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THE ADVENTURE CONTINUES | PAGE 1,2 - - - - - - - - - - According to Lindsay, the future of gaming lies in competitive online play of real-time strategy (RTS) games. He likes Bungie's Myth -- a fine game, to be sure. And RTS is the flavor of the month at the moment. Titles like StarCraft and Total Annihilation have done extremely well -- although plenty of other RTS games have sold miserably. That's absolutely normal in computer gaming; according to received wisdom, 94 percent of all computer games lose money. (I have no idea where that figure comes from, but it's been quoted all over the place -- and it's reasonable, given that 2,000 titles are published annually and maybe 100 top 100,000 units in sales.) But let's take a closer look at online gaming. Last year, all of the business analysts who follow computer gaming announced that online was the wave of the future. Jupiter Communications claimed it would be a $1.6 billion industry by 2000. Forrester Research claimed $1.6 billion by 2001. Kagan, with amazing precision, claimed $742.8 million by 2000. The actual results for 1997: Online gaming grossed $97 million. By comparison, the market for boxed computer gaming product was $1.8 billion domestically in 1997. That alone should nail home the pointlessness of Lindsay's argument. The boxed game industry is big. Online is penny-ante stuff. What is online gaming, exactly? First we have the old-line online game companies -- Kesmai, which runs Gamestorm, and Simutronics, which runs Play.Net. They got their start running titles for the old proprietary online services -- CompuServe and GEnie. They designed text-based product that relied on a share of connect-time revenues -- and they were both profitable. They both hit big problems when the Internet ballooned to its current monstrous size, when all the online services except for AOL bit the dust and when AOL went to a flat monthly fee. Why is that a problem? Here you've designed a game that encourages people to stay online as much as possible, because you earn money for every hour they stay online. Then suddenly, AOL doesn't want to pay you by the hour, because it isn't getting paid by the hour. Instead, it wants to discourage service usage, because it gets the same $10 a month regardless of how long people stay online. Gaming stops being a big source of revenue for AOL and becomes a cost sink. Kesmai and Simutronics have both made the transition to the Web, and run their own gaming services now. Kesmai is still bleeding money, but it's owned by News Corp. and has deep pockets. Simutronics claims to be running in the black, but it doesn't have anywhere near the capital it needs to turn itself into the kind of huge operation the analysts' numbers predict. It's an $8 million a year firm, and growing pretty fast, but that's not going to get us to a $1.6 billion industry any time soon. Then we have the low-latency mafia: MPath, TEN, DWANGO, HEAT.NET and the like. These companies got capital by claiming they had "solved the fundamental problem of online gaming." The fundamental problem, supposedly, was latency -- the fact that it takes a while to get information over the Net. Your computer draws data off your hard drive in microseconds, but it can be a fraction of a second, or even a few seconds, before you get data from one computer on the public Internet to another. If you're trying to play a fast-action game like Quake or Myth over the Internet, latency is a big problem. So these services all began with the notion that they'd offer a premium service -- low-latency connections -- and charge by the hour for it. They wouldn't develop original games; they'd let the boxed game publishers do games with Net-play capability, and then people would sign up for TEN or MPath to get a better gaming experience. The problem is that the business model all these companies relied on just doesn't work. Low-latency matching has become a commodity. For one thing, companies like Bungie have set up their own systems. Bungie.net matches Myth players for free, so why would you pay someone? Few people will pay for this anymore: They've laid out their $50 for a boxed product, they don't want to pay an additional fee to play online, and they don't have to, because too many people offer the service for free. All of the low-latency companies are scrambling for a different model. MPath is going for advertising support; others are trying a flat monthly fee; others are developing proprietary games. On Monday, DWANGO closed all its U.S. operations, although DWANGO Japan, chosen by Sega as the online carrier for Internet play using its forthcoming Dreamcast console, will continue operations. This is the first of the major low-latency carriers to bite the dust, but it won't be the last. And then you have companies like Microsoft and Sony -- large technology companies trying to build "destination" sites for gamers like the MSN Gaming Zone or The Station@Sony.Com. They offer simple games for free (Hearts and Spades and game matching on the Zone, Wheel of Fortune Online and Jeopardy Online for the Station). They sell ad space for the free area. And then they have a fee-based area for games specifically designed for online play -- not, as with Myth, solo-play games with a Net-play version bolted on. They aren't making any money, either. And finally, you