Games and Software: Flowing Streams

A proven revenue model, an existing user base, and a means to maximize stickiness characterize the streaming game and software segment. In context with the whole of the streaming media industry, this segment also boasts another key advantage: Streaming games and software already work to the satisfaction of consumers.

A panel composed of streaming game providers and broadband service providers tore at the meat of this blooming market during a conference session at Streaming Media Europe 2000 today. What emerged was a message of confidence that streaming games, in particular, hold significant potential for revenue growth - an assertion founded on technological and market bases. Streaming game providers boast rather mature business plans for the streaming space, and can already offer real adoption, usage, and revenue figures - elements often absent in conversations with alternative types of streaming content providers.

"We're seeing usage times in excess of 30 minutes with our games," said Vincent Grosso, chief executive officer of streaming game and software provider Into Networks.

Panellists suggested that while developers and aggregators of games can benefit greatly from streaming their products to consumers, other Internet businesses can integrate games into their content offerings to increase stickiness. "Owning someone's eyeballs for the protracted time periods we see with games is unimaginable for other media types," said Alex St. John, chief executive officer of streaming game developer WildTangent.

The Technology

It hasn't been easy to create the technologies to stream games to users. "Audio and video arose on the Internet early on, primarily because they're very easy media types to deliver. Games are much more complex to deliver," St. John said.

But games and software also hold certain advantages when it comes to streaming, due largely to the fact that they employ cache on the client computer. "From a network provider's point of view, streaming software is much more friendly than video, because it's ‘bursty', uses cache on the PC, and employs algorithms to smooth delivery," Grosso said.

Tracy Wyman, director of content services at Enron Broadband Services (EBS), pointed out that "you can have much of the application on the client PC, and then use the network to deliver the interactive elements."

Achieving cross-platform functionality - so that all games can be streamed to all potential customers - is a more difficult matter. Panellists were somewhat vague about how they plan to meet the needs of various platforms. WildTangent's interactive game products are based on Java technology, and thus, theoretically at least, can appeal to all platforms, according to St. John.

The Market Strategy

The try-before-you-buy concept is high on the list of reasons why streaming games and software appeal, panellists said. "I wouldn't buy a program to redesign my garden, but I might rent one," Grosso said.

Overall, cost savings to the consumer is a big driver of the subscription business model that is common among streaming game and software providers. "Subscription, pay-per-view, and syndication - all of those business models are supported by this kind of content," said St. John.

Rather than pay up to $50 for a single title, users can pay a subscription of less than $20 per month to play as many games as they like. "Surprisingly enough, users do not want to be committed to owning games, and kids tend to lose CD-ROMs," Grosso said.

Interactive advertisements that incorporate a game element have seen success, as well. St. John alluded to an ad for a Toyota truck that let the user take the wheel for a race against time. The game, he said, attracted a record number of users.

Some of the success of streaming game providers might also be attributed to the fact that they face few of the digital rights hurdles plaguing providers of music and video content. "This is a huge business, and far less contentious than video, where you have Hollywood that has to filter content up to the providers," Grosso said.

St. John added: "The game industry is bigger than the movie industry - has been for years."