New scramble among portal powers

In a whirlwind of activity, big cyber sites are getting serious about games. Here's why.

In a whirlwind of activity, big cyber sites are getting serious about games. Here's why.


By Rob Lemos, ZDNet News
November 23, 1999 4:24 PM PT

With its $207 million acquisition of the Gamesville.com gaming site, Lycos has validated a new truth about the Internet: Games are turning into a must-have feature for aspiring Internet portal powers.

A year ago, the big portals raced to outdo each other, dressing up their sites with sundry free e-mail and e-commerce features. But in the search to offer something truly different, portals are looking to entertainment as the next holy grail.

"Now, games are what everyone needs to have," said Doug McFarland, the senior vice president of Internet tracking firm Media Metrix.

That point was underscored by a rush of activity this week. On Tuesday, No. 1 portal America Online Inc. unveiled a deal with game giant Electronic Arts Inc. to run its online game channel. One day later No. 4 Lycos announced the Gamesville.com acquisition, a move analysts said would prevent the gap with AOL from widening.

On the surface, the acquisition changes little; Lycos only adds a couple of points to its audience. But there's a less apparent gain: The addition of Gamesville.com boosts the amount of time users spend on Lycos' Web properties by a whopping 22 percent.

Gamesville lets visitors play games, such as Bingo, Poker and Acey-Deucey, for free and gives the audience chances to win prizes. In return, Gamesville peppers the players with commercials from its advertisers. It's a model that allows a company to profile its users and target the advertisements as well.

The result: More than 2.2 million registered users glued to the Web despite frequent advertisements -- so much so that the site proudly claims, "Wasting your time since 1996."

Follow the leader
Internet tracking firms like Media Metrix have come in for recent criticism from Web industry executives who complain about the accuracy of the numbers. They contend that the methodology doesn't fully take into account the number of users on their sites, let alone the amount of time spent there.

But as the focus shifts from page views to ad impressions and time spent, quality of reach is sure to become a major consideration in how Internet companies get ranked.

"Obviously, advertisers are going to look at overall reach, the size of the audience," said Eddie Ranchigoda, the product manager for the MSN Gaming Zone. "Only three percent of users have played a game online. There is a lot of potential for growth. As important, advertisers are looking at quality of reach and that is where stickiness is a factor."

To be sure, the portals need to offer what consumers want and broad-based games appeal to a general audience. Other gaming sites, such as Pogo.com -- which rents out its leisure games to sites such as Excite -- and Uproar are based on a similar strategy, said Jeremy Schwartz, senior analyst with market watcher Forrester Research Inc.

"Personalization of advertisements is pretty big," he said. "The audience is like a big focus group for (Gamesville). The data comes back and they can tweak the games in real time."

While the deal between Electronic Arts and AOL is similarly rooted in the search for new audiences, the EA-AOL deal is much more focused on delivering entertainment, said Mark Blecher, vice president of marketing and e-commerce for EA.

"The Internet has been successful in delivering information. It has been successful in making communication easier and allowing e-commerce, but it really isn't that entertaining of a place," he said. "Our venture (with AOL) is about making the Web a more entertaining place."

In contrast, Gamesville is less about gaming and more about direct marketing. Lycos CEO Bob Davis put the focus more on Web traffic than on entertainment. "The addition of Gamesville to the Lycos Network adds to our revenues, grows our average daily usage minutes by nearly 20 percent and adds depth to our direct marketing efforts," he said.

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