Can fantasy games make real money?

Gamers get hooked Online

It's been two years since the arrival of "Ultima Online," an Internet-based role-playing game and evolutionary successor to the renowned pen-and-paper fantasy world of "Dungeons and Dragons."

In that time, Ultima has managed to attract more than 139,000 adherents who spend an average 20 hours a week plying its make-believe environs known as Britannia. Each player spends about £6 a month to "live" in this virtual world, which distinquishes itself by continually changing even when a player is logged out. That translates into some $1.3 million in revenues per month for Ultima's developer, Origin Systems Austin, Texas.

Despite the stunning success of Ultima, though, other developers have pretty much left the market for multi-player role-playing games alone. Until now, that is. This week, two goliaths of gaming -- namely Microsoft and SegaSoft Networks -- will watch from the sidelines no longer. Microsoft will ship the fantasy role-playing game "Asheron's Call" to stores, while SegaSoft plans to begin public beta-testing of "10Six," its science fiction-based strategy game world.The new games should go a long way in showing whether these virtual worlds will go forth and multiply, or starve for lack of users.

The online virtual worlds appearing today aren't anything new, really. They capitalise on the same instincts for fantasy play that have prompted kids to play "Army" since time immemorial. The difference is that stunning 3-D graphics and ever more powerful processors transport the players into a realm that seem less imaginary and almost real. Players essentially assume a second and separate life online through their character.

"People are drawn in by the plot -- and stay because they have developed their role and are attached to the game," said Rob Alvarez, product marketing manager for SegaSoft's HEAT.NET gaming network."

The key to this veritable addiction: Virtual characters and property that players can nurture and develop, and a tight-knit community of players that spend nights chatting as often as they go "adventuring."

At any one time, around 20,000 Ultima Online players are online. "Once you have established a connection to the world, it's damn hard to give up the game and not get back online," said Jason Bell, producer of "Ultima Online." A newer game, Sony's "EverQuest," has even bigger participation numbers, with more than 150,000 active accounts. Recently, the number of people playing the game at the same time peaked to 50,000.

That kind of dedication makes up for modest initial sales of the games. Both "Ultima Online" and "EverQuest" sold 225,000 boxed copies for about $50 each, making them moderate hits by gaming industry standards. But add a monthly fee of $10 for each active account -- about $1.5 million monthly -- and the business becomes much more lucrative.

Eric Lempel, project director at The NPD Group, which tracks consumer markets, noted that, where most companies sell the software and move on, online game makers "have the additional revenue every month." In fact, the total revenue from "Ultima Online" and "EverQuest" to date come close to matching such big retail hits as "Command & Conquer" and "Big Game Hunter" -- and both games have the potential to go a lot farther.

Such performance explains Microsoft's and SegaSoft's desire to play in a market that most analysts consider too small to track."It obviously takes a certain kind of person to play these games," said Jeremy Schwartz, senior analyst at Forrester Research. "Yet, the whole community around the games -- the fact that people with gainful employment are spending thirty or forty hours online -- makes it much more interesting for companies."

Origin Systems, for one, has no doubts about the segment. After the coming release of the final sequel to its long-running "Ultima" series next year, the company's five development teams will eschew single-player games and instead focus on a variety of online multiplayer projects. "Ultima Online 2", which will succeed but not replace "Ultima Online", will be released next year, and the company intends to develop a game based on its Wing Commander universe.

Microsoft believes "Asheron's Call" will make the company a major power in this market as well. The company saw almost 80,000 people open up accounts on The Microsoft Network to register for the open beta test. More than 6,000 players logged on to watch the beta test's conclusion, which featured the end of the world, as staged by game creator Turbine Entertainment Software (Microsoft is the game's publisher.)

"We are really happy that 'Ultima Online' and 'EverQuest' have done so well," said Matthew Ford, program manager for the Microsoft Network and "Asheron's Call". "It validates what we are trying to do and shows that there is a market."

The rewards could be great: If "Asheron's Call" can match the success of Sony's "EverQuest," MSN could see its simultaneous online users double, from 50,000 at its peak today to more than 100,000. Still, the same loyalty that the current games enjoy, and that Microsoft and SegaSoft hope to engender, could present a hurdle for newcomers.

An informal poll of many "EverQuest" players online and in chat rooms found few who wanted to switch to "Asheron's Call." One player, who uses the online name Egwene_Alvere, liked the established community of "EverQuest." "After playing the game, I feel much more a part of the social aspect," the player said. "I won't switch."

"Ultima Online"'s continued success in the face of the runaway hit "EverQuest" says a lot about that sort of loyalty: Sony's entry into virtual persistent worlds basically doubled the size of the market. "Everyone's going to want to check out 'Asheron's Call,' " said Origin's Bell. But he expects "Ultima" users will stay with the game.

For Microsoft and Sega, success will be better defined by their ability to sign on new players than to win over the old players. Even Origin will test its players' loyalty when the company releases its second foray into the market, "Ultima Online 2," next year.

"We think the games will complement each other," Bell said. "But in reality, there are not a fixed number of people interested in these new worlds. We are not worried that one game will cannibalise the other. It's not a zero-sum game."

"We believe this whole medium is in its infancy. It's akin to the TV in the 1950s, " Bell added.