Understanding Video Games text-book
Mapping online gaming: Genres, characteristics and revenue models

Date posted: May 19, 2006
Updated: Oct 24, 2006

By Simon Egenfeldt-Nielsen

This article tries to outline some of the basics of online gaming and sketch some difference in revenue models between the genres so it is possible to discuss online gaming within the same frame. To discuss online games you need to make a distinction between 4 online game genres (plus two hybrids) and clarify what online games are not. Furthermore, the goal is to operate with as few genres as possible and differentiate between games with different objectives and skills needed.

TABLE MISSING

* The different revenue abbreviations are explained below. The revenue is a list of potential use of different revenue streams and not necessarily a picture of the field today:

P – The player pay pr. game he plays
A – The service is sponsored by ads
T – The income comes from percentage fee for trading tokens in the game
H – The player pay pr. hour
F – The player pay a regular fee, a flat rate, each month or year
E – The player pay for extended services in the game
O – The player pay a one-time fee typically for downloading the software for playing.

** The indications are educated guesses based on analysts’ expertise in the field and my own experiences.

Basically, I operate with 4+2 kinds of online game genres: Action, strategy, adventure, simulation and the two hybrid-genres simple games and edutainment. All of these have sublevels, which will be described if they are of relevance for online gaming. But before I go into each of these six I will shortly describe why online gambling, advanced single player and fantasy league have been excluded.

The target group for online gambling is quite different than for online gaming and the dynamics are not primarily based on the game play. A large proportion of the thrill comes from including money and the luck factor. Furthermore, the dynamics of online gambling do not seem to differ a lot from traditional gambling, which is usually not considered a part of game area.

The single player games are really quite uninteresting from an online view as they are just ordinary games that are accessible through the net. You can find them inthe same place as simple games – everywhere – and they are for free.
The fantasy leagues are quite another target group than computer gamers and there are no new qualities added online compared to the ones we know from newspapers and magazines.

Action
To the general public, the action games is the most well known genre. The game play is often about fighting, battle and other highly intense physically drama. You have to hack and slash your way through opponents or drive faster than the other player on the Indianapolis track. Or you are a one-man-army fighting invading alien forces and rescuing the world from utter destruction.

It was when the leading games in this genre went online that the ordinary computer player seriously became aware of this new interesting playing ground. There are several sub genres of action games like sports games, shoot’em up, first person shooters and racing games however the most popular online are the violent, adrenaline driven action games like Quake, Unreal, Tribes II or Counter-Strike.

Nobody has yet found a durable revenue model for this genre. The online action games grew out of an open source game engine, and it is not that hard to set up a server to host games. Therefore, if you tried to take money for playing it on a server, players would quickly find alternatives. Some try to charge money for controlling the rating system and matching the latency between players - however, this is not very successful in revenue terms.

The producer could change the multiplayer option and have exclusive rights for hosting online. This would however be a major setback for online gaming and a game company would run the risk of alienating the players. Blizzard have been trying to do this to some degree with their Battle.net service and it has been successful to some degree but now another company is trying to offer the same service, so it has only been a brief respite. The question is if the game company wants to make money on selling the game in a box or through online gaming. It will be hard to have it both ways unless they offers a unique online service. It is different for persistent game worlds like Ultima Online and Everquest because there are so few alternatives. But even here the tides are changing as still more MMORPG are being developed thereby increasing competition.

Strategy
This genre covers a broad spectrum ranging from epic new strategy games like Age of Empires, Red Alert and Heroes of Might and Magic to old strategy games like Utopia with a text interface. These games are often about war, although at a more abstract level. The father of all strategy games is chess but in new strategy games the playing experience is far less abstract and the complexity is usually higher. In that you have several different pieces to move and an economy to control as well. Strategy games have today almost become synonymous with real-time strategy games that became popular with games like Dune II and Warcraft. Games like Age of Empires and Star Craft are now getting most of the attention online however the old turn-based game that have gone out of fashion in offline gaming, is still strong on the net. Games like Utopia, Earth:2025, Space and Planetarion can muster well over 200.000 regular players online.

