U.S. MMORPG Companies Need To Offer More Free Games – Not Subscription Models – To Grow Market

Parks Associates Study Outlines Strengths and Weaknesses in MMORPG Market...

Massive multiplayer online role-playing game (MMORPG) publishers may have to start giving away playing time to attract more players into online role-playing worlds, according to Parks Associates’ Electronic Gaming in the Digital Home II.

This consumer study of 2,000+ U.S. Internet gamers found only power gamers are interested in subscribing to an MMORPG service, whereas social, dormant, and leisure gamers all show significant interest in a free-to-play, microtransaction-based model. The MMORPG market will be difficult to enter with a subscription model at this stage.

Fourteen percent of gamers not currently playing MMORPGs would be interested in playing if they could play for free. Only 2% of gamers from the same group were interested in adopting an MMORPG with the traditional subscription-based model. The good news for MMORPG companies is they can recoup their investment over time through microtransactions, where game publishers and operators make money through sales of in-game items.

The barriers to entry, in terms of time and money, are simply too high for many potential customers, according to Cai. “Free-to-play models offer flexibility, and players can choose how much they want to invest based on interest level and play patterns. Microtransaction models have the best potential to grow the U.S. MMORPG audience.”

Analysts from Parks Associates will present new digital media research in San Jose next week.

Analysts from Parks Associates will present new digital media research on April 10th at the Fairmont Hotel in San Jose. Its a must attend event with the ability to meet with analysts and senior-level executives from various industries. "The Business Cases for New Media Workshop," hosted by Parks Associates, scheduled from 8:00 A.M. to 4:30 P.M.

Featured analysts include: Kurt Scherf, VP and Principal Analyst; John Barrett, Director of Research; Michael Cai, Director of Broadband & Gaming; and senior-level executives from various industries.

Session topics include: Strategies for Broadband and Bundled Services Providers, TV 2.0 Critical Links in the Value Chain, Buying and Using Digital Media Platforms, Electronic Gaming: The Fastest Growing Entertainment Media, Broadband Video: To the PC & Beyond, and The Monetization of Digital Media: Advertising and Alternative Payment Solutions. The full agenda can be viewed here.

Event Registration. Media can register for a free press pass.

Parks Associates' Gaming Analyst to Present New Consumer Data and Forecasts at Virtual Worlds Show

Yuanzhe (Michael) Cai, Director of Broadband and Gaming, Parks Associates, will present new gaming research at Virtual Worlds Spring 2008 in New York on Thursday, April 3 at 11 A.M.

Cai will present data from the Electronic Gaming in the Digital Home II, a consumer survey of 2,000 Internet gamers divided into six groups: power, social, leisure, incidental, dormant, and occasional. This survey analyzes trending in all aspects of the gaming domain, including gamer habits and expenditure on different hardware platforms, online vs. offline gaming activities, and interest in different gaming offerings such as online console gaming, multiplayer online gaming, mobile gaming, virtual worlds, and free-to-play games.

Blu-ray Game: Aliens vs. Predator vs. You

Many of my colleagues have written about their impressions on CES last week. For me, CES served two purposes: 1, to expand my horizon and see the cool, new gadgets and talk to knowledgeable people; 2, to test how many miles I can go in a day, as it takes both brain and brawn to be an analyst here at Parks. In preparation for the first purpose, I meticulously planned my schedules and read related industry articles. In preparation for the second, for the first time in my life, I attended a Pilates class in a local 24-Hour fitness club to prompt myself for the upcoming hardship. But it was almost embarrassing to find out that I was the only male in the class. Anyway, I found the CES show to be great. Many trends struck me during the three days such as gigantic flat-panel TVs and wireless HD content transmissions, but as gaming is more of my focus, I want to share some new things happening in the gaming industry.

It is not news anymore that games consoles such as XBox 360 and PS3 are able to provide on-demand videos and even serve as TV Set-Top Boxes. Now, new-generation DVD players are jumping into the role of game consoles too. Studios are able to combine the power of Blu-ray video with its interactive features to provide innovative gaming services. The first example I saw during the show was the Blu-ray version of the Aliens vs. Predator movie, with an add-on interactive game titled Alien vs. Predator vs. You. In order to play the game, players first have to upload a picture of theirs to create their avatars. Then, they can choose and wield weapons to fight the monsters in the movie. Players are awarded points based on how hard they hit the opponents. The whole experience was exciting at first but sort of awkward afterwards as it was not a real game per se but nothing more than a game interface slapped on the movie videos. Plus, players access the game through a remote control. The company providing technology behind the scenes is called RCDB (Related Content Database) based in San Francisco. So far, they are working with Panasonic and Fox on interactive initiatives. I talked to the staff from RCDB. They told me interactive games of this sort will be provided free of charge as extras to Blu-ray movies. As Blu-ray machines will be connected to the network, users can enter their profiles, get game updates and game statistics easily. In addition to that, game players can post comments and form game communities.

