Karen Raugust reports on the growth and latest trends in online gaming, including the the upcoming gaming network, Phantom.net.
The advent of online functionality in the console game market over the last two years has enabled developers to enhance gameplay and consumers have responded. Nearly 1.5 million people in the U.S. played games online using their PlayStation 2 or Xbox console in 2003, with that number expected to rise steadily, to 2.2 million this year and 5.4 million by 2007, according to Schelley Olhava, an analyst with IDC. (Olhava estimates that PS2 has attracted slightly more players than Xbox; the former has a 60% share of the console market, versus 19% for Microsoft.)
Sony reports that 10% of consumers who have PlayStation 2 at home have purchased the PS2 online adaptor. That translates to 2.6 million gamers who are able to play titles online, says Teresa Weaver, corporate communications manager for Sony Computer Entertainment America (SCEA). The largest game-specific online community in the console world, with 1 million active accounts, is centered around SCEAs first-party PS2 title SOCOM II: U.S. Navy SEALs.
EverQuest (left) is the most well-known big impact online game ever. The same creators are currently developing Vanguard: Saga of Heroes (concept art is on the right), a next-generation massively multiplayer role-playing game for the Windows platform. EverQuest ©1999-2003 Sony Computer Entertainment America Inc. Vanguard © 2004 Sigil Games Online, Inc. All rights reserved.
Sony and Microsoft have taken different approaches to the online space. Microsofts Xbox Live is a centralized operation, with consumers going to the Xbox Live site to play and Microsoft providing all the necessary tools to developers. Sonys approach is an open model, with consumers going to individual publishers or developers sites to play and publishers/developers creating games independently, using software kits provided by companies such as GameSpy.
Microsoft charges consumers a monthly or annual fee for playing online, while Sony leaves that decision up to developers and publishers. So far none have charged for play but that is expected to change when Square releases its next Final Fantasy title for PS2, Olhava reports. Microsofts system is broadband-only and connectivity is included in the box, while Sony consumers must purchase an adaptor (bundled or separate) and can play either through a dial-up or broadband connection. (Nintendos online activity has been minimal.)
Benefits for Gamers
Online functionality adds value for consumers, especially in certain genres. Its a really good way to enhance content, says Robert Nashak, vp of development at Acclaim. Really, in sports its almost a requirement. Even if [consumers] dont use it, they think it has value. Nashak notes that annualized sports simulation titles are a good example. With Acclaims Major League Baseball titles, gamers formerly could download content and update rosters periodically, but now, with online connectivity, data is updated constantly in realtime, causing the game to accurately reflect reality. Its fresh and relevant throughout the season, says Nashak, who adds that the company has received positive feedback from consumers about these improvements.
Racing titles, such as Acclaims Juiced, also benefit from online functionality. Juiced, a street racing game, allows deep customization of cars, including the look and the engine. If a gamer creates a car and excels at racing it, he will want to go online to show it off and race it against others. Were trying to develop titles that as you play offline, there comes a point when you almost have to go online to enhance the experience, Nashak says. The company plans to add pink slips where a racer can bet his car on a race; if he loses, he gives up the car that hes worked so hard on, which adds to the stakes.
Online functionality is less important in the action/adventure genre, where networked elements are being added but are not yet necessary. You can succeed in action/adventure without online content, where in sports you really cant, Nashak explains.
Networked elements, from the opportunity for head-to-head play to the ability to update, also keep players engaged and invested in the game, which means theyll play it more often and longer. Xbox Live has a function called Live Aware where gamers can invite others, even if theyre not currently online, to join them in a contest. It keeps people engaged in the space even if theyre playing offline, Nashak says. He believes that when a title goes online it becomes almost like a playground instead of just a game. The games are almost co-created by the audience.
Benefits for Publishers and Developers
SCEA works with more than 60 developers/publishers on PlayStation 2 titles, and more than 20 of those offer online-enabled software for PS2. Online gaming creates new opportunities to expand the lifecycle of a game and offers value for developers and consumers, says Weaver.
For developers, there is the potential financial benefit. Online gaming positively impacts hardware and software sales because consumers find more value out of their videogames and purchase the new titles for enhanced experiences, says Weaver. She cites a 2003 IDC/GameSpy study in which 66% of players said online capability was a very important factor in their decision to purchase a console title. Meanwhile, hardware sales for PS2 in North America have surpassed 25 million units, more than doubling since the launch of online gaming.
[Online] is certainly growing, but its not at a penetration level thats huge in 2004, says Nashak. Its an increasingly significant part of our strategy. Nashak believes more gamers will have to get broadband connections and more publishers will have to offer killer apps, along the lines of SOCOM II, before online really takes off in the console market.