In the beginning the turn-based strategy games were the only ones suitable for the net and in some regards they still are. Furthermore, they have a potential for getting a more mainstream public into gaming. You do not have to spend that long playing a turn-based game, which is both its advantage and its disadvantage. The advantage being a more causal playing style however it also hinders the immersion of the player. The player can’t control how much time he wants to play and when he wants to play. He has to wait until the other player has made a move or for time to pass, so he is given more turns. So he is stuck at the same level of engagement and can’t scale it up or down. This often leads to players having more online turn-based games going on at the same time.

The revenue streams for the turn-based genre and the real-time genre is different. In real-time you play 1-4 games every time you are online, and these games are only connected through the impact they may have on your rating. The turn-based games often go on for a long time. This makes it easier to charge money for it because you get a somewhat persistent world, that the player spent a lot of time building up and a competing site can’t easily copy the game world. The problem for the turn-based genre is the trouble with giving the players the degree of immersion they want. In MMORPGs where you have a persistent world you can spend all the time you want, and that is a good sales argument. On the other hand the turn-based games are very confined in space and time, you have a certain amount of turns and that’s it.

A good turn-based game could benefit from a monthly regular fee or an initial fee, which Planetarion is starting to do. Another way to gain revenue in turn-based games are through extended services, where you gain the basic game for free but can get added functionality for a certain monthly fee. However, the target group will most likely be quite small but features such as increased communication with other players and certain game worlds that are cheat and lag free could do the trick.

With the real-time games you have the same conditions as for the action genre: you can always find another place to play. So if you are to gain revenue from real-time games it will probably be through ads or hourly play.

Adventure
Adventure games are at their core opposite action games, where the player in action games has to be fast. In adventure games the players must have patience and typically the game requires a great deal of thinking. Typically the setting is in a mythical or ancient world, where good and evil fight for supremacy. The player has to choose side or is fighting for good to prevail. The adventure genre grew out of Dungeons & Dragons but along the way there have also been made detective games and a lot of games with haunted houses.

The role-playing aspect, which was an important part of Dungeons & Dragons (and its table-top successor) have however slowly died in the offline games. For many, the online gaming had the potential to redeem the genre with the great qualities found in role-playing. The role-playing games is characterised by more player and non-player interaction. The MUDs on the net have been the nesting place of the role-playing and games like Ultima Online and Everquest tried to incorporate it into their game. However, the games did not manage to make the role-playing part a success. The combination of role-playing and more action-oriented adventure games seems hard to get working. Not that the wish is not there for it – almost all want a deeper story and interaction in their game but the players still seems to be hacking and slashing away. The role-playing communities that exist online like for example Threshold have dedicated players however games like Everquest and Ultima Online are stealing players. On Skotos.net you can also experience several role-playing games and Skotos are making a big effort to enhance the role-playing experience. Although these role-playing games are almost all text based that is not a hindrance - quite the opposite. It seems that the graphic interface make people want to do other things than chat. They want to interact, move and fight – the communication is not enough.

The phenomenon is not unknown from Dungeons & Dragons, where it was also a big problem that some players stayed in character while other enjoyed the killing of monsters and level chasing. For a lot of people the role-playing part was too hard to get going. As such they used the game as a replacement for playing war in the woods. Games like Diablo and Everquest have more focus on fighting than role-playing. Currently, the MMORPG genre is the most effective of all the genres in generating revenue due to the persistent world concept, where people pay to have a lasting experience. However, the resources for running these sites are tremendous and have surprised the game industry. This is due to the fact that the players never stop to expect more – every month they pay 8-20$ and think and want new content.

