Your move - Interactive gaming's time has come

March 2002 With ever-greater numbers of people signing up for Internet access and interactive digital TV, the new challenge for these respective service providers is how to get their subscribers to stay online for longer and pay for new interactive services. One increasingly popular way is to offer games

Web-based and TV-based interactive games are not a new phenomenon; both have been around for a number of years. But they are now the focus of a renewed interest as many of the problems that have beset their provision have been ironed out.

The UK's BT Openworld has just successfully completed a trial online games subscription service called 'Games Domain'. For about €16 per month, subscribers were able to play each other over the network using the same peer-to-peer technology pioneered by the music-swapping service Napster.

Furthermore, Barry's World - a former Web-based games favourite - is back with new funding from Electronics Boutique and a more commercially-focused business model. Unlike before, players wishing to use its multiplayer games services must club together to 'rent' a server; the company has also developed a micro-payment system to facilitate the new model.

'Initial services didn't have a fighting chance. It took a while for the industry to get hold of the solutions,' says John Raczka, senior vice president Content for BT Openworld. 'Peer-to-peer hadn't been fully-developed; customer service wasn't up to scratch and the networks used weren't fast enough - but the business model wasn't right either,' he says. 'These sites relied on advertising, and as we all know, that didn't work out.'

Fabio Torlini of XO Communications, the hosting company behind Barry's World, says that there are a number of other factors behind the re-emergence of online games. 'The bandwidth at the server end has come down in price and a heap of new technologies have emerged, such as caching. There are now servers all over the world that cache info at the edge of the network, so the amount of data that travels across the Internet has reduced.'

top

Bandwidth issues remain

Although the current environment for the provision of online games is better, it does not suit everyone. Downloading and playing multiuser games across networks requires a lot of bandwidth, which places a strain on the network operator. And some industry insiders believe the game developers themselves need to get involved. 'There hasn't been widespread agreement between ISPs and games providers. Service providers won't let games take up lots of bandwidth because they have to guarantee a certain level of service for their customers. The games companies have to invest in the networks so that ISPs don't shoulder all of the burden,' says Matt Tormollen, vice president of marketing for broadband software developer Broadjump. One way round this, of course, is to develop online games that consume the minimum of bandwidth.
	BT Openworld's Games Domain and Sky's Super Manager

This is where new streaming and compression technologies are of value. Real Networks has developed a downloadable software product called Real Arcade, aimed at the casual rather than the hardcore gamer.

According to Paul Freeland, product manager for Real Arcade, the firm has stumbled upon an untapped market. 'Our demographic is 55 to 65 per cent female with 85 per cent over 30,' he says. 'People are looking for games that are diversionary rather than intense. "The Sims" - a popular lifestyle simulation game - stumbled upon this user base.'
Real Arcade has a subscription service similar to BT Openworld, but this is not as popular as the download service. 'Subscription is not doing well. People only want one game a month, so we make our money from the one-off downloads. The reason why it's so lucrative is that there are so many people buying,' says Freeland.

top

Service suites

Another reason why online games are faring better today is that service providers are offering them as part of a suite of services, which is more economic. For example, as well as its online games service, BT Openworld has a music service and is planning a betting subscription service. As the 'mechanics' are the same in each case, the same network and software can be shared.
'There are lots of opportunities for companies like BT, NTL and Telewest,' says Tormollen of Broadjump. 'They can have a unified billing service offering lots of different products under one brand.'

The cable companies are certainly realising how valuable their high-speed cable networks are to gamers. Telewest will begin a limited public trial of its broadband Playstation 2 network early this year, which will enable multiplayer games as well as game downloads.

iTV games

The other significant platform for games is interactive TV - although, as the kind of games that can be played through this device are different from PC and console games, the business concepts are also different. There are essentially two kinds of game on interactive TV: stand-alone games contained in a 'walled-garden' and games based around existing programming.

Simple stand-alone games make an operator money through a 'pay-per-play' model. The incentive for the players is to get onto a leader board or to win a prize. Companies such as Di3 and Two Way TV create these games to sit inside areas such as Energis Interactive's Bright Blue channel on Sky.
Until now, games have included word puzzles, simple block-shifting games or have been based around a TV brand - primarily because of the limitations of the handset and the need to appeal to the widest audience.

'In the PC world, gamers tend to be "hardcore" and focus on their favourite titles and genres. TV is far more broad based,' says Justin Dewhirst, head of marketing at Energis Interactive. 'In order to gain an audience you need to associate them with a particular programme; for example, Fox has a Digimon game.'
TV channels are also realising that interactive games offer them another way of promoting their brand. For example, The Cartoon Network launched a special games area within the Sky Active walled-garden at the end of 2001, offering arcade-style games that the company hopes will appeal to kids.

The second option for TV-based interactive games is to incorporate them into programmes. At the moment, games companies are looking at 'retrofitting' old games shows with interactivity - so that viewers have the option of guessing the answers before the contestants and accumulating a score as the show progresses. Again, service providers make money by charging a small fee to play and the incentive is to win a prize, appear on a leader board or even appear on the programme itself.

The Discovery Channel has taken retrofitting a stage further by making a new series of a popular quiz show with interactivity. Viewers can play along with its new version of Mastermind and submit their final scores to the channel for a fee.

Viewers can also play along without submitting and therefore without paying. The top four who do submit are then invited to appear on the show in a special viewers' final. 'We're primarily hoping to promote viewer loyalty,' says Tanya Field, director of new media at the Discovery Channel.

Games certainly offer service providers additional revenue streams if they can be provisioned sensibly and economically. Many of the bandwidth problems for Web-based multiplayer games could be overcome if network operators and games providers worked more closely together.

But no matter what the platform, games provide service providers with much more than just new revenue streams. They provide a vehicle for operators to establish one-to-one relationships with their subscribers, which, in an increasingly networked and marketing-driven world, is essential for survival.

top