Aside from revenue-generation, there are other benefits to online gaming for developers and publishers. Xbox Live has leader boards and web services that have become great marketing tools for producers. Developers and publishers can post the data on their Websites, offering realtime proof that people are playing their games. Meanwhile, both Sony and Microsoft allow developers and publishers to use the live space for market research. Were in contact with our consumers in a very rich way, says Nashak, who points out that focus group research cant offer the same depth as observing game play. The company can see which tracks consumers like and which levels they use, and identify other play patterns. Thats huge, Nashak says. It will help us develop better games.
PC-Based Online Gaming
The PC-based gaming world has been online for longer than the console market, introducing massively multiplayer games where computer users compete against one another. PC-based online games are delivered on CD-ROMs and played on the computer rather than on a dedicated console. The console and PC-based online markets are distinct in many ways and are viewed by most observers as separate, noncompetitive markets, although many publishers and developers produce games for both worlds.
PC games also can generate large online communities. Sony Online Entertainments EverQuest has sold over 2.5 million units of games and expansions over the last five years. There are currently 420,000 people playing the game, with more than 100,000 around the world logging on simultaneously at peak times.
Different types of games work best in each space. Generally, PC-based games tend to focus more on role-playing and first-person viewpoints, while console games are more action-oriented and graphics-heavy. There is starting to be some overlap, with a wider variety of genres available in both platforms and graphics becoming more similar.
There are online-only game sites as well, with titles delivered via download or streaming technologies rather than on a disk. Big names such as AOL, MSN and Yahoo are joining the likes of Shockwave and RealNetworks to offer online gaming communities. Online-only games tend to be simple, often based on puzzles, board games, quizzes and Tetris-like titles.
Those are very different in nature and design and experience from console games, says Doug Lowenstein, president of the Entertainment Software Assoc. He points out that online-only content is free or very inexpensive, whereas console games are purchased for $49.95 or so and require additional purchases of online adaptors and sometimes fees for online play. Console games require more commitment and passion, he says, noting that the two worlds may become more alike when next-generation consoles come out in three or four years.
The schism between PC- and console-based online gaming leads to a training issue for console game makers entering the online space. PC developers have online experience but not console experience, whereas console developers have the opposite. Not a lot of people have both, reports Nashak. While this is a challenge in the short term, it will decrease over time as developers create more online console titles. The growth in online games in general may provide more opportunities for animators, as console games are adapted and features added for online play.
Phantom.net
This fall, Infinium Labs plans to launch its long-awaited gaming network, Phantom.net. In some ways, the initiative is a combination of both console and PC-based online strategies. It bridges the PC and console worlds in that youre taking PC games and using them on a TV screen, says Infinium Labs president/coo, Kevin Bachus. But its more of an evolution of PC than console gaming. The system is played on a dedicated device connected to a broadband line and the television; the PC is not involved.
Phantom.net will differ from both PC and console games in that high-quality, top-line, multiplayer PC games will be downloaded over a broadband connection rather than from a CD or other software format, according to Bachus. Therefore, the consumer doesnt have to go to a retailer to get the game or spend time installing it. Payment will be through a combination of basic and premium subscriptions and pay-per-use models. (Details will be announced in May before the E3 convention.)
Bachus notes that while hardcore gamers are excited about the system, it should eventually attract a broader market of older consumers (late thirties and up), as well as families and women. These are people who grew up as gamers and still have a passion for gaming, but dont have time to shop for, keep up with and install new titles. The real opportunity for us are those gamers who have an interest and passion in gaming, but no time, Bachus explains.
Unlike other platforms, says Bachus, translating a title for Phantom.net does not take 20 to 30 developers and a year or two of time. Its designed to require no effort for publishers to take games from PCs to our platform, he says. They give us a gold master of the PC game and wait for the checks to come in. Its absolutely incremental from their perspective. The initial roster of games will mainly consist of bestsellers from larger game developers, but there will likely be more breadth and some exclusive offerings over time.
Doug Lowenstein of the Entertainment Software Assoc. predicts that online and console gaming will collide with the release of next generation consoles.
The Future
Online gaming in the console market is still emerging, although growth has happened more quickly than many had anticipated. Weaver points out that Sony announced a goal of making 10% of its installed base online-ready within the lifetime of PS2 and achieved that goal within just nine months.
But real mainstream acceptance may not occur for a few years, at least. Most Xbox owners and PlayStation owners dont have [broadband] connectivity yet, says Lowenstein, who notes the real test will come down the line, with the introduction of next-generation Xbox 2 and PS3 devices and maybe a connected device from Nintendo. The question is not how big an impact [online console gaming] has had yet, but what it portends for the future.
Karen Raugust is a Minneapolis-based freelance business writer specializing in animation, publishing, licensing and art. She is the author of The Licensing Business Handbook (EPM Communications).
