Online Games Are Games No More
01. 06. 2009.
GKIeNET – T-Home – T-Mobile: Online Games Are Games No More: In May 2009 almost one-fourth of the population aged 14 and over, some 1.9 million people, could be considered regular online gamers in Hungary, according to the June issue of the GKIeNet – T-Home – T-Mobile Report on the Internet Economy.
Online games are more and more prevalent in Hungarian households, playing an increasing role in home entertainment. Some college students view certain online games as potential temporary income opportunities.
In Hungary 23% of the population aged 14 and over regularly play online games (meaning that they played at least once over the three-month period preceding the survey, and it was not their first time. The data were collected in May 2009 from 1,000 individuals). This rate corresponds to 63% of all internet users, and it is not surprising that half (50%) of all online gamers are aged between 15 and 29. Demand for online games is increasing consistently all over the world, and the sector is clearly one of the driving forces of the internet-based economy.
Online games can be divided into four distinct categories:
1. Casual games
Games belonging in this category (for example Honfoglaló, Kvízpart, Startlap games, Jojatek.hu, Coolegames.com, or FreeWebGamez.com) are simple, easy to play, with no complex rules or skill requirements; they are produced largely for a mass audience.
Casual games are generally played to kill time or relax, nevertheless, they are addictive, in single-player as well as multi-player forms. They are popular among men and women alike, with the majority of gamers being students, bored housewives and idle office workers. With free access, most of these games are based on advertisement revenues (typically display ads, but many are sponsored games). Occasionally, but more and more frequently, a limited demo version of a game is free for a limited time, encouraging players to purchase the full version. Some sites offer pay-per-play games, where players are charged by the session, others offer subscriptions to unlimited game time for a certain time period.
2. Browser games
Browser games, such as Travian, Tribal Wars and Ogame, are similar to casual games in that they do not require the installation of client-side software, since they are played entirely on web browsers. Their graphic designs are generally simple in comparison to hardcore games, but the incremental cost per each new player is low. These games offer real-time play for thousands of users simultaneously, instead of being turn-based. The rules and accessibility of browser games are more complex than casual games, and game time is also significantly longer, sometimes lasting for several months.
The business model of these online games is often called ‘freemium’, which refers to a framework where players are offered free access to basic functions, and although upgraded features are offered for a premium, the same gaming level can be accessed free provided the player invests more time or more skills into the game. Consumers show great willingness to purchase digital goods used for web games; most players are willing to pay for premium services even if they offer little extra in terms of game functions, in order to obtain advantage (or avoid disadvantage) in the competition. The simple explanation behind the willingness to pay is the fact that browser games are even more addictive than casual games, and consumers’ commitment increases in line with the length of time invested in the game. Browser games create online communities among players (e.g. Hotdog), and virtual communities potentially turn into actual communities (for example Travian clan meetings).
In addition to premium services there is retail-oriented business model based on players’ commitment and the community feeling.
3. Hardcore games
Hardcore games, such as Call of Duty, Counterstrike or World of Warcraft, are complex games with complicated rules that require significant time commitment as they are continuous. While players of casual games play an average of 1-3 hours a week, hardcore gamers spend significantly more time playing, often as much as 18-24 hours a week. Hardcore gamers are mostly male and single (although the rate of female users has been on the rise over the past 2-3 years). The majority of hardcore games require client-side software to be installed, but some of them can be played via web browsers. Following the initial purchase (box or download) and the installation, players are required to pay a subscription fee to join and access the online game network. Hardcore games fall in one of these two categories:
• RPGs (role playing games): they feature a fantasy/science fiction setting, constant character development and free movement. The games can be real-time or turn-based, e.g. Legends of Zork, Scroll Wars, Diablo, Warcraft III.
• MMORPGs (massively multiplayer online role-playing games): they combine the basic features of RPGs and multiplayer games, with thousands of players playing with or against each other in a virtual world. Examples of MMORPGs are World of Warcraft, Everquest, Star Trek Online. Typically, the business model of these games involves an initial purchase (which allows access for a limited time period), followed by monthly subscription fees. These games generate substantial revenues (to the most part from subscriptions), given that they are used by millions of people worldwide.
Hardcore games are played predominantly by men, but the number and percentage of female players have been increasing gradually over the past few years in the United States: by the end of 2008 40% of all players were women. Obviously, online games have become a form a social activity and increasingly offer an alternative to watching TV. Gender differences have been diminishing for years both in computer use and in the consumption of online content, and the same trend is now seen in the area of online games.
4. Skill games
Skill games, such as yahtzee, backgammon, chess, rummy and blackjack, are characterized by the same simplicity as casual games. However, unlike in casual games, players of skill games upload a certain amount of money into a fund and compete against each other to win that amount. The winner gets to cash out the entire amount of the fund minus the commission of the website operator. The results of the game depend on the skills and competence of the actual players, which makes these skill games different from online gambling. All players participating in a skill game start with the same conditions at the beginning of the game.
Online games of chance, on the other hand, are based largely on luck instead of skills. Whether poker is based on skill or luck is always subject to debate, nevertheless, online poker can be considered a game of chance. The business model of online poker involves the same commission-type structure as that of skill games. In addition, the commercial model also plays a role, albeit smaller, in the online poker industry: some poker sites are engaged in virtual commercial activity, selling their own branded products or offering various gift items for bidding. The revenue-share model is also prevalent: the websites of many poker rooms are embedded in other sites. Currently the most popular online poker sites include PokerStars, PartyPoker, Full Tilt Poker, Bwin, and iPoker Network.
Revenues from online poker services have shown a four-fold increase since 2004, which clearly reflects that online poker is becoming a dynamically growing sector. In 2006 online poker accounted for half of the total revenues of online gambling worldwide, estimated at five billion dollars. In 2008, online gambling revenues amounted to as much as 20 billion dollars, with the online poker segment contributing approximately 5.9 billion dollars. 70% of all online poker players worldwide are male, 62% of them have a high school diploma or a postsecondary degree. Among current (May 2009) college students aged between 18 and 29 in Hungary, 32% know someone who plays poker online, and 2% indicated that they would possibly play online poker for a living following their graduation.
In the United States the Unlawful Internet Gambling Enforcement Act (UIGEA) has been in effect since 2006, regulating payments to and from online gambling sites and putting restrictions on the incorporation of operators of gambling websites. However, the UIGEA has not had the desired effect so far: instead of discontinuing their services, many online gambling sites opted for illegal operations or moving their sites to other countries, with only a small number of companies remaining in North America, which, for the most part, benefit from the loopholes of the regulations. The European Union has yet to reach a consensus about regulating this industry.
*Explicit prohibition or permission means that the laws of a given country actually include passages regulating online gambling. In the majority of states with implicit regulations, the issue is undecided due to the uncertainties of the legal framework, while active regulations generally reflect an actual choice.