Online Gaming: Internet Oasis or Dot-Com Mirage?

In the future, we all will spend our days at our computer terminals, playing video games over the Internet against people we’ve never met.

At least, that seems to be the vision dancing like a sugarplum in the heads of those who have targeted online gaming as the undeniable, certifiable next big thing on the Web.

They might be right. After all, almost one-fourth of all Web users visited an online gaming site in April, according to Nielsen//NetRatings. But the idea that these numbers will continue to grow like the Andromeda Strain is just another illusory pot of gold at the end of another dot-com rainbow.

Doom and Gloom

No one can deny that gaming itself is a growth industry. Or can they? The price war being waged over Xbox and PlayStation 2 is as good as any of the games themselves right now. What causes price wars?

Attempts to grab market share for one; attempts to stave off slowing growth for another. Certainly, gaming is big business worldwide and, in some ways, has only scratched the surface. Then again, when the economy slows down, how far down the list of priorities do video games fall?

But smart companies look beyond short-term trends and try to ride the current wave, position themselves to catch the next one and watch for the one after that. One of those future waves, people in the know seem to think, will have everyone playing games not on a local console but over the Web.

One Big Murderous Family

The idea is appealing. The Web was supposed to bring us closer together, after all, so giving us the chance to kill each other in a virtual world is just a slightly bloodier and less romantic version of the same notion.

Will online gaming be big? Undoubtedly. Will it be unbelievably huge? That’s another question.

And it’s the key question, it seems to me. If Microsoft is investing $1 billion in order to be a first-mover, it must see more than a little upside. Even though Gates & Co. have money to burn, they’re not about to invest $1 billion to make $1.5 billion. They’re thinking bigger than that. Much bigger.

The problem is that these things usually have a way of appearing bigger from a distance. The Web has a funny way of distorting images, we’ve learned; at least, we should have by now. Just ask all the Internet market research firms that ran out of zeros as they made predictions about growth in certain e-commerce industries.

Remember online grocery sales? One firm that predicted triple-digit growth halved its estimate for 2001 shortly after Webvan folded and essentially has not mentioned the subject since.

Try, Try Again

Why should online gaming be any different? Yes, the companies vying for market share and setting up infrastructure are more solid than the speculative dot-coms that sprang up to answer a perceived demand for other Internet services and goods. But even optimists admit there are hurdles.

NetRatings has noted that broadband Internet connections are a prerequisite to gettingin on the online gaming action. Another problem may be the nature ofvideo games themselves. Gaming is, for many people, a solitary pursuit.

On the other hand, subscription services seem to make a lot of sense. If I can get a subscription to play online, it might beat buying a game. It’s the online music model all over again. I can use the Web to sample games and become a die-hard fan of those that most fit my personality.

What is online music? Good question. It was supposed to be a big, big thing by now. But it hasn’t quite worked out as everyone thought it would. Rather than worry about why that is, we’ve found a way to divert our attention once more to the future. Where everything is possible. Where everything is big.

What do you think? Let’s talk about it.

Note: The opinions expressed by our columnists are their own and do not necessarily reflect the views of the E-Commerce Timesor its management.


  • Uh, where’s the rest of the story? It doesn’t really address anything! 🙂
    I think the gaming world is growing. I read somewhere that the industry will soon match and shortly thereafter surpass that of the movie industry, which doesn’t surprise me – since some games *are* as entertaining and compelling as some movies (Star Wars .. and Jedi Knight II)
    Look at all the MMORPGS in development – too many to list. Look at all the gaming websites, clan/guild websites, and the recent increase of stories in mainstream media. No longer do computer/online gamers carry the stigma of being geeky/nerdy, instead they are becoming respected and, in some cases, very wealthy.
    Anyway, thats my 2c. 🙂

    • The gaming industry is very healthy. A few of the co-location deals I AM currently working on are for gig ethernet. Bandwidth requirements are growing at 10 megs a week. The "Cyber Athletes" right out of high school have the opportunity for corporate sponsorship and prize money over 100K per year. We are just in the infancy of this field IMHO.

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