[MUD-Dev] Inside the Serious Business of Online Gaming

[Michael Tresca]

From: http://www.ecommercetimes.com/perl/story/19585.html

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Purveyors of interactive online games have hit upon an
audience-pleasing business model, featuring methods like
subscription plans that give users unlimited access for a monthly
fee. But gamers are an avid and demanding clientele, and industry
experts say firms in other areas of e-commerce will be hard-pressed
to emulate gaming companies' success using the same tactics.

  "People will pay for 'all-you-can-eat' as long as you can promise
  them a nonstop stream of compelling content," GartnerG2 research
  director PJ McNealy told the E-Commerce Times. "Right now, most
  entertainment companies can't deliver on that."

So far, McNealy said, PC-based role-playing games appear to be
gaining the most traction. For a monthly fee, usually between US$10
and $15, such sites as Sony Online Entertainment and Electronic Arts
(EA) Online let gamers take on numerous challengers in far-flung
locations.

Pay To Play

McNealy noted that Sony's Everquest game is the latest example of
this business model working well. Tens of thousands of users pay a
regular subscription fee of about $12.95 to play.

Games also are helping to draw advertising money to sites, partially
offsetting the dramatic decline in banner ad revenue that has hit
the rest of e-commerce. Experts point to the rising profile of
advertiser-sponsored games at sites like Wild Tangent and
Microsoft's MSN Gaming Zone.

Wild Tangent, for example, offers online demos from traditional game
publishers as well as full-length interactive games backed by
companies like Fox Sports and the TNT cable TV network.

McNealy said such sites are increasing in popularity and have become
important forums not only for game makers, but also for nongaming
companies that want to reach target audiences. "For example, Toyota
had a six-week race game on one site to promote their trucks," he
noted.

Tough To Copy

He added that gaming sites' success has forced major online players
to take notice. Now, companies like Yahoo! and AOL are setting up
subscription-based models for selling content.

Most entertainment-oriented sites, however, have had mixed success
with the subscription model. According to McNealy, movie sellers are
limited in their ability to provide a constant stream of new
content, while music companies have more content to offer but have
yet to find the right pricing strategy.

Other e-commerce sectors seeking to replicate gaming's winning
formula face considerable challenges. Experts noted that the online
gaming audience has a number of things going for it that other
sectors envy, including a high proportion of users with fast
Internet access.

Broadband Crowd

According to IDC senior analyst Schelley Olhava, online gamers were
among the earliest adopters of broadband, and they are open to
shelling out more for certain offerings, which can be a boon for
gaming sites.

  "The gaming community tends to want the highest level of
  performance, and they are willing to pay extra for a better
  experience," Olhava told the E-Commerce Times.

Therefore, while other commerce sectors struggle in the current
climate, the future of online gaming looks comparatively bright.

More Growth Ahead

IDC has projected that the number of households with access to
online gaming will rise to 40 million by 2004, up from 25 million in
2000. The firm expects U.S. revenue from online gaming to rise from
about $200 million in 2000 to $1.8 billion in 2005.

Specifically, the ranks of online gamers will be boosted as console
players migrate to the Internet. Microsoft earlier this year
introduced online offerings tied to its Xbox player, and Sony has
similar plans for its PlayStation 2 console.

According to IDC, further growth is expected as more games become
available for use on mobile wireless devices and through services
like interactive television.
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Mike "Talien" Tresca
RetroMUD Administrator
http://www.retromud.org/talien



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