Q&A With John Taylor, Founder and Senior Vice President for Strategic Planning and Acquisition and Chris Holden, Chief Executive Officer at Kesmai Corporation

With the explosive growth of the Internet in the last two years the universe of online gaming has changed a lot. How has Kesmai changed during this time?

[CH] As the Web became ready for prime-time, Kesmai launched a major retail games service called GameStorm in November 1997. GameStorm is the definitive online gaming destination, and today has more paying subscribers than any other online games service. It offers the best "massively multiplayer" games from Kesmai and Engage, peer-to-peer CD-ROM play from SegaSoft's Heat.Net, and custom content including content from award-winning GameSpot. All this, plus the industry's easiest to install and use software and the very best customer support, for a flat price of $9.95 per month. GameStorm has garnered rave reviews and is the leading service, and the only one to focus heavily on massively multiplayer, persistent-world games.

In general, as the Web has grown in usage, Kesmai has developed and aggregated more general-interest games with easier learning curves and broader appeal (Godzilla, Aliens Online, Casino Poker, Classic Card and Board Games, Catchword, Jack Nicklaus Online Golf Tour, etc.).

With the seeming glut of online game services (MSN Gaming Zone, HEAT, Mplayer, etc.) what compelled Kesmai to launch its own competing service last year?

[CH] None of those services focuses on massively multiplayer games, and none really builds compelling community. These are the things that Kesmai has always done best, and no one was doing this on the web, so we waited until the medium could support it and dove right in. The services you list are fundamentally "dating services," which provide simple matchmaking for CD-ROM games; this is available for free all over the web (including GameStorm), and offers no real value proposition to the customer. They offer very little in the way of immersive, persistent-world, online-optimized games like we focus on. Plus, it is much more fun to play, say, Air Warrior III with thousands of other people than to engage in endless deathmatches against one other person or a handful of other people.

Most people would say that the online game services are not making money at this point. What do you see the future bringing in this regard, and do you think that a "pay for play" model can compete in the long run with the "free matchmaking" services?

[CH] Most services are not making money at this point, but Kesmai has pursued a very different model, focusing on offering real value (massively multiplayer games and real community) and expecting to be paid for it. As I mentioned before, we appear to have generated more revenue from online multiplayer gaming than MSN Gaming Zone, TEN, and Mpath combined. We are in this for the long haul and are committed to making a profit for our partners and ourselves.

Who do you see as your biggest competitor? I would expect you would have to be a little afraid of Microsoft given its unlimited bankroll and its willingness to lose money for years to dominate a market it thinks is important.

[CH] We literally view everyone as potential partners. This industry is way too small at this point to worry about competition; we are all still trying to build a