Simulation
The simulation game is a classic genre in offline gaming but it has never been big online. All games are a form of simulation of something but this genre puts in an extra effort to make it realistic. In fact the most important part of simulation games are that they are realistic. It does not matter if they are fun or very hard to master. That is precisely the point. Therefore the game series Sim-[subject] is not a simulation game. In the Sims, SimCity, SimEarth or SimFarm the game is not about getting a very realistic feel but about constructing a fun environment.

A good example of simulation games is Flight Simulator series from Microsoft. The amount of simulation games online is few. This is of course due to the very high demands from the players of simulation games – it must be so realistic as possible. However, if you can reach the same degree of realism as in offline simulation games the market is big because of the devotion of this target group.

Simulation gamers are not very attracted to other game genres and spend a great amount time on their game. Therefore, this genre could have the same kind of loyalty and commitment that we see in successful adventure games like Ultima Online and Everquest. The potential for revenue could be as big as for other persistent worlds and the management and maintenance of the site is perhaps lower. This comes from the fact that the games are very complex and takes a long time to master. When you master them it is still a great thrill for the player to ‘just’ fly or drive around. In the adventure games and role-playing games you have to make new monster, scenarios and adjust game balance because of the in-game economy and interaction.

Simple games
These games are known to everyone and have been around for a long time. They are not necessary that simple but they have a game set-up that is well-known and easy to grasp. Furthermore, the financing for developing these games is often lower than other online games.

They have often been developed as board games but not exclusively. Games of this type are Tetris, Worm, Chess, Go, Hearts, Spades, Monopoly, Risk, Diplomacy, Backgammon. Games that mostly is for free and used for attracting traffic to a site. They can be found on www.flipside.com, www.zone.com, www.gamespy.com etc. Besides these there exist several national game services and promotional games for different consumer brands. The simple games are the hardest genre to make money on because people are used to playing them all kinds of places. The only realistic revenue model is through ads and using them to attract people to other games, that cost money.

Edutainment
Edutainment is formed by the words education and entertainment and is a result of the wish to use the fascination of games for more serious purposes. The industry is large offline but online there are fewer attempts to take advantage of the potential. Some museums and zoo’s have tried to make such games and combine them with quizzes. There have been made a few attempts to use the game world in for example Everquest as a training ground for different subjects. The easiest being training English through different quests, however the attempts were not very successful because the online world does not lend itself very well to constrained and narrow task-solving, the game is about venturing out and see what happens. Also Active Worlds have been used for different experiments with establishing learning universes online. As the examples below demonstrate it is mostly within the adventure genre there have been made attempts but there are also some simple action games.

The relation between revenue model and playing style
Hopefully it is clear that all of these genres have different revenue options. The genre has profound effect on the game play in the games. Furthermore as a last note we should not only think of revenue models in terms of getting money but also consider them important tools for regulating and enhancing the online games. For example payment pr. hour will raise the commitment of players to the game itself. If they are paying by the hour they will spend less time chatting and discussing, when the game has started. They will also tend to be inclined to just hang around the game lobbies and discuss there without paying money for that. Today you see several examples of games, where people keep playing even though they have lost or are not really motivated to play. This often happens because people have flat rate on their Internet bill and do not pay to play. If you play by the hour this will serve as motivation for spending your time with caution.

Another example is cheating which is a big problem in online game. A key issue to get rid of cheating is to establish a stable online identity so you can identify a specific person online and enforce sanctions. This would be possible when you use your credit card and real life information to make an account online. Furthermore, a problem in many games is that people make several accounts because they are free. This cost maintenance resources and helps people cheat, which is again a good argument for having a certain fee for playing.

It is important that the player doesn’t experience the fact that they pay money online as a cheap trick from the industry to gain more money, but rather that the money issue has good implications for game play and game world. Surely more would pay if they paid to get rid of cheat and lag – instead of for the game that they bought in the shop.

This article is a work in progress. I would very much like to have feedback especially on the edutainment part and experiences with different revenue models in relation to different genres.

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