Strategy for Information Markets/Multiplayer computer games

Multiplayer computer games are a branch of video games which link individual users through a number of different mediums, who all access the same video game application. One of the more common platforms for users to access an application is called a personal computer. It is common for the user to install the game from a compact disc or from a download accessed directly from the internet. Some multiplayer computer games can also be played through the user's web browser without any significant download necessary beyond the potential need for cookies and plugins. There is also the option for users to access multiplayer games with game consoles such as the Xbox 360 and Playstation 3, which allow either networked or hotseat interaction with other players, through that system specifically rather than through a personal computer.

History

Origins

The relatively rapid rise of the computer as a personal gaming instrument dates back to the 1970s. The first recorded multiplayer computer games were based on closely associated, closed networks which linked select machines that had both geographical proximity to one another and technological compatibility. Up to hundreds of personal computer terminals could be connected through serial lines, linked through minicomputers (small mainframes). Each terminal would run an instance of the computer game while sharing memory across the mainframes. The first computer games included content such as first-person combat, large scale warfare, real time strategy including developing economies and trade, and space exploration. Although similar to modern day Local Area Networks (LAN), these systems were a more basic and restricted version of the networks being used today. The first games which were truly connected through a LAN arose in the early 1990s.

Today

Since the advent of multiplayer gaming there has been the creation of a diverse set of methods through which to play these games. Different avenues for multiplayer gaming include hotseat, LAN, play-by-email, play-by-post, play-by-internet, and online games. The last category, online games, is the most common form of multiplayer gaming. This gaming can be pursued either through the web or simply through an application which accesses the internet but which is not hosted directly by a website anchored in the web. The most common genres of online gaming are Massively Multiplayer Online Role Playing Games (MMORPG), Massivley Multiplayer Online Real Time Stategy (MMORTS), and Massively Multiplayer Online First Person Shooters (MMOFPS), although there are a number of other popular types of multiplayer online games. Most of these games are able to connect millions of users to each other through the use of large servers located geographically throughout the world to provide a better overall online experience in a process called matchmaking. Hosting services also come equipped with software that allows players to be matched up with other players with similar skills or abilities who are looking for a competitive game. The presence of online gaming in modern day is undeniable in much of the world and manifests in many forms. Online tournaments attract many competitors in many different nations linked across the internet or even in person, and video game conventions entice thousands of individuals to attend. Movies and novels have been adapted into video game format and vice versa, and world renown composers offer their services to video game scores. The rise of online multiplayer games also owes credit to the world's movement toward electronic commerce, networking, and education. Were there not so many practical applications of usage of the internet, the games we see today may not have ever become so prolific.

Common Platforms

Personal computer

PC: Personal computer gaming is the most pervasive and widespread method for gaming. PC gaming has the advantage of oftentimes bridging the proprietary divides created between game consoles such as those developed by Microsoft and Sony. For example, gaming titles that are released by Sony for the Playstation may be restricted from distribution to Microsoft or Nintendo consoles but still released for computer systems.

Video game consoles

Xbox One (Xbox Live): Released in 2013, Microsoft's Xbox One is a popular gaming console. This console has the ability to connect to the internet and has an online gaming network called Xbox Live, which offers and supports various levels of membership and features. The 360 uses computer-based processing cores and makes good use of its hardware for graphics delivery even though it does not possess the most sophisticated processor and graphics card when compared against other systems.

Playstation 4 (Playstation Network PSN): Also launched in 2013, Sony's Playstation 4 (PS4) is the third and most technologically advanced version of its product line which began in 1995. Unlike its predecessors, the PS3 features wireless network connectivity for online gaming on its PlayStation Network (PSN) and operates using a custom AMD-based GPU. The PS4 has the most distinctly impressive graphics of the three systems, according to its specifications. The PS4 also boasts the benefit of serving as a Blu-ray DVD player.

