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From...
PC World

Internet Challenges Game Publishers

by Kristi Essick

(IDG) -- As online multiplayer gaming continues to grow in popularity, traditional PC game developers, as well as strictly Web-based companies, are fighting to find a profitable way to keep gamers happy, said a panel of game experts at the Milia Interactive Festival.

The Internet has caused a "huge downward pricing trend" in games, said Robert Gehorsam, senior vice president of programming and platform development for Sony Online Entertainment Inc. People expect to be able to have access to anything online for free, while at the same time are demanding highly interactive, well-developed games -- which means a huge investment for developers, he said.

"It is darn difficult to make an online game successful," said Lawrence Schick, executive director of interactive entertainment at America Online Inc. Many developers are finding it is slower, more difficult and much more expensive to develop online games than they ever expected, he said. And once a game is complete, publishers are struggling to find a way to offer the game to users over the Internet and still

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Tailoring Pay, Play

The only way to move forward is to create multiple streams of revenue and to target different audiences with different pricing structures, the panelists said.

Selling advertising on a gaming site is one way to make money, agreed the panelists, but it doesn't always work with a gamer audience. Hard-core gamers, who are often interested in complicated role-playing or strategy games, can spend hours a day online playing games, Schick said. These sorts of gamers don't even look at ads and certainly aren't interested in general e-commerce -- for these sorts of games, providers should charge per-hour usage fees, he said.

However, another audience altogether is drawn to online entertainment such as game shows and parlor games, said Timothy Ewing, president of E-Pub Europe, which operates an online game show site called Uproar. The company's online audience is not at all a typical gamer crowd (usually an overwhelming percentage of young men), but is instead 60 percent women, Ewing said. This crowd, while not necessarily dedicated enough to pay per-hour fees, is definitely open to online advertising and shopping, he said.

Dedicated gamers, however, are more than willing to pay for use of certain games, Gehorsam said. "Pay-per-play" will work as a revenue generator for this market, he said.

Another revenue generator game publishers should consider is offering a matching service, which allows owners of packaged multiplayer PC games to find each other for online play, said Ed Fries, general manager of Microsoft Corp.'s games division. Microsoft's games site can offer matching for its own products, which encourages sales. Microsoft also wants to cross-sell its products between its gaming audiences, Fries said. Online board game players might not know about what it's like to use a flight simulator, but that doesn't mean they wouldn't like it if given a chance to experience it, he said.

Whether online gaming publishers can stay in business will also depend a lot on the funding they have backing them, the panelists said. AOL, Sony and Microsoft have a lot more money to spend experimenting with what works online than a small publisher does, they agreed.

"Niche players will find it harder and harder (to survive)," Gehorsam said.

In the end, the cost of development plus low returns will mean consolidation in the gaming industry, the experts agree. To survive, a games company today should aim to partner with online content delivery companies to get its product on the Internet, they advise.

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