Online gamer abandons retail

In the latest example, Starwave said today it would phase out retail distribution for its Castle Infinity online adventure game, cut its subscription prices by 25 percent, and opt for product bundles and giveaways instead. The reason: Retail doesn't allow for the "extensive trial necessary to kick-start the new genre of online games," said David Gedye, Starwave's director of online games.

"A Web download doesn't provide the full game experience and retail is just too expensive," Gedye added in a statement.

Multiplayer online gaming launched in recent years with much promise, including predictions that it would become a $1 billion-a-year business by the year 2000. But so far, many leading online gaming companies have turned to price cuts to stimulate demand.

Starwave has been experimenting with distribution through big retailers such as Blockbuster, CompUSA, and Egghead. A CD-ROM for unlimited game play cost $39.95 at CompUSA and Egghead. Blockbuster offered another deal: four hours of game play and a free month of Internet access from Netcom for $9.95 and an offer to upgrade to unlimited game playing for an extra $30.

Instead, Starwave will team up with Diamond Multimedia, Happy Puppy, The Net magazine, and the Cybersmith chain of cybercafes to distribute free CD-ROM copies of the game. An estimated hundreds of thousands of users on the Windows 95 platform will receive the CD-ROM.

The starter kit includes four hours of free game play; after that, players can upgrade to unlimited game playing for a one-time $30 membership fee--a full 25 percent, or $9.95, less than the original offers.

Starwave hopes the plan will work on the premise that "avid players become our online sales staff." Castle Infinity, aimed at children aged 8 to 12, now has some 13,000 players worldwide.

"It's a totally new market and you have to find out what works," the Starwave spokeswoman said. Starwave is not alone in retooling its online gaming strategy, and analysts expect continued changes.

Last month, the Total Entertainment Network said it would cut its flat-rate subscription fee to $19.95 per month from $29.95.

In February, in a reversal, Mpath Interactive backed off plans to charge members for playing games online. Instead, it is offering unlimited free access and hopes to generate money from advertising. Mpath still is offering a "premium area," with access to content, tournaments, and contests, for $29.95 annually.

Starwave is privately owned by Microsoft cofounder Paul Allen and the Walt Disney Company. Allen is also an investor in CNET: The Computer Network.