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Follow UsTimna Tanners
LOS ANGELES: Whether you're a dedicated video gamer or merely sneak a round
of computer solitaire when the boss isn't watching, the video game industry is
aiming to make you pay. To play, that is.
The industry's eyes are focused on how No. 1 independent video game publisher
Electronic Arts (EA) will fare with its new $4.99 a month online games
subscription, which it rolled out this month. EA's play-for-pay gambit is one of
many strategies being used by the video game industry to extract more revenue
from the mass market.
Sales of video games and hardware, despite a struggling software industry,
are steady, with volume sales up 1 per cent and sales in dollars down 5 per cent
to $6.5 billion in 2000 from the previous year. Yet executives know that
existing "hard-core" gamers are a limited bunch. To sustain this
growth, the consensus view is that the video game industry needs to reach a
broader audience.
The industry is divided over how best to draw more video gamers and revenue,
with strategies ranging from promoting new platforms, such as mobile phones, to
new subscription-based pricing models for online games. French video game
publisher Infogrames Entertainment chairman and chief executive Bruno Bonnel,
SA, and its New York-based subsidiary Infogrames Inc., is skeptical that money
can be made with online video games, which are best known for free card games
like Solitaire.
His company's Web site, http://www.games.com,
costs about $25 million annually to maintain and Infogrames recently stopped
investing in it, he said. Bonnel argues for expanding the market for games,
predicting Web games won't turn profits for five years. "The formula for
interactive entertainment means reaching the mass market," Bonnel said.
"We're not making enough games that are sing-a-long."
In this effort to hook everyone on role-playing, shoot-em-up, gambling and
sports games, some developers such as Sega Corp. and THQ Inc. are working to
tailor games to cellular phones and Palm organizers and other personal data
assistants.
"We're forgetting the mass market, who would enjoy video games if they
were more accessible to the market," Bonnel said, during the first Global
Gaming Forum earlier this month in Los Angeles, suggesting new media for games
such as video glasses, mobile phones and television.
The completion of Infogrames' acquisition of Hasbro Interactive in January
has positioned it to offer Hasbro Inc.'s popular licensed brand games, such as
Scrabble, Monopoly and Dungeons and Dragons.
Online subscriptions
In contrast, Electronic Arts is so confident in this subscription model,
under which players pay between $4.99 and about $10 a month, that it is
constructing a new building at its Redwood City, Calif., headquarters to support
its Web site: http://www.EA.com. It aims to
generate profits by spring 2002.
The advent of PC games for adults, such as Electronic Arts' The Sims, has
expanded the world of video gaming, noted Roger Lanctot, senior director of
research for PC Data, a market research and consulting firm. A simulated world
where the player creates interacting characters, The Sims was the top-selling PC
game in 2000.
Later this year, Electronic Arts aims to take The Sims online as part of a
package of strategy and role-playing games available for a monthly fee. Although
it remains uncertain whether mass-market gamers will opt to pay, the recent
weakness of Web sites offering free services offers support for a subscription
model. Internet portal Yahoo! Inc.'s earnings warning earlier this month helped
back arguments that the era of free games and services may be over.
"We think the next wave of Internet content will be fee-based as the
Internet evolves toward other forms of media," said, a Deutsche Banc Alex.
Brown analyst, Justin Post, in a recent report to clients. He said Electronic
Arts' subscription model was compelling due to its brand and content.
"EA's uncommon focus on the bottom line should pay long-term
dividends," Post wrote.
(C) Reuters Limited 2001.