Sept. 22 — It’s game time for Yahoo! On Monday, the leading Web portal is expected to launch a subscription broadband service, called Games on Demand, offering users the chance to rent and play streaming PC games.
Users with high-speed Internet access will be able to rent games for a few days or for a month with a range different pay models. It will cost $4.95 to play one game for three days, $12.95 for five games for a month or $14.95 for the rental of 10 games for 30 days.
After a one-time download of the Game Launcher, which allows games to be streamed to the desktop, players can choose how they rent the titles, either multi-game, monthly subscriptions or single, three-day rentals.
“The play experience is the same as if you bought the CD-ROM off the shelf in the store,” said Daniel Hart, senior director of Yahoo! Games and Entertainment.
Game rentals have been available online for some time, but Yahoo!, which has a monthly user base of 90 million people, is the first mass-market Web portal to introduce the games-on-demand model, said Yankee Group analyst Michael Goodman.
“This opens a whole new rental market for the games industry,” said Goodman.
The rental market for games reached an estimated $900 million last year, said Goodman.
Blockbuster, which recently muscled its way into the video-game market, reported second-quarter game revenue was up 20 percent, reaching 11 percent of its overall rental revenue.
On the Internet, gaming is shaping up to be the hottest form of entertainment content — outside pornography.
An estimated 59 million players now play online games on the PC, projected to grow to an audience of 90 million in the next few years, according to Jupiter Research. At least half of 35-44 year-olds played online games at least once a week in 2001, the Yankee Group found.
It’s only going to get bigger as more hot PC game titles come online and as the console game makers Sony Corp., which produces the Playstation 2, and Microsoft, which produces the Xbox, hook their products up to the Internet.
For example, Sony is launching its “EverQuest Online Adventures” next spring and Electronic Arts is debuting the online version of “The Sims,” possibly the most popular PC game ever, during the holiday season.
What’s more, games are widely considered the “killer app” for mainstream adoption of high-speed Internet access, or broadband, many industry analysts believe.
For Yahoo!, the game is about making money.
In the midst of a prolonged advertising recession, Yahoo! has been under pressure to grow the number of people who pay for services. At the same time, Yahoo! and its portal competitors, Microsoft’s MSN and AOL Time Warner’s America Online see broadband as the key to their future. The thinking is, people with broadband access are more likely to pay for content or other services than dial-up customers. (MSNBC is a Microsoft-NBC joint venture.)
All three portals are scrambling to develop offerings that will entice people to pay as much as $50 a month for high-speed Internet connections.
Yahoo! isn’t making projections about how many subscribers it expects for games on demand, but Hart points out that the portal has over 8 million unique monthly users who play pool, Diamond Mine and about 78 other games for free at Yahoo! Games.
Even so, the new broadband service may not be an out-of-the-gate success, industry analysts say.
Broadband penetration isn’t growing as rapidly as once hoped and will only reach about 15 million homes in the U.S. by the end of the year, according to the Yankee Group.
“It’s an interesting next step that will someday be a very big business,” said Jeff Brown, spokesman for Electronic Arts, the No. 1 video game publisher. “But it won’t be big until the pipe gets fatter.”
On the other hand, Yahoo!’s Hart says “This is going to be a great opportunity for us to introduce people to broadband.”
Yahoo! rivals question whether the rental market will take off online.
“Based on research we found that consumers don’t want game rental; they want to own the content,” said Andrew Wright, general manager of Real Networks’ game division.
Real Networks launched RealOne Arcade last year and has sold 800,000 copies of downloadable games like Jigsaw Puzzle.
Chris DiCesare, group product manager. MSN’s The Zone believes the casual game market — free games like poker, chess, backgammon or puzzles — is where the real market growth is, at least until broadband penetration takes off.
“There is potential in the future for streaming games, but in terms of the Internet, the big market is still casual gaming,” said DiCesare.
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