Wii (Virtual Network): Released in 2006 the Nintendo Wii is a revolutionary console that is based on actual physical movement caught by a motion sensor. The Wii posses the least powerful processor of the three major consoles, running at just 729 megahertz. With the weakest processor and graphics offered of recent consoles, the Wii attempts to offer a more enjoyable and enriching gaming experience rather than sheer powerhouse gaming performance. Overall the Wii seems to boast the most broad and casual appeal, with many demographics expressing an interest in using the Wii console.

Kinect: Kinect is a motion sensing input device by Microsoft for the Xbox 360 and Xbox One video game console. It’s like a webcam extra for the Xbox. it enables players to use and play it with just your hands. The Kinect is aimed to expend its users and create a new different life experience. A version for Windows was released on February 1, 2012. The most different change compared with general game console for Kinect is the way of using your own hands as a controller and visual contact. There are more and more games which are developed for Kinect. The Kinect made Xbox take more of the game console market and helped it earn more profit since its realease.

Hand held device

Hand held gaming devices date back to 1970's when Mattel first released Auto Race, the first hand held electronic game. Since then the most popular hand held console has been the Nintendo line of Game Boys. This line did not offer a significant multi-player hand held experience until the birth of the Nintendo DS in 2004. This gaming system allows connectivity for up to 16 players and has WiFi capabilities. The DS line also possesses backwards compatibility with Game Boy Advance games, helping the DS line to become one of the greatest selling hand held lines of all time, with more than 104 million units sold. Nintendo has had much success in its hand held video game consoles and with the expansion of the DS it has shown a level of dominance in the multi-player arena as well. The popularity of multi-player gaming has grown and Nintendo has been able to capitalize on that growth with the development of the DS. The DS allows people to connect on the go; playing their games together in transit, on school campuses, and even while waiting for the start of their favorite movie's midnight premiere.

Another popular hand held gaming device with multi-player functionality is the PlayStation Portable, released in 2005. Known as the PSP, this unit is capable of using cable and wireless connections to link with the PlayStation 3, other PSPs, and the internet, which emulates the same multi-player attractiveness as the Nintendo DS.

Lastly, the most recent addition to the handheld family is the Playstation Vita. Released on February 22, 2012 by Sony Computer Entertainment the Playstation Vita is now the 8th generation in modern gaming devices. The processor in the Playstation Vita is similar to that of the original Xbox. It also offers the same features as the PSP with cable and wireless connections. Added features included two .3 megapixel cameras that allow videoconferencing from the internet possible. This is a new step for gaming devices to allow the same interaction that a regular Personal Computer or laptop markets. This type of software also competes with cellphones due to its ability to reach other users of the device. The Playstation Vita allows has a touchscreen system to provide convenience and user friendly technology.

Mobile/Cellphone

A multiplayer mobile game is often a remake of a classic multiplayer game for a PC or game console. Most mobile games are single player with computer animated opponents or are linked to a external network device. This can include: Wi-Fi, wireless lan, or even bluetooth technology. BlueTooth games are designed to share game information rather than give a on screen interaction. It is limited geographically within the Bluetooth's range. With the use of a online browser, network games can be accessed by any player at any time. Although these games have limited memory and are not graphically advanced, the focus by content creators is to create a large number players interested in the game. In general, the larger the network size in this market, the more interaction and fun the game is for the average consumer. Game applications include Scrabble and Draw Something. Older mobile phones supporting mobile and even calculators have gaming that is connected by a wired port, usually USB.

A GPRS connection which is common among GSM mobile phones can be used to share data globally. Developers can connect players of mobile games with one server and share data among everyone. Some have invented cross platform games, allowing a mobile gamer to play against a PC gamer. This way of interaction best supports turn based games and role playing games. Faster connections like UMTS and HSDPA allow real time multiplayer gaming. More multiplayer mobile games continue to enter the market with an increasing demand.

