Working to make play pay
Posted by Kheldar on 19 October 2001 - 15:02 · no comments & 49 views
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In the search for ways to make online gaming profitable, game companies are trying episodic games, digital distribution, and “advergames” that serve as both games and advertisements. So far, the new generation is off to a mixed start.
MOST RECENTLY, Electronic Arts launched one of the boldest efforts with Majestic, an episodic conspiracy game. The game drew critical delight for its creative use of faxes, email, instant messages, Web searching, and cell phones. But it only drew between 10,000 and 15,000 subscribers, forcing Electronic Arts (EA) to shift to a retail CD-ROM model. At $10 a month, Majestic generated approximately $150,000 in monthly revenues, but that was far short of ambitions for the game; it was built to support more than 1 million players.
That disappointment hasn’t dampened the ambitions of other game companies. WildTangent, in Redmond, Wash.; The Groove Alliance, in Santa Monica, Calif.; and RealNetworks’s RealArcade unit in Seattle, Wash., are still pushing innovation in online games with new titles this fall.
Compared to EA, WildTangent has a low-cost approach. The company’s 3D authoring tools allow their programmers to develop games on a shoestring budget in a matter of months, while still creating high-quality graphics; this gives the company a fighting chance in spite of the challenges of the online gaming business. It uses small programming teams and shorter development times than the two years it usually takes to make computer games like Majestic. By keeping the cost of creating a game low, WildTangent lowers the point of profitability for that game.
Betty Bad, a shooting game based on the classic Tempest arcade game, was the work of Paul Steed, an artist who worked for Id Software; he created the game in a matter of months with just a couple of other programmers. Phil Shenk, a former member of the Diablo II art team, put together sci-fi game Dark Orbit with a small group in a few months. Sabre Wing II, another sci-fi title, was developed by one programmer in four months. WildTangent this month launched nine Web-based games for the holiday season, including Dark Orbit and Sabre Wing II.
WildTangent is basing its revenue model on paid downloads. The company is releasing the games through its Digital Distribution Channel — a kind of commercialized Napster for games — and they will be available at Shockwave.com, GamePro, and GameSpy, as well as on new consumer computers from Hewlett-Packard. Players can get free game demos from the sites and upgrade to play the full games for a fee.
To measure royalty payments from member sites, WildTangent’s proprietary Web driver software individually tracks which game files each user visits from which URLs. No personal information is captured or transmitted.
Besides the problem of getting users to pay, downloadable games suffer from quality concerns (compared to offline games bought at retail) and from complaints that they take too long to transmit over narrowband connections. “The competition is end-user apathy,” says Roger Chandler, director of consumer marketing for 3D at Intel Labs.
RealNetworks says it has had a successful trial stage for its RealArcade business, which allows game players to download games that they can try before they buy. Since May, more than 2 million people have downloaded the RealArcade software, which offers a selection of 120 free ad-based games, 75 pay-per-download games, 11 broadband games, and 1 multiplayer game with thousands of simultaneous players.
The wide selection has helped generate considerable increases in quarterly traffic, said Andrew Rice, general manager of RealArcade. From the downloadable game demos, roughly 2 or 3 percent of players chose to purchase the full versions of the games for $9 to $19.99.
Since any developer can post games on RealArcade, it’s a boon for startups who can’t afford to get games on store shelves. René-Gilles Deberdt created a game called Kyodai Mahjongg in France. The title generates more than 4,000 downloads per day, and roughly 4 percent of the players pay $19.99 for the full game.
The numbers for 3D on the Web are mixed, with the best still ahead. Last week, at its Web 3D Conference in Santa Clara, Calif., market research firm Jon Peddie Associates estimated there are 11.8 million active Web sites, but only 16,000 use 3D. By 2007, the firm estimates, 3D Web sites will grow to 1 million sites out of a total of 48 million. By then, an estimated 56.5 percent of computers will have 3D-enabled Web browsers, compared to less than 5 percent today.
Alex St. John, CEO of WildTangent, said that advergames weren’t as profitable for his company as digital downloads. Still, WildTangent has created free games that double as advertisements, such as a Toyota Adrenaline game on Microsoft’s MSN Gaming Zone that Toyota sponsored to show off its trucks.
But Chris Kantrowitz, CEO of The Groove Alliance, says that major advertisers have finished their exploratory phase and are about to up the ante with higher-budget games. The Groove Alliance is lean, with 17 employees to WildTangent’s 130. Much of Groove’s revenue comes from licensing its tools to other companies that make games that serve as advertisements, such as the Real Pool game on Shockwave.com that advertises Jack Daniel’s whiskey.
“As far as a business model goes, advergaming is getting bigger and bigger,” Mr. Kantrowitz says.