have the massively multiplayer virtual world crowd: Meridian 59, and Ultima Online and the forthcoming Everquest and Asheron's Call. Ultima Online claims to be operating in the black now, despite its well-publicized problems. Maybe so, but I'd be surprised if the overall project is profitable at this stage. And no one else has made this work. But where does Myth fit in this picture? For the boxed game manufacturers, online play has become a marketing point, another box to check off, another thing to add to your sales spiel when you call on the buyer for CompUSA. Real time, yup. 3-D, yup. Online play, yup. But the boxed game manufacturers earn no revenue from online play. They get about 50 percent of the $50 you lay out when you buy the game, and that's all the sugar they'll ever see. Yes, they want you to play the game online, and decide it's hot, and tell all your friends so they'll go out and buy the game, too -- but it costs money to support everyone who's playing the game online. Server farms and T1 lines don't come free. So for the boxopoly, online play is an expense -- unless they unload the cost of supporting it on someone else, like MPath or the MSN Gaming Zone, as many do. Bungie.net is a nice service -- free support for Myth players -- but it's not making Bungie money. Quite the reverse. This is no model for building an online games industry. It's a model, ultimately, for companies discouraging their customers from playing online, because supporting them costs bucks and there's no continuing revenue stream. Myth is not the harbinger of the future; rather, it's illustrative of why online gaming is screwed, and why it's not going to be that glorious $1.6 billion industry in the near future. Nor will online-play of real-time strategy games be the mainstay of the online games industry when it does become big. The strength of online gaming is in communication -- something Lindsay recognized when he called chat "the killer app" of online. But RTS, like first-person shooters, is a fast-paced genre -- so fast that in-game chat and negotiation is virtually impossible. Pause to engage in a discussion with another player for a minute or two, and you'll find yourself hard-pressed to continue with the war. RTS as a genre was developed initially for solitaire play at home, and it is best suited to play in that mode. It can be shoehorned into Internet play, but it is not ideally suited to it. Myth and Age of Empires -- the two RTS titles best suited for Internet gaming -- are still, fundamentally, solitaire games with wires welded on. Internet gaming, when it does explode, will be based around approaches that are specifically designed to take advantage of the medium's greatest strength -- communication -- rather than compensate for its disadvantages of latency and bandwidth. So what's the online games industry? It's the old-line online firms, holding on by the skin of their teeth. The low-latency start ups, running short of venture capital and thrashing about looking for a business model that works. The graphical MUDs, either marginally profitable or losing money. And the boxopoly, doing what it's always done, selling expensive boxes with plastic disks in them, becoming more sophisticated about their multiplayer versions, but still looking at online play mainly as a way of avoiding having to program expensive artificial-intelligence opponents -- and as yet another cost of marketing and support. What it isn't is a booming industry. It's a struggling one -- a thousand business plans chasing venture capitalists who placed their bets on the low-latency firms, have been burned and are now a lot more interested in technology plays than entertainment. 1998 won't be the year that online gaming takes off. Nor 1999. Indeed, just as Brazil is the country of the future, and has been for more than a century, it may be that online gaming is the wave of the future -- and always will be. Meanwhile, the much maligned adventure game -- a brief novelette's worth of story, a slim Dover paperback of puzzles and a million dollars of computer graphics -- chugs slowly along, not the main driver of the gaming industry but a nice little auxiliary engine. It's responsible for two of the top-selling games of 1997, in a list otherwise notable for the presence of huntin'-and-fishin' games and computerized versions of classic board games. Not so shabby, all things considered. So which one's dead and which one's booming? Neither. The adventure game is puffing when it runs upstairs and worrying about its gut. And online's in the incubator, while the doctors confer in worried tones about its low birth weight. The one has years to go and miles to travel before the grave -- and the other has a lot to learn before it's a brawling adolescent. Greg Costikyan has designed 26 commercially published CD-ROM, online, board and role-playing games. At present he's working on an online-only strategy game for the Station@Sony.com -- and an as-yet unannounced graphic adventure game for Learn Technologies Interactive, a New York independent game developer.
The games people play: Myst and Riven are a dead end. The future of computer gaming lies in online, multiplayer worlds
Groveling for dollars: Bugs, babes and booze -- for game developers rustling up financing, there's a million potholes on the road to success
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