Success in Video Game Consoles

With the advances in technology, the Xbox 360, the Playstation 3 and the Nintendo Wii have created an innovative gaming system environment. These consoles allow users using the same systems to connect to each other and see what activities their friends are doing at that moment. The ability for anyone using a specific console to send friend requests, videos, messages etc. to other friends who are on the same system is accessible as well. This creates an expanding gaming environment, much like social networks, that keeps users engaged in online multiplayer gaming. Companies such as Microsoft or Sony are working very hard to get as many users as possible operating with their system for as long as they possibly can. By introducing new venues through the Xbox or PS3, such as Netflix, YouTube, Hulu Plus, and others, the users of these operating systems no longer need to enjoy these entities by other means. Microsoft and Sony have brought these venues to the users at no cost of buying an Xbox or PS3. The importance of keeping gamers online and in continuous contact with their selected console, has not only caused an increase in console activity in the latest years, but has increased the number of users who are involved with multiplayer gaming. The simplicity that Xbox and PS3 have created for its users, has had an enormous effect on friends and other observers to go and purchase one for themselves. In total, the number of game consoles purchased between Microsoft's Xbox 360, Sony's PS3, and Nintendo's Wii, has reached 82.2 million units sold ending in 2011. Keeping users interested by creating innovative devices can attract more users to multiplayer video games.

Failure in Multiplayer Game Production

Entering and competing in the multiplayer game industry more often does not lead to success. The major competitors in the industry have the advantage over others because they have gained market power through previous production. Most of the popular games in the multiplayer gaming industry are either sequels or are in some way related to another popular game. Industry types estimated that 10% of games produced 90% of revenue, and only 20% of games turn a profit. In the multiplayer gaming industry, it is known that failure in accordance to production, occurs when producers are blinded from past successes and ruin their reputation by releasing games that they have unfamiliarity with. We see this mistake made by numerous, big time competitors in the industry.

Nintendo

At the time Nintendo had yet to experience failure. The Virtual Boy was a monumental failure for Nintendo and was said to have caused blindness from the Pseudo 3D in red and black. What Nintendo tried to do with the Virtual Boy was create a 3D system that was portable. Instead, Nintendo is said to have given consumers many headaches and caused eye irritations. Nintendo also failed earlier in the industry by creating a console with cartridge formats. If not for the major popularity of Zelda and Mario, Nintendo might not be a major competitor today.

Playstation

Right as the PS3 was to be introduced and placed on shelves for sale, the hype that Sony and Playstation had created for PS3 from its extremely positive feedback from PS2, which is said to be the best selling game system of all time, did not meet expectations from a few different reasons. Sony introduced an extremely difficult to use controller, questionable graphics, poor marketing schemes, as well as pricing the new console at $600. PS3 sales upon launch were dismal, and was the least successful of the three consoles.

Less Common/Outdated

The Dreamcast was launched in 1998 by Sega. Dreamcast was the first game console to have a built-in modem and internet capabilities. Holding a 200 MHz SH-4 processor it originally had a dial-up connection although a boardband adapter was also an available accessory for highspeed boardband connection. It allowed users to connect with others in hotseat, LAN, and even MMORPG games such a Phantasy Star Online. Ahead of its time online gaming had not become a popular network externality for users to sustain production of the console and was thus discontinued in 2001. Although the system failed to provide sustainable growth and profit it did revolutionize what console were capable of and was the foundational building block for next generation consoles.

Getting Started

Purchase and Use

In the consumer market for multiplayer computer gaming there are many different genres and styles to which users have access. These games can be purchased from electronics distributors, directly through the manufacturer, or through other third party services on the internet. An example of a game which requires an up-front purchase but which is free to play following that purchase is the first-person shooter Call of Duty: Modern Warfare 2. A game which requires an up front purchase price and which also requires monthly payments through a subscription is World of Warcraft. A game which requires no up front purchase and no monthly subscription is League of Legends. A game played directly through the browser which is free to acquire but may require a fee to play could be an online poker site. Many online games typically require an upfront purchase cost which generates a significant amount of revenue for the manufacturer and associated development companies, but many firms find it more valuable to require that games be paid for on a time-specific basis through either subscription payments, or by offering their services at a freemium.

