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How and Which Niche?

No one seriously doubts that PW/MMOG-type online gaming is going to grow as a market. Analysts and industry experts differ on when and how fast, but the evidence is clear—the next big market sector expansion is going to come in this area. For that reason, nearly every game publisher except Nintendo has short- and medium-range plans to get into the PW/MMOG market sector. For its part, Nintendo's representatives have stated publicly that they just don't see the need right now, with the console online market just getting started. However, they reversed course in April 2002 and announced that the GameCube would, indeed, have Internet access capability by the end of the year and that Sega would be porting online games Phantasy Star I & II to work with the GameCube.1

The "traditional" online gaming market is actually three separate and distinct market segments with only a little bit of crossover among them. The following definitions will help you to make good decisions on what to develop and how much to spend.

The Classic Games Market

Represented in this market are games familiar to just about everyone, such as chess, poker, hangman, spades, Hasbro's Risk, Scrabble, backgammon, and hearts. We might not be experts in these games, but most of us know at least the basic mechanics of play.

These games have become commodities, offered for free play on aggregator and portal sites such as Yahoo!, Internet Gaming Zone, and the like.

It is hard to make any money from this market segment. Current game sites and portals are using these games as loss leaders in attempting to attract enough people to charge decent advertising rates for page views.

The Retail Hybrid Market

These are games exemplified by Quake II, Unreal Tournament (UT), and Age of Empires. These games not only feature solo or standalone home play, but they also connect to the Internet for multiplayer action in player blocks that range from 2–64 players per game session. The average number of players allowed per session is somewhere between 8 and 16, depending on the game's design. Real-time strategy games and first-person three-dimensional (3D) shooters dominate this category.

The retail hybrid concept has also become a commodity. While the player does have to buy the retail unit, the games can then be played in multiuser mode online for free.

The PW Market

This sector is exemplified by games such as EQ, UO, and Dark Age of Camelot. The key differentiators of this category are as follows:

  • The games feature a PW, in that the player creates a character, persona, or handle that identifies him/her in the game and which can be grown and altered over a period of time. In UO, this is represented by a character whose skills and possessions grow with playing time. In Air Warrior, it is represented by a character's kill/death ratio.

  • Another differentiator is that PWs are currently the one measurable working business model in online gaming due to the monthly subscription model. Players who subscribe to these games tend to stay in them—and pay for them—for months or years. Basic subscription fees range from $9.89 to $12.95 per month, and are trending upward.

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