I believe that some major players in the industry believe that online gaming provides too much value. If you look at recent comments by Nintendo on XBox Live you will see that they feel there is a possibility that Microsoft will be cutting into their hardcore gaming market via XBox Live. The reasoning is quite simple: online play extends a gamer's interest in a game beyond the point that the gamer would normally tire of a particular title. This means that that gamer is going to purchase fewer titles.
There are key questions here:
(1) Can the revenue from the smaller number of titles sold be recovered in the online fees? The jury is out on this one. Microsoft's highly subsidized Live network is surely not a feasible economic example. At the minimum we will have to see how many subscribers Live maintains next year, when Microsoft institutes a rational monthly/yearly fee.
(2) Could the option of online play somehow mean _more_ titles are sold? This to me seems unlikely now but eventually possible if Broadband was less expensive. The only way this could possibly happen is if the option of online play greatly extends the gaming market. The barrier to entry that the high price of broadband and its narrow market penetration present are just too significant.
For example take the well known online game Counter Strike. This game is of immense value to the online gamer who enjoys first person shooters. But NO ONE is making significant revenue from Counter Strike. Its more or less a revenue black hole. And putting this game on the XBox will not attract its current PC fanbase to XBox Live.
And what does XBox Live mean for 3rd party software developers? When combined with giving away 2 to 4 free games per console, XBox Live is an independent game company's worst nightmare.
So my conclusion is that Microsoft is potentially taking a signficant gamble with XBox Live. Both Sony and Nintendo while inching forward on online play, in order to remain competitive if the idea succeeds, are waiting to see how the XBox Live experiment turns out.
There are key questions here:
(1) Can the revenue from the smaller number of titles sold be recovered in the online fees? The jury is out on this one. Microsoft's highly subsidized Live network is surely not a feasible economic example. At the minimum we will have to see how many subscribers Live maintains next year, when Microsoft institutes a rational monthly/yearly fee.
(2) Could the option of online play somehow mean _more_ titles are sold? This to me seems unlikely now but eventually possible if Broadband was less expensive. The only way this could possibly happen is if the option of online play greatly extends the gaming market. The barrier to entry that the high price of broadband and its narrow market penetration present are just too significant.
For example take the well known online game Counter Strike. This game is of immense value to the online gamer who enjoys first person shooters. But NO ONE is making significant revenue from Counter Strike. Its more or less a revenue black hole. And putting this game on the XBox will not attract its current PC fanbase to XBox Live.
And what does XBox Live mean for 3rd party software developers? When combined with giving away 2 to 4 free games per console, XBox Live is an independent game company's worst nightmare.
So my conclusion is that Microsoft is potentially taking a signficant gamble with XBox Live. Both Sony and Nintendo while inching forward on online play, in order to remain competitive if the idea succeeds, are waiting to see how the XBox Live experiment turns out.