Initial Purchase Cost

For the games which require an initial purchase cost for play, manufacturers have found lucrative profits throughout the many years during which this has been the most predominant distribution and access method. Sales have historically been conducted through a physical location, typically an electronics store, but as transmission of information goods becomes more seamless and easily conducted there has been a shift toward digital distribution either through a game-specific portal such as Steam or though an online store. As of mid-2009 sales of online games generated around $11 billion in revenue.

Versioning

One way in which game developers are able to capture as much initial purchasing revenue possible is through versioning their product. Versioning is the creation and marketing different versions of a given product that is catered to match the differing values of different consumer demographics. When versioning is used as a business strategy it is most effectively employed in creating simple, mid-range, and high-end versions as a standard. The Madden NFL football game series has been producing its games for almost two decades and thus has a devoted fan base that will purchases these games consistently for each release. From time to time Electronic Arts, the developer of Madden NFL, will release a standard version of an upcoming game and a "superior" (more expensive) collector's edition game with additional online and offline content. This strategy assumes the most highly devoted members of the fan base are willing to pay the increased cost for the higher end version and that regular consumers in the video game market will purchase the standard version. The Madden network is large but it is not large enough to successfully sustain a third versioning tier, however this is not the case with Activision's Call of Duty series. Call of Duty: Black Ops is a video game produced by Activision and developed by Treyarch. The game's predecessor, "Modern Warfare 2", is the all time best selling multiplayer game in history, beating the record set by another predecessor "Modern Warfare (part 1)." Based on pre-order numbers, early reports show that Black Ops will top the record set by Modern Warfare 2, setting new sales and revenue records. As it relates to versioning, Blacks Ops much like Modern Warfare 2, will release in the form of three editions: standard, "hardened," and "prestige." Standard will sell for $59.99, hardened for $79.99, and prestige for $149.99. The higher the version the more content a consumer can receive. Just as with Madden, the die-hard fans will purchase the highest end, and the basic fans will purchase the lowest. But the beauty of Black Ops is the fact that they are producing a mid-range product. The mid-range product or the "hardened" edition, is key for basic buyers who have a bit more value for the game but not enough to be considered hardcore and for hardcore fans who may not derive value from spending $150 on a video game.

Digital Distribution

The digital distribution of games has allowed for new distribution portals, such as Steam, to arise and meet consumer demand. Since its launch in 2002, Steam has quickly created a user base of 30 million accounts, with approximately 6 million unique users accessing Steam each day. Steam is a communications platform designed by Valve to connect developers and consumers directly. This allows smaller fanchises and independent game developers a chance to promote titles that would otherwise go unnoticed. Today there are over 1500 games available to purchase on the Steam website. It is estimated that Steam owns at least 70% of the digital distribution market share. [2] By bundling its products with an active online community with the ability to chat and network, Steam has found a way to directly connect its customers with one another in a way that was previously unavailable. Gamers are able to view what games their friends have purchased as well as statistics revealing how much time they spend playing each game. By providing users with this information, Steam is able to encourage the sale of its games through individual promotion by its users. With continued growth of over 100% in unit sales in the past 6 years, Steam has quickly become a leader in online game distribution. To meet the ever rising demand, Steam recently developed its infrastructure to reach speeds of 400Gps. At this speed, a digitized version of the Oxford English Dictionary could be downloaded 92.6 times per second. With over 1,200 games now offered in 2010 , it is likely that Steam will continue to lead the digital distribution revolution.

Subscription vs. 'Freemium' models

The first major subscription-based online multiplayer games with which we are familiar date back to 1997 with the advent of Ultima Online and 1999 with the appearance of Asheron's Call. World of Warcraft has been the most successful of this genre to date, boasting more than 11.5 million monthly subscribers. For games like this, the players are paying a monthly fee, but in return the game they are playing is essentially never ending. The monthly fee adds significant revenue to the game producer. Because of high revenues, funding is available to make continuous changes to the game. This enables players to have a variety of new challenges at any given point in time.

