacrifice their hands if they go belly up. The vast majority of these companies fail miserably. Perpetual Entertainment had industry vets, a Star Trek title. Look what happened to them. It’s going to get ugly out there. I’ve seen the money coming in. It’s like the dotcom era all over again. You are going to see more failures.

VB: The twist this year is to throw social networking into it and make it casual?
MJ: Yes, that reduces the risks because it’s less money invested and the technical challenge isn’t as demanding. Warhammer is more complicated than Camelot, and Camelot is a lot more complex than the social networking games.

VB: What resources have you thrown at this?
MJ: (Laughs). We have more than 200 people. Over three years by the fall. WoW was a lot of years. Pirates of the Burning Sea took five years and didn’t do well. EverQuest was four years. Lord of the Rings was five years. We can do it quickly because we have the same team and we have good technology.

VB: So when are you going to war?
MJ: The announced date is this fall. One of the advantages of EA is we won’t release this game until it’s great. With Camelot, we ran out of money and so we released the game. It’s really important for EA to get the quality of our games out. We let the top EA executives into our game, even at the earliest stages. We have nothing to hide. We have almost 700,000 people signed up for our beta test. That’s ridiculous. I want a million. We have people inside now working 24/7 trying to break the game. To compete with Blizzard, we have to use our extra time to polish it.

VB: You’ve got a new CEO, a new company structure, a new COO, a new CFO, and (chief creative officer) Bing Gordon left. What do you make of all the management changes at EA?
MJ: I consider Bing a close friend. He did so many things for this company. He cut to the chase. He challenged me. I stood up to him when I thought he was wrong. He did the same to me. We need people like that. Developers, more broadly, need people in your studio who are going to challenge you. That’s what we need at EA.

VB: If you succeed with Warhammer, can you do three or four of these things at once?
MJ: Oh my God. When you try to do too many of these, you will always fail. They are so complicated. It’s like the film industry. When you see a great team, or director, you could always tell if the team or the talent was doing a bit too much. The quality would suffer.

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