CES 2006: Broadband Games Expand - From the Casual to the Networked PC Universe

Kicking off Gamasutra's coverage from last week's Consumer Electronics Show in Las Vegas is the first of New York-based Digital Hollywood's “Game Power” series. Entitled “Broadband Games Expand – From the Casual to the Networked PC Universe,” the panel brought together eight industry leaders to discuss the emerging trends and future outlook for the online casual games market from a variety of different perspectives.

The panel's moderator, Game Trust President and co-founder Scott Cohen, opened the discussion by asking each of the speakers to discuss their most successful business models today, and where they see their models moving five years from now.

Because most of his business comes from casual game portals, Wade Tinney of Large Animal Games explained how he has been focusing on the mostly-standard pay-to-play model of distribution, where users pay a flat fee to download a full game, typically after being offered a limited demo for free. “I'm interested to see how we can monetize those three hours of trial time we're giving away,” he said, wondering if a small micro-payment system along the lines of the classic arcade model might be successful in the future.

Dave Williams of AtomShockwave is more interested in gaining revenue from advertisers. “Advertisers lately are more interested in in-game content,” he said. He feels that success comes with either a subscription model, or one based entirely on advertising revenue. “I think online play needs to feel free, even if it isn't really free,” he said.

“As broadband takes off, the need for downloading goes away,” said AOL Games' Ralph Rivera, referring to the emerging issue of users preferring to play instantly within a browser rather than having to download and run files manually. Rivera has seen massive success with advertising money, stating that AOL Games generates between 1 and 1.5 billion page views a month. He also, like Tinney, sees a future in micro-transactions, saying that we're already seeing it succeed in Asian territories.

Romain Nouzareth of the Boonty online game distribution network believes, unsurprisingly, in a unified platform. “Subscription-based services are the key,” he said. “In the next five years, the market will be dividing between pay-to-play and free games, and it will be interesting to see where that goes.”

Mike Cassidy, CEO of online game “buddy list” network Xfire, is of course seeing his revenue from advertisers. “The younger demographic is spending more time playing online games than watching TV!” he said, revealing that Xfire users average 88 hours of play per month. Additionally, he says, Xfire's year-to-year online advertising revenue has grown by 50%.

And finally Chris Early, of Microsoft's Casual Games division, spoke for all three of Microsoft's gaming portals; MSN Games sees most of its revenue from advertisers, Xbox Live Arcade for Xbox 360 is “almost 100%” a pay-to-play download model, and the Messenger service sees success in the subscription model. In the future, mirroring his company's general voice, Early sees games becoming cross-platform with one purchase; for instance, one purchase would give the user a compatible build of the game for their at-home PC, their mobile phone, their gaming console, and wherever else this might be feasible. This belief would become a hot topic of debate in later Game Power panels. He also, like others, is watching the micro-transaction model very closely.

In discussing the emerging issues of the micro-transaction system, specifically whether or not micro-transactions offer strategic advantages to the highest bidder, Nouzareth argues that, typically, micro-transactions “don't offer advantages over other players, as much as additional content.” Cohen, however, sees things differently, specifically with the popularity of buying and selling well-skilled players in massively-multiplayer RPGs. “It creates this hardcore versus casual player dynamic,” he said. “It will be interesting to see how this affects the industry. I've seen hardcore players leave worlds over this.”

Cohen asked the panel to discuss the free demo model, and whether or not it might be adversely affecting sales. “Why would I buy a downloadable game when I can play sixty minutes for free?” he asked. “I can go to all these different portals and get lots of play. Why should I stay on one portal?”

“Who wants to lose their progress in the game and start over?” asked Tinney.

Early argued that it's the sites themselves that keep users loyal. “I drink Corona,” he said. “I could go to the grocery store and buy Corona, but I don't drink it there. I sit down and drink it in my favorite place.”

Xfire's Cassidy agreed. “We're huge believers in community,” he said. “People think gaming is a lonely activity in the basement, but it's mainstream now,” he said, before revealing further statistics: Xfire, he says, sees an average of 160 million combined user minutes logged in per day, with 160,000 simultaneous players.

AOL's Rivera countered this with statistics of his own, saying that his service sees 300,000 simultaneous players and 1.5 billion combined minutes per day. “But I'm in the casual games segment, and he's in the 18-34 male demographic,” he said.

And at least in the casual games market, said Tinney, most players don't care about directly competing against one another. In fact, they work together. “In the Pogo bingo rooms,” he said, “they actually figured out that if they all sat there and waited until they all had a bingo, they'd all get the points.”

The panelists also revealed their main demographics. Xfire's, as Rivera touched on earlier, targets the 18-34 male demographic. Microsoft's Xbox Live targets the same audience, though their web-based casual games target the 35 and older female crowd, and MSN Games see the most usage from the younger females, between 13 and 24. Boonty sees 57% of their userbase in the 25-45 female bracket, AOL sees a 55% female base that skews toward the older crowd, but with obvious variation in their sports and arcade games, which are popular among the younger males. And finally, AtomShockwave sees their main sales from 25-54 year-old females, though again with obvious skews: Daily Jigsaw has an 80% female userbase, but their racing games attract males 13-34.

Finally, the panel discussed the possibility of convergence between platforms. “Will it ever be possible to play my game at home, in the office, and on my phone?” Cohen asked.

“Absolutely,” said Microsoft's Early. “You can play Hexic on your 360, your PC, and your phone. The resolution is different, obviously, but it's the same gameplay.”

“IP owners are currently licensing per-platform,” Rivera countered, “so a seamless convergence can't easily happen.”

Rivera concluded the panel on a positive note. “We always say ‘games,' but it's interactive entertainment. It's the only form of entertainment native to computers. To really harness the power of broadband, you need interactivity and communication.

“I know my vision is right. I know eventually what we call ‘games' will be like the Holodeck; a fully immersive experience.”

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