September 9, 2007 4:19 PM PDT

Online gaming hits its groove

AUSTIN, Texas--Online games used to be a niche market, with a few large hits and not much else worth mentioning. But today, with huge successes like World of Warcraft, Habbo Hotel and Club Penguin, the world is taking notice.

This past week in the Texas capital, many of the leaders in the online game industry gathered for the Austin Game Developers Conference. And while there was no direct consensus about the state of the industry or where it is going, there were definitely some strong opinions on those matters.

For one, there are those who think that online games will soon be the province of extremely mainstream brands as big-name companies jump on the bandwagon and see that they can provide their customer bases with a new form of entertainment and a novel way to interact with their products.

"Certain people have woken up to it," said Chris Sherman, executive director of Virtual Worlds Management, who ran the conference's precursor, the Austin Game Conference. "The consumer goods industry and the toy industry (and the) media have woken up (to the idea) that people can be more engaged in a game-type environment."

As an example, Sherman pointed to Warner Bros. Online Arcade, which lets fans of many of the company's properties--Scooby Doo, Bugs Bunny and Harry Potter, for example--play online games based on them.

To be sure, not all such games are going to be complex, time-consuming environments like World of Warcraft. Some will be casual games that require small amounts of time yet still suck in consumers. Regardless, the Warner Bros. example, as well as MTV's forays into virtual worlds, or the many brands that have set up shop in Second Life, demonstrate that big companies are, more than ever, seeing some value in putting their brands into online gaming experiences.

Of course, Sherman added, not everything about these experiences is related to game play. In fact, he said, many new virtual world properties will incorporate game play as just one piece of the puzzle.

"I don't want to say that game play is being marginalized," Sherman said, "but game play is just a part of it."

To others, though, the pace of big brands moving into online games and virtual worlds does not yet mean there's a far-reaching understanding on Madison Avenue or Wall Street that these are environments that companies must move into.

"I don't think we're on the immediate verge of that," said Corey Bridges, co-founder of The Multiverse Network, a developer of virtual world platforms. "The funny thing is that anytime you have a new medium (like online games), you see people dragging (in) the constraints and tropes of old media. For example, the first Web sites were like brochures. It's predictable stuff like that."

From Bridge's perspective, the danger is if too many brands decide that the best way to leverage virtual worlds and online games is to simply try to set up virtual versions of stores or apparel shops.

"I think we're seeing things like that with virtual worlds, people having the...idea of replicating a real world store in the virtual world," Bridges said. "But that is so completely goofy. It's dragging the baggage of atoms into the world of bits. There's no reason to have those constraints."

As an example of this kind of thinking, Bridges pointed to an experience from his past. He had been an early employee at Netflix, and what that company proved, he explained, was that choosing movies to rent did not have to be an analog experience in which the consumer wanders up and down the "drama" aisle, or the "comedy" aisle. Instead, using as many filters as they wanted, consumers suddenly had a very modern way to search for films that met their needs.

And that, Bridges said, is the model that anyone wanting to utilize virtual worlds or online games for brand-building should follow: to think beyond traditional ways of reaching consumers.

At the same time, Bridges also said he is excited about the way that online games and virtual worlds are increasingly becoming a genre that independent companies can succeed in. Where huge titles like World of Warcraft might still be the exclusive territory of publishers like Blizzard Entertainment, given their eight-figure development costs, it is also possible to be successful in the genre without such budgets.

Bridges pointed to Habbo Hotel--which has garnered tens of millions of visitors--as an example of such a game.

CONTINUED: A growth opportunity…
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virtual worlds, online game, Warner Bros. Entertainment Inc., conference, World of Warcraft

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