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AOL users may pay as they play

AOL, always looking for a new revenue source, says fee-based online games just might be the way to go.

America Online (AOL) may soon be turning its attention to the tough market of fee-based online gaming.

AOL Studios, which develops programming for the online giant and other distributors, is scheduled to make several announcements at the Electronic Entertainment Expo [E3] next week in Atlanta. The AOL division currently is developing a "whole new dimension of entertainment that goes beyond AOL's basic games," said a source.

AOL currently offers a range of entertainment from sports to trivia games designed for hard-core gamers and hobbyists alike. A pay-as-you-play gaming plan could make sense for the online service, which boasts 8 million members, and has found that 30 percent of its members play games, according to Wendy Goldberg, an AOL spokeswoman.

"We're looking to see what makes sense for our members and business model," Goldberg said, in reference to the premium pricing model. "Gaming may certainly be one of those areas."

Only services not currently found on AOL's flat-rate $19.95 plan might receive a premium fee. Goldberg said that the idea is similar to the cable industry model.

AOL, which last year switched to a flat-rate as competitors made similar moves, is searching for ways to further its revenue sources.

But road to fee-based online gaming can be tough, say industry watchers.

"In general, in the online gaming world, it's difficult to do because so many services out there offer gaming for free," said Ted Pine, president of InfoTech, a market research firm specializing in digital publishing.

Very few companies currently charge for online gaming, Pine said.

"Three main camps used to offer free service, but they started charging for their service last summer or fall," Pine said. Dwango charges users either a subscription fee or sells blocks of playing time, while Total Entertainment Network charges a flat rate and hourly rate.

But Mpath, which followed the path of charging for its service, has since switched back to an advertising-supported model and offers free play.

Pine noted, however, that a move to fee-based games may work for AOL.

"They have a good tract record as any, and have 8 million members that already form a community," Pine said. "But the question is, do they have a really hot game? Online gaming is like a soap opera, you have to have a reason for them to keep coming back. And if it's successful, it will be wildly successful, if not, it will be left in the dust."