This exhibition shows that technically Blu-ray gaming is a viable gaming channel. But does this mean new-generation DVD gaming will be exploding anytime soon? I don't really think so, at least not in 2008. A few conditions have to be met before it goes mainstream. First, format war has to end to accelerate consumers' adoption of next-generation DVD. My colleague Chris Roden has written about this below and he thinks we may see the end of the tunnel in2008. Secondly, the design of new-generation DVD games has to improve. A game interface slapped on movie videos is far from optimal. A trivial casual game testing viewers' knowledge on the movie they just saw or the stars in the movie, anyone? Studios can set up a leader board or gaming center to reward those who score high on these mini-games. Or, if they are using PS3 to watch the Tomb Raider on their Blu-ray DVD, maybe they can download a free demo version of the Tomb Raider video game or purchase a full-blown version?

To end this entry, I found myself feeling more flexible just after one class of Pilates. So I found a good website on Pilates for anyone who might be interested. Maybe that's what we should add to our New Year's resolutions: work hard, play games hard, and don't forget to exercise. (Picture Courtesy of http://www.1up.com)

Sony Seeking Rescue for PS3

Two pieces of news came to my attention about Sony Computer Entertainment in late October. The first is music to gamers’ ears: Sony decided to cut the price of the 80 GB hard drive PlayStation 3 from $599 to $499. Also a 40GB model for $399 will go on sale on November 2^nd to catch the holiday season in the US.

The price cut came at no surprise considering PS3’s lagging sales. While Microsoft is reaping the benefits of Halo 3 and Nintendo’s factories are still burning the candle at both ends to meet consumer demands, Sony is desperate to narrow down the gap between itself and its competitors. The new prices will make PS3 more comparable with the other two consoles.

The second news is Sony confirmed it will sell its PS3 chip production to Toshiba, which is another major manufacturer for game console chipsets. Sony has invested at least $1.7 billion in this business; the divestiture of this expensive division will release some of its capital and potentially grant Sony access to lower priced chips, thus reducing the total cost of PS3.

The question is whether these moves will change Sony’s position as the “underdog” in this cycle of console war. While the long-term winner is still undetermined, the price cut will surely ignite the fuse in the short run. Need evidence? Since Sony cut the price in the same proportion in the UK, sales of the PS3 have gone up more than 150%. In the week of October 23^rd in Europe, Sony sold more than 64,000 units of PS3, just 6,000 units short of Nintendo Wii during the same period of time.

Historically Sony has been a long distance runner, not a sprinter. In the previous generation, PlayStation 2 sold more than 90% (still counting) after the first two years, compared to 79% for Xbox and 56% for GameCube.

Lower pricing is key to driving adoption initially but a good variety of quality games will be crucial in the long run. The problem is high quality game development for PS3 can be challenging because PS3 is very technologically advanced for the developers to digest and many third party developers have turned their attention to Wii. So what Sony will have to do is to first rely on the first-party games such as Heavenly Sword to showcase the power and versatility of the machine and wait for third-party developers to catch up and help spur PS3 sales in 2008-2009 timeframe. We are expecting an inflection point of PS3 sales in 2008, driven by lower prices and better games, the two main factors that contributed to the runaway success of PS2.

Meanwhile, Sony is in a perfect position to leverage its media assets to ramp up the offerings of video, music downloads and PVR to boost the average user spending per month, provided it can orchestrate the interests of its different divisions. Although it has been slow to bring the meals to the table, digital media distribution is likely to contribute to its bottomline in the future. I am also holding my breath for its highly expected virtual world Home and casual MMO Free Realms. Both of these initiatives are scalable and have the potential to be played on multiple platforms. They can help attract a diverse group of gamers, among other benefits.

Connection Research Announces Cooperation with Parks Associates

US-based market research firm Connection Research and Parks Associates today announced a cooperative agreement where Connection Research will sell Parks Associates’ research reports and studies in Australia.

Connection Research will be a reseller of all of Parks Associates’ products and services, including the full range of the company’s digital lifestyles, digital media habits, digital health and electronic gaming reports. The two companies have also agreed to cooperate on research activities and provide assistance to each other in developing cross-regional products.

For more information on Connection Research, please visit http://www.connectionresearch.com.au/