Internet gaming companies suddenly are turning to new tactics to lure customers--and turn a profit.
In an about face, Mpath Interactive is backing off its plan to charge members for playing interactive games online. Instead, it will offer unlimited, free access with the hope of making money from advertising. Analysts say this is another sign that advertising, not subscriptions, may be the best moneymaking scheme on the Net.
Whether it involves online gaming or Web publishing, Internet companies have struggled to charge users fees for access to their content. Microsoft's political magazine, Slate, has backed off plans to charge a subscriber fee, and Web heavyweight Playboy has yet to execute such a plan, either.
Mpath's competitor, TEN, called the switch a sign that Mpath is "clearly struggling to find a business model that works," but the company denied that. Mpath said they remain confident that the new plan will succeed.
Despite the hype, Net gaming has yet to meet the lofty expectations. The industry is supposed to generate $1 billion in annual sales by the year 2000, according to a report by Jupiter Communications. The field is getting crowded too, with a new player, SegaSoft, entering the market last week.
Mpath now will offer two game plans for users. The first is dubbed "MPlayer Free Zone," where users get unlimited, free access to many of the popular games such as Quake and Hasbro's Interactive Scrabble. "Game developers tell us that gamers are demanding that new games feature free Internet play," said Mpath chief executive Paul Matteucci.
The company said it is confident that advertisers will "flock" to Mplayer, because the average members spends about an hour on the service per session. "In addition to rotating banner ads within Mplayer's Web environment, advertisers will be able to take advantage of daily, weekly and monthly sponsorships," said Mplayer general manager Kristin Asleson.
But the company is not abandoning the fee-based model all together. For $29.95 a year, effective March 1, Mpath also will offer a so-called premium area that offers access to unique content, tournaments, and contests. MPlayer Plus will debut with games such as a secure version of Diablo by Blizzard Entertainment and Comand and Conquer six-player Red Alert, both from Westwood Studios. "MPlayer Plus gives developers the opportunity to keep the content fresh, and earn extra revenue for their efforts," Matteucci said.
A TEN spokesman countered: "If I were a publisher, I'd be concerned about garnering significant additional revenue."
TEN is sticking to its plan to charge members. It has raised its introductory offer of $4.95 to $9.95 for five hours per month, with an additional $1.95 per additional hour. Subscribers can also pay $29.95 per month for unlimited access.