Online Computer game manufacturers requiring a monthly subscription have a distinct advantage when compared to those games that a free to play. Blizzard Entertainment, a highly successful manufacturer of online games, has benefited greatly from the World of Warcraft games. Instead of investing extensively with the development of new games, Blizzard worked on improving and adding new features to the World of Warcraft. Without the release of one new computer game, Activision Blizzard generated a revenue of 1.2 billion dollars last year. They have successfully captured the second largest number of subscribers for games of the same type. Second Life, by San Francisco-based Linden Labs, is the only game that surpassed the World of Warcraft’s subscription numbers. This was only because their game was free to play on the internet.

Based on the World of Warcraft, it can reasonably be inferred that charging for online subscriptions can be more profitable than simply producing a large number of new games. Blizzards time and effort that is allocated to its online subscription games are enough to make people continue to pay and play. By adding new features every so often, people’s interests are peaked and boredom is unlikely. Other companies have also begun adding to the online portion of existing games as well. For example, the creators of Call of Duty: Modern Warfare 2 made new maps available for purchase. People undoubtedly purchased these map packs because it was something new to keep the game from being too repetitive. The practice of adding new features most likely stem from the falling revenue of a given game.

Contemporarily, we are starting to see this stringent money making strategy with which online video game producers are releasing what we can call "full-partial games." These games are not to be confused with demos or pre-release copies; they are the actual game, however with missing online playable content (even sometimes offline). Two of the most popular 2010 games have or will feature aspects of this strategy. For example NCAA Football 11 for the XBOX 360 & Playstation 3 consoles, released its game in July 2010 for $59.99. Once purchased, the game could be enhanced by purchasing a "create your own school" mode, where an individual could create and develop one's own university football team and use that team while online. Similarly, Call of Duty: Black Ops, the most anticipated game which was released in 2010 (November 9, 2010), was with the standard retail price of $59.99 but with an option to purchase additional maps for online gaming. By releasing these games in their full nature yet with expansion potential, producers are able to initiate more demand for their product and thus sell the rest of the content separately from the game generating more profit.

Freemium games do not require a time-specific subscription in order for the consumer to participate. The player can download and play the full core content of the game without spending a penny on the game itself, but is granted the option to enrich their gaming experience through purchase of advanced content which may or may not only provide an improved gameplay experience, but which would allow and edge in performance in-game. A survey conducted specifically regarding purchases of additional content in-game found that over half of online game players made their purchases in free to play games. In this types of game in some instances it is essentially a requirement to purchase items to perform well within the online environment, but in others the manufacturers limit the items which can be purchased so as to only enhance the experience of the player rather then actually grant them a leg up when competing against other online players. One example of a free-to-play game with pay-to-play enhancements which can really contribute to a player's in-game success is the Korean based MapleStory which has generated millions of dollars in revenue and claims to have surpassed 100 million online players. League of Legends is a game which allows real money purchase of game-specific currency that can be used to buy things like outfits for characters, extra characters beyond those which are free-to-play, and other enhancements which promote more in depth gameplay but which do not ostracize the portion of the community that cannot afford extra expense.

Pros and Cons

Subscription:

Pros

Get money from the subscribers

Have more stable players

Larger secondhand market

More available capital to make the game continue

Cons

Limited the players

People may stop play because the subscription

Less advertisement income

May have less market compared to the “Freemium” models

Freemium models:

Pros

Doesn't limit the player at the first time

More income from advertisement and items selling

Make strong network externalities within shorter time

Cons

More risky

Less stable players

Less available capital to make the game continue

Fewer secondhand market

Making a Profit

Based upon simple economic analysis it can be safely stated that if there were no profits involved in the online video game industry we would not see the dominant market which serves as the focus of this discussion. Multi-player games, especially those played on-line, have immense Economies of Scale. Once the developers have the hardware base (servers, memory storage, etc.) they can support a continuously growing user base with nearly no additional cost. By keeping a desirable product this market has been able to successfully generate revenues in a variety of different ways. It has crafted an industry that didn't exist before the mid-nineties. Initial purchase, subscription fees, and freemium services are three of the most lucrative and observable ways for online games to make a profit, and it appears that these methods will continue to do well for this industry.

One reason multi-player games have become so popular is due to network externalities. For example, let’s say Taylor wants to buy Call of Duty: Modern Warfare 2. He could receive two different types of value from it. The first type of value that he would receive would come from the single player mode of the game. He would be able to play through it, and would not need any additional people to play with him. He would then be able to receive additional value when another person buys the same game. Once this occurs, he can play multi-player mode on the internet. The games value will continue to increase to Taylor as more people buy it. It works the other way as well. If no other person purchases the game (or he believes no one will purchase it) then it is worth much less to him. He could only have access to one part of the product. The positive network externality described above provides evidence as to why multi-player games are able to grow in popularity rapidly. It is usually beneficial for game producers to market their game in a way that allows for a high number of initial purchases in order to make the extra value available to consumers.

Advertising

With games that are visually stunning and deceivingly realistic, advertisements are fairly prominent. In racing games it is not uncommon to observe billboards emboldened with the name of the manufacturer of the world through which you maneuver your speeding card, nor is it unheard of that a specific brand or product be brought up not-so-discretely in the course of dialogue between your personal avatar and a non-player-character within the game. This is similar to advertising efforts made in Hollywood; just like in a movie, if the character in a game goes to pick up food somewhere, then a specific restaurant chain may be displayed. Or if the character is walking down a street, certain department stores or even banks are made visible. Not only are there advertisements inside the product itself, but surrounding the game there may be plenty of opportunity for third party marketing. Banners and pop-ads are commonplace when accessing browser-based online games, and even in some console specific markets such as the Xbox Arcade. The game itself could be an advertisement as well. For example the game America's Army was made specifically as a recruitment effort for the United States Military. Call of Duty's Modern Warfare 3 took gaming advertising to whole new levels with the introduction of the new game. The popularity that the Modern Warfare name has achieved with its consumers, has called for advertisements in magazines, Facebook, and on television commercials. Facebook allows its users to "like" any of the recent Modern Warfare products and this gives Facebook users the ability to connect with friends who use it as well. The makers of Modern Warfare see this as a way for Facebook users to connect with each other, since if friends on Facebook see people who "like" Modern Warfare, they may me more likely to go purchase the game for themselves. Another interesting advertisement scheme that the game Modern Warfare 3 introduced to its followers was with Jeep. Jeep introduced a new model that was branded Jeep, the Modern Warfare 3 edition. The fan base that has been created by the Modern Warfare game has taken to the streets and now everyday drivers know who plays Modern Warfare 3 and this tactic gives the game company an advantage because if non-users notice the Jeep branded with Modern Warfare 3 on the spare tire, they may be affected by the advertising and potentially be influenced to buy the game or buy the car.

Multiple Installments

Many games are able to carry on successfully through many iterations by carrying on from the success of a previous version. Bungie's Halo has come out in five different versions to date, and Rockstar Games' Grand Theft Auto has exceeded even that number. Loyalty to a particular game or brand can bring substantial rewards for manufacturers, so long as they maintain the level of quality which their consumers have come to enjoy. Not only does this provide the generation of revenue from a new game title, but also saves the costs of developing an entirely new and untested game model for distribution.

PC Single System

Today's console and computer games are made for home theater PCs, idea of a multiplayer game usually describes players who play together by using remote controllers that are either wireless or plugged into the game system. Aside from Local Area Network console systems, the maximum number of players on a PC is not a standardized number. However, as the number increases the amount of bandwidth and server demand increases. When this demand exceed its potential the server can crash. Due to the popularity of USB game controllers, PC multiplayer games are capped by the amount of USB ports equipped on their console, whether the USB device is supported on the operating system they own, and the type of controllers a particular developer wants to support. For home console games, developers often use split-screen, single play area, or hotseat from the viewpoint when interacting with the game. Each type offers their benefits and is more appropriate than others depending on the type of console and genre of multiplayer game.

Splitscreen

Split screen is mostly used in non-networked for multiplayer video games. A split screen can be either in a two-player form or a four-player form on one screen. The videogame display is divided into equally-sized areas so that the players can move about without having to be in the same area. Splitscreen was widely popular before World Wide Web connection allowed users to interact in the same from different geographic areas. During its most popular usage splitscreen was used for genres like first person shooters and racing.

Single Play Area

A single play area camera moves the same way as if you were playing the game by yourself. All the players are viewed on one screen and are limited to move about together rather than able to explore different areas at once. Early arcade games such as the Simpsons, gauntlet, and street fighter used this type of interaction. Common game genre for this type include: adventure, role playing games, cooperation, and fighter.

HotSeat

The term Hotseat is used to describe opponents who take turns being the operator of one controller for the same game. Because of this it is more commonly known as turn based games. These types of games are slower pace and allow players to decide on what their moves will discretely rather than simultaneously. Game genres include strategic, puzzle, and simulation games.

The Different Multiplayer Modes with Advantages and Disadvantages

There are three different modes of multiplayer games which include single-head, LAN, and Internet.

Single-Head

Single-head games involve one computer with one display and can use multiple controllers. This mode can either be split screen like in Goldeneye 007 or this mode can place the players into a shared view such as Super Smash Bros.

Advantages

Can be less expensive for users only using one computer or monitor.

Disadvantages

Limited to players among geographic neighbors.

Games whose design requires a first-person or behind-character view must split the screen, giving less screen area per player.

Generally limited to genres that either are turn-based or work well on a gamepad.

Handheld play is for turn-based games only.

LAN

LAN games are games that involve multiple computers on a local area network such as Starcraft.

Advantages

Permits for handheld play.

Permits for real-time use of keyboard and mouse.

Use of full screen allows for a more detailed first-person or behind-character view.

Disadvantages

Limited to players among geographic neighbors.

Can be expensive with requirements of one computer per player and one monitor per player.

Requires one software licensed per computer.

Internet

Internet games involve multiple computers on the Internet. Many LAN games have become accessible through the Internet by private matches or matchmaking. The Internet allows for games with large persistent worlds, such as massively multiplayer online role-playing games.

Advantages

Use of full screen allows for a more detailed first-person or behind-character view.

Allows for real-time use of controller, keyboard, or mouse.

Large amounts of players.

Allows for handheld play in select hotspots.

Disadvantages

Pool of players consists largely of strangers.

Occasionally certain users causes other players to not enjoy the game.

Requires one computer per player and one monitor per player.

Monthly fee applies to Internet access and to many games.

Virtually all implementations require one software license per computer.

Players in geographic areas without higher-speed residential Internet access are at a severe disadvantage in real-time games.

Virtual economies

One unique aspect of online multiplayer games is the conception of virtual economies. A virtual economy refers not to the exchange of real world monetary funds for in-game rewards, but instead refers to the generation and accumulation of wealth and resources within a video game or other closed model. To avoid confusion, the existence of real money trfansactions for the acquisition of virtual goods is persistent and identifiable, but this is outside the scope of the virtual economy and refers to a mixed economy of virtual markets and secondary markets. Many games which have already been mentioned here involve virtual economies such as Asheron's Call, World of Warcraft, and League of Legends. These virtual economies can act in a variety of forms and either exist as persistent markets which largely adhere to global exchange markets under fixed exchange rates, or in session-based form where the funds necessary for a purchase are always in the same amount and can be acquired in a more or less predictable way.

Session based

In any given session-based game - such as a real time strategy game - when a user seeks to acquire new goods or inventory through an in-game purchase they are typically dictated to the same terms each time a session is started. In the game StarCraft II: Wings of Liberty by Blizzard Entertainment the player's objective is to micromanage a small outer space installation comprised of builder units and a base of operations. From these base components resources can be harvested and new buildings and units can be purchased, but always for the same purchase cost. Unless a large overhaul of the game is conducted via Blizzard Entertainment patching the client or in-game mechanics then this will continue to be the case.

Persistent world

Much more complex and dynamic, the virtual economies of persistent online worlds change based upon the intuitive principles of economics to which many of us adhere each day. In this manner players are given a set of fiscal and monetary rules which include a currency for the persistent world, constant exchange rates between currencies where necessary, and a marketplace for exchange. With these principles in place, players are then able to acquire wealth and items as they interact with one another and engage in the virtual world. If Player A were to enter a world and try to purchase an apple from a NPC (Non-player character) vendor in Town A, the price may be ten (10) gold pieces. But if during the player's travels through the game they find that Player B has, through their own adventures, acquired a surplus of apples and is selling them for eight (8) gold pieces, this is where the markets begin to emerge. When Player A and Player B are linked up through a forum or market the principles of economics become clearly represented. When these interactions are not just between two players but instead between millions, the economies become far more complex and involved.

Secondary markets

There are secondary economic markets which function outside of the developer's intention for the game. These markets do not include transactions between the consumer and the developer of a video game, but instead involve exchanges of real monetary funds between consumers for in-game goods or game-related goods.

Virtual Good Sales

As large scale games such as World of Warcraft continue to expand, new markets for in-game virtual goods have arisen. Some companies have tried to capitalize in this by offering special features to users willing to purchase special in game items for a small fee. In Softnyx's Gunbound, users are able to purchase items that increase their characters abilities and enhance the overall game play experience. Although developers are able to capitalize on new market, so are consumers.

Gold Farmers

In several countries, including China, there are large collections of players whose job is to collect in game currency in popular games and sell said currency for real money over the internet. These workers are known as "gold farmers" or "real money traders" (RTF). In game goods are purchased much in the same way any normal consumable good would be. Websites are set up devoted to the sale of in game currencies or items, and users are able to purchase them via credit or debit card. Recently, there has been some abuse of gold farmers in the United States and overseas. For instance, prisoners of jails within a country are forced to farm various games up to 20 hours a day in order to make a real world profit.

Selling Accounts

The most common form of virtual selling is the sale of online game accounts themselves. In similar fashion to gold farming, a large collection of users may accumulate wealth and skill status on a character with the sole intention of eventually selling the character to a consumer. The most common example of this is also easily seen in the game World of Warcraft. Through websites such as www.wowgoldfacts.com, users are able to purchase accounts for as little as $100 USD for low level accounts to as much as $1500 USD for the higher-end characters.

Power Leveling

The practice of power leveling involves the disclose of a user's name and password to a third party, sometimes a gold farmer, in order to advance a characters skill level or accumulate in game wealth for a player. This practice is not as common as the purchasing of virtual goods directly or selling of virtual accounts, but has seen a recent spike in the usage of these services has increased since the development of large scale MMORPGs such as World of Warcraft.

Long tail network effects

Persistent online communities have the ability to keep a game running long beyond when the graphics and other various components have since become obsolete. Long tail economics bolsters an idea that a long running video game can persist not based solely upon the direct, intended appeal of the game, but also upon the vitality of the community of that game. Diablo II, distributed by Blizzard Entertainment, was first released on June 29, 2000 and runs on software that was developed over a decade ago. Regardless of its relatively old age for the gaming world, Diablo II is still running strong. There is an extremely loyal following for this game that numbers in the millions, when combined with the following of Starcraft, another legacy game released by Blizzard in March of 1998.

internet censorship controls

Every country has its own internet censorship controls. Some country are more strict, some country are less strict. The different censorship controlling made every game developing company need to face a same problem: change their strategy for every country.