Video Games

The changing face of 'games-as-a-service'

Speaking at the Dice Summit in Las Vegas, Valve Software Chief Executive Gabe Newell provided some pearls of wisdom that are as applicable to gaming as they are to pretty much any kind of software.

Fundamentally, the Steam on-demand gaming platform is so successful because the service disintermediates middlemen and allows the platform developers to engage directly with customers. This strengthens not only the social networks but also the core platform.

Newell says the future will be "providing ongoing value." Once you start thinking from a service perspective, he continues, "It starts to help you understand the … Read more

Making money with "free-to-play" games

Free-to-play games are looking more and more like open source products as commercial entities behind the development and operations figure out ways in which to add value and monetize their user base.

In the open source world this typically consists of a split between "Community" and "Enterprise" versions of the products. For casual and free-to-play games, the split tends to be associated with some kind of premium offering or a payment mechanism like micro-transactions.

David Chang, Executive VP of Business Development and Marketing at online game publisher Gamescampus discusses the challenges of "free-to-play" in … Read more

Game sales buck the recession with 13% growth in January

While it's clear that nothing is truly recession-proof, video games are doing a heck of a job trying to buck the trend.

Market research firm NPD Group reported that software and hardware combined reached $1.33 billion in revenue for the month, a 13 percent jump over $1.18 billion in January 2008. Nintendo continues to dominate with Xbox 360 making a very impressive showing.

January Software Statistics: 1. Wii Fit (Nintendo, Wii) - 777K 2. Wii Play (Nintendo, Wii) - 415K 3. Mario Kart Wii (Nintendo, Wii) - 292K 4. Left 4 Dead (Valve/EA, Xbox 360) - … Read more

World of Warcraft is the new Starbucks

An education professor at the University of Wisconsin-Madison education believes that MMOs like World of Warcraft (WoW) can help to produce better real-world citizens.

Professor Constance Steinkuehler outlined her views at a recent campus event.

With about 12 million people playing World of Warcraft alone, MMOGs have become a new "third place" like "Cheers," where everyone knows your name and all that, Steinkuehler said.

Players "hang out and engage with one another in informal social ways," she said. "Most people go for the game and stay for the people."

The "third-place&… Read more

Subscriptions driving MMO game revenue

Massively multiplayer online, or MMO, games are generating serious dollars these days and doing so in a way that suggests that revenue opportunities are still nascent.

Counter to what we see with console games, the bulk of the revenue appears to be coming from subscriptions. Generally speaking, subscription revenue for MMOs and MMPORGs (massively multiplayer online role-playing games) is better than license revenue for console games because it has a longer life span. Call it support, maintenance, or whatever you like, but a recurring revenue stream is what drives every software-as-a-service and open-source company.

GigaOm has reported on the Top 10 money-making MMOs of 2008 and the ways in which they all make money.

A few interesting points it makes:

The top MMOs all require a piece of software to be installed to the local machine Subscriptions and prepaid cards are clearly working well Microtransactions are picking up

… Read more

Microsoft looks for Xbox love from the ladies

Microsoft recently started recruiting women to throw Xbox soirees as part of a branding effort to get women to start playing the Xbox, according to the Gannett news service.

They got an Xbox party pack of freebies that included microwaveable popcorn, Xbox trivia game "Scene It? Box Office Smash," an Xbox universal media remote control, a three-month subscription to Xbox Live, and 1,600 Xbox Live points (used for game, movie and TV show purchases).

I do think this is a great marketing strategy but as with all Microsoft marketing efforts it feels a bit off. Women have … Read more

The evolution of video game business models

The enterprise software market has been going through a product-to-service transformation for a number of years. One clear representation of this is the boom in open source and software as a service, both of which are built on a different value curve in relation to typical enterprise licensing.

The community and enterprise versioning strategy common in open-source companies is similar to free-to-play and premium versions of games, though games tend to have alternative paths to monetization--typically advertising.

The game market is at the beginning of an evolutionary path--moving from purely packaged games played on consoles to browser-based free-to-play and hybrid-hosted … Read more

Virtual Worlds: Children are our future

Virtual Worlds Management today released its updated Youth Worlds Analysis with the latest data showing more than 200 youth-oriented virtual worlds live, planned, or in active development.

Strangely, the under-7 market (if there is such a thing) is the most heavily targeted with 107 worlds aiming for market share.This strikes me as a bit odd considering that the most you can hope for with kids under 7 years old is some brand recognition, with a subscription as the best-case scenario. Kids that age are notoriously fickle which makes it very difficult to monetize them. But teens appear to be … Read more

Nearly $600 million in VC for virtual worlds

Virtual world and supporting companies raised more than $594 million in 2008, according to a new report from Virtual Worlds Management.

While this represents a small portion of total venture dollars, there are some large deals ($100 million and $70 million), as well as ones typical of early-stage companies ($500,000 to $4 million).

I'm not sure why it takes so much money to build these popular virtual worlds, but it seems that investors still have an appetite to provide money. The fourth quarter saw $101 million in investment, with Gofish, Playfish, and Playspan grabbing $22.5 million, $17 … Read more