People of all ages and from all walks of life spend a large amount of time and money on online games, which makes it a billion dollar industry. Looking into the Business Model adopted by this billion dollar industry.
MMO Games (Massively Multiplayer Online Games):
Over the last few years, MMO games have taken the world by storm, success stories of games like WOW have inspired literates to write books and take surveys explaining the phenomenon. These games are played by millions and are bandwidth eaters, which do not bite cost but gulp it. MMO games are high expenditure ventures and need a lot of funding to continue with game development and server maintenance.
Critics argue that the state of art business model is still in a divergent state. Every author is elaborating different proposals. However, the current scenario supports the following business model.
1. Initial Game Title sales: This revenue ensures to keep the development momentum going and helps pay for the initial development cost.
2. Time Based Subscription Model: The revenue model is based on a simple fee, which gives unlimited access to the game during a certain period of time, usually a month, but with other subscription rates for three, four, six or twelve months.
3. Virtual Currency Model: Revenue model is based on selling currency for use in a virtual in-game economy.
4. Virtual Real Estate Ownership Model: Second Life® came with a new concept of MMOG. Their producers, Linden Labs, provide the infrastructure that is the open virtual word. Their expected revenue will come from subscription fees, in US dollars, and land taxes, in Linden dollars (the in-game currency). These Linden dollars (L$) that can be traded for real money, at a variable rate, depending on the law of supply and demand.
Interesting News ( a fact on the value adding within the Game itself - which eventually adds to the capital of the game producers - taxes paid on the property worth) :
http://www.gamespot.com/news/6162315.html5. Brand merchandising: MMO's are also involved in selling branded products to fans and user alike for a profit consideration.
6. Paid sponsorship for product promotion: Companies are using the MMO platform to promote their products for a consideration of promoting their products within the MMO community.(growing in millions)
http://video.google.com/videoplay?docid=-11753674930819787057. Expansion: Expansion is added to make money on user up gradation and also ensure a continued interest in the games.
Casual Online Games:
Casual online games are a little lighter in the resources and are a little less intense on the game play and graphics but equally addictive. The business model adopted by casual online games is molded a little different that the MMO with some similarity in brand merchandising and sponsorship. Casual Online Games like GoPets focus on building game loyalties by offering free accounts and free game downloads for enjoying the game. The Business adopted by such games is as follow:
1. Brand merchandising: Game characters now appear as stuffed animals and action figures and on board games and trading cards. 2. Game sponsorships: Companies pay for getting custom games built for the game user and use it as a marketing object.
3. Upgrading Options: Online casual games also offer upgrading the user account, from free to paid subscription in return for more game functionality and privileges. 4. In game / on site advertising: Casual games also offer ad placements within the game site to advertisers for a monetary consideration.
5. Virtual Currency Model: Revenue model is based on selling currency for use to buy virtual items in the game.
Casual Downloadable Games:
Monetizing Casual downloadable games is probably the most challenging. They do not have an easily accessible system or a proper distribution channel apart for some high trafficked download sites. The cost of game development is high (
http://kotaku.com/gaming/popcap/casual-games-getting-big-budgets-217836.php), so how do they justify such cost and what business approach do they follow?
1. Time Trial Free Downloads / Limited Online Version: The best method used to sale such games are the FREE Downloads (ironic), which one can play for a whole hour. It's like a time trial, a death match, fighting a battle to finish as much as possible within the free trial. After the time trial is over or the proposed level before the fun begins is over, the downloader has to pay a premium to get the unlock code to play further. This is the sales strategy followed by most casual downloadable games.
2. Branding for other online publishers and online portals: Casual games are also branded for online publishers who use it under their names and make it available on their sites.
3. Selling ads on online sites: Casual game publishers are also offering advertising option in the forms of video ads (played before the game starts), banner advertising option and even contextual ads through Google Ad sense and likes.
Traditional console Games:
Console games from the wiki: A console game is a form of interactive multimedia used for entertainment. The game consists of manipulable images (and usually sounds) generated by a game console, and displayed on a television or similar audio-video system. The game itself is usually controlled and manipulated using a handheld device connected to the console called a controller. The controller generally contains a number of buttons and directional controls (such as analog joysticks) each of which has been assigned a purpose for interacting with and controlling the images on the screen. The display, speakers, console, and controls of a console can also be incorporated into one small object known as a handheld game console. Marketing a console game is much easier with mass channels of supply and distribution. Console gaming is the most popular and has a well fought market with leading competitors in the form of XBOX, PS3 and off late the Wii. Business models for console games have been well established as it follows a very predictable trend.
1. Console Sales: Develop great hardware, sell it near or below cost, then generate profit by taking a cut of the revenue from all future game sales.
2. Online branding: Advertisers have just found another venue to spend their advertising buck with in game objects branded to promote their products and services. Play a Fifa and you will be side boards promoting some on the well known brands.
3. Online Scoreboards: Gaming consoles are now equipped to connect to online scoreboards where people can download, pay games and compete with other gamer world wide. Drive for competition makes people pay.
~*~*~*~*~*~*~*~*~*~*~* The Gaming World offers both fun and money. There are huge opportunities to be grasped in this industry as the line between the real and the virtual world is blurring.
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