Making The Case: Business Models in Online Gaming

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Making The CaseBusiness Models in Online
Gaming
Greg Costikyan Chief Design Officer, Unplugged
Games costik_at_ungames.com http//www.costik.com
Jessica Mulligan Jessica_at_mm3d.com
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Who We Are
Greg Costikyan Chief Design Officer, Unplugged
Games MadMaze, Fantasy War, 25 others The Future
of Online Games http//www.goodreports.com/r-olg
ame.html
Jessica Mulligan Rim Worlds War GEnie Game
Manager Engage Origin Consultant
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The Agenda

• Todays Markets What are they and who are the
  customers for each?
• Current Models
• In-Test Evolving Models
• Likely Future Models
• Rules of the Road
• QA 10 to 15 minutes

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Todays Market Segments

• Mass Market
• 70 of all game players
• Casual
• 15-20 of the group
• Hard Core
• 10-15 of the group

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The Online Gamer Pyramid
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Current Models

• Advertising/Sponsorship
• Classic card (Spades, Poker) and board (Chess,
  Backgammon) games, trivia, gameshow games,
  often prize-driven. Players play for free, but
  view ads and/or sponsor notices.
• Buy at Retail, Play Online for Free
• Quake, Unreal, Starcraft, Diablo II.
• Retail Purchase Monthly sub
• Buy the SKU, pay a monthly fee e.g. Ultima
  Online, Everquest.

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Emerging Models

• Episodic
• Charge by episode or for the game engine.
• Console
• ISP charge for add-ons and ancillary services.
• Free client, monthly sub

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Models We Know Dont Work

• Licensing to ISPs
• Ad-Supported Hard-Core Games
• Virtual Collective Card-Game Model
• Micropayments (but PayPal may change equation)

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Whats Coming?

• Creative Divergence
• The proper technology to appeal to the proper
  market and customer.
• Owning The Customer
• Large publishers and content owners should seek
  to control access to their subscriber base, not
  aggregators.
• Reach Out and Touch Someone
• Combining electronic entries into players daily
  lives to send and receive game content.

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Tomorrows Models

• Ad SponsorshipShift from click-throughs to
  online branding make games more appealing
  (highly sticky).
• Persistent Worlds Remain Big Revenue earners.
• Capturing the Middle GroundThe big middle that
  will pay a little but not a lot.
• Episodic Content

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Tomorrows Models II

• Consoles ISP pay for components
• Multiple platforms revenue streams

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Rules of the Road

• This is not TV. Understand the difference
  between participation and observation.
• Customer service rules.
• Understand that only about 5 of the world
  population is currently connected. Those who
  prepare now will reap the riches five, ten and
  twenty years from now.

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Some Definitions

• Casual Gamer Enjoys computer and video games,
  buys maybe 4 to 6 a year, enjoys competition
  against other human players, may have tried one
  or two persistent worlds. Prime candidate to
  move into the Hard Core ranks.
• Mass Market Enjoys well-known and easy to play
  games such as card games, Trivia and board games.
  Use these as a short social event. Least likely
  to spend money on a subscription or for-pay
  basis.
• Online Game Any game that allows two or more
  players to interact via the Internet, Web or
  online service.
• Persistent World Also referred to as massively
  multiplayer online games or MMOGs. Major
  features include persistent terrain, objects and
  non-player characters, player characters/avatars
  that grow in power, possessions and/or game score
  and a continually growing and evolving backstory.
• Retail Hybrid A home-play SKU that includes
  Internet connectivity for 2 to 64 players per
  online session. Online sessions are short in
  duration, generally less than one hour and often
  15 to 20 minutes. Generally features no
  persistence. Examples include Diablo II, Unreal
  Tournament and Quake III.

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• Presentation may be downloaded from
• www.costik.com/pres/iirLondon/
• Questions Queries to

Jessica Mulligan Jessica_at_mm3d.com
Greg Costikyan costik_at_ungames.com