Online Games – Can We Make Money Playing Them?

When we refer to online games we are normally referring to video type games that we play on a computer via the internet. Some video games are played over the internet using mobile phones and video consoles, but generally speaking online games means computer games that need an internet connection to be played. Simple text-based multiplayer games were the first of these types of games as internet connections were slow and expensive when these games were first introduced in the 1980s. Gradually these games became popular in the 1990s, with today’s online games featuring virtual communities, realistic graphics and multiplayer games where people can even play one to one or in knock out tournaments for cash prizes. We all know that the internet is the fastest growing market place in the history of the world but did you know that there is an online games sector that is growing 4 times faster than the internet overall! Yes! and it’s the “Online Skill Games” market.

There are many styles of Online Games

Some of the different types of online games that exist:

1. Real time strategy games: This type of game is all about strategy where, for your army to fight successfully against the other internet players you need to develop a game plan by building lots of resources

2. First person shooter: Here the players compete with each other one to one. In most first-person type games, the online game allows the death match or arena style of play. In this style of game play the view you see is the one seen from your character’s eyes.

3. Massively Multiplayer Online Role Playing Games (MMORPG): In this type of game each person has to keep trying to reach the next highest level until he has reached the top one written for that game and these online games can have, simultaneously, thousands of players from every part of the globe, playing in a giant virtual world interacting against or with each other. Gamers can keep playing these types of games for months or even years!

4. Browser type games: These are pastime games that are quick, simple and small that are played in your browser. The popular Java and Shockwave technologies are used to develop these games.

5. Online skill games: An online skill based game is a web game played in tournament format or one to one. Each player pays a cash entry fee to play with a cash or merchandise prize going to the winner or winners. The outcome of each competition is based on the player’s ability and performance not luck.

How Do Online Game Companies Make Money

All games today, are playable online. How do we make money? This is the question that companies making the online games have to ask themselves. The majority of companies make single-player games that are played at home and in this the player has to beat the artificial intelligence of the enemy. Today these games normally include an online multiplayer version which can be played against or with other Internet players. By selling their game DVD/CDs is how these companies earn their profit e.g. Warcraft 3 and Counter Strike. Advertising and promotions is how browser game companies make their money. MMORPG companies generally charge their players a monthly fee and continue to add content by programming new scenarios etc in their games e.g. Everquest 2 and World of Warcraft. Some don’t, but survive because their DVD/CD sales are high e.g. Guild Wars.

What is the future of online games?

Soon there will be a new entry into the online skill games market. According to their Free Online Games Market Report they will be the first company with their new online skill games platform, to launch a business that encapsulates three of the newest phenomena on the internet today. Online Games Entertainment, Social Networking using web 2.0 and a new way of marketing which has been described as Social Marketing 2.0. One of the core differences with this new platform over the conventional models is that we the players can if we want share in the profits while we play our games. With the market today (2007) worth approximately $5.2 billion USD and predicted to rise in the next 3 years to over $13 billion USD that’s $412 per second and with social networking sites already reaching 45% of web users and the 4 major Instant Messengers having more than 400 million users between them this potentially could be a whole lot of money.

Fun Free Online Games & Social Networking

Computer and video games have become very popular. In particular the interest in playing fun free online games over the internet is increasing strongly.

Despite the growing popularity of YouTube, MySpace, and Facebook, gaming remains the king of online entertainment, driven largely by casual gaming activities.

Sites like Yahoo Games and EA’s Pogo.com offer users access to a wealth of advertisement supported free online games, where sponsors have options for branding opportunities, and display and banner ad placements.

Online games on the consoles could become a $10.5 billion business by 2011 from $981 million in 2007, according to market researcher IDC.

In 2007, online console revenue is at 2.5% of total global video game market revenue, including console and handheld hardware and software revenue. By 2011, revenue from connected consoles will represent 18.6% of total market revenue.

Although subscription revenue for premium online services and games will grow from $476 million in 2007 to over $2.4 billion in 2011, its share of online console revenue will decline from 48.5% in 2007 (already down from a high of 86.5% in 2006) to 23.2% by 2011.

Downloadable content (DLC) consisting of games and game-related items, which at $35 million in 2006 represented a 13.5% market share of online console revenue, will become connected consoles’ primary revenue source in 2007, growing from $493 million in 2007 to $7.2 billion in 2011. In 2011, game-centric DLC will make up 68.6% of online revenue.

Advertising revenue from sponsored services, in-game ads, and product placement in connected consoles will reach $12 million in 2007, posting the first significant online console ad spend. Advertising revenue will grow to $858 million in 2011, with an 8.2% market share of online revenue.

Video game growth will be strongest in the Asia Pacific region, its largest market, with a 10% annual growth rate through 2011, but will increase in the Europe/Middle East/Africa region (10.2%), the U.S. (6.7%), Canada (9.4%), and Latin America (8.2%) as well.

Certain trends hold steady across most regions: For instance, driven by increased penetration of broadband access, online gaming is surging. In the U.S. and Europe/Middle East/Africa, online gaming represents the fastest-growing consumer segment (19.3% and 24.6%, respectively); in Asia Pacific and Canada, online growth came in second only to wireless (at 16.1% and 13.9%, respectively). Other trends are more regional. The in-game advertising market is expected to increase 64% in the U.S. And in China it is expected to rise at a compound annual rate of 14.3% to $2 billion in 2011, most all of that growth will come in online games.

Spurred by the new generation of consoles and handhelds, and by increased penetration of broadband and wireless technologies, the video game industry is ripe with opportunity. “Growth in platforms allows you to hit new demographics,” says Stefanie Kane, a partner with PwC’s entertainment and media practice, noting that handheld game devices have brought more women into the market, and that the entrance of cable and on-demand TV channels will further widen the base. “There is a lot of unlocked potential.”

You might think the face of one of the hottest areas in gaming right now is a young male in his 20s who owns the latest supercharged gaming system from Microsoft or Sony – or both.

But you’d be wrong.

Instead, the epitome of the new-era gamer is a woman in her late 30s or early 40s who plays on an average PC.

Yes, the video game industry seems to have been turned on its head.

For years, the dominant themes have been faster game machines, increasingly realistic graphics, more immersive play, as well as the old standbys – blood, guts and blowin’ stuff up.

But that picture has begun to look increasingly outdated. While young men dominate the gaming industry as a whole, casual games are one of the fastest-growing parts of the industry and attracting a whole new demographic.

You can find signs of the revolution everywhere. One of the fastest-growing parts of the game industry is centred on so-called casual fun free online games, PC-based titles that users can generally start playing in minutes and usually don’t require the mastery of some combination of multiple buttons to enjoy.

The upheaval has spread to the console market, as sales of Nintendo’s Wii console and DS handheld, both of which stress fun-to-play games over powerful processors or realistic graphics, are far outstripping their supercharged competitors from Microsoft and Sony.

Revenue streams enabled by active online consoles in this cycle show the strongest growth in the sector and will not only determine the future success of the console vendors but also be crucial to the success of many third-party publishers.

Further information on fun free online games and business opportunities combining Online Games and Online Social Networking can be found at my blog.

Noel I Crowe

Skype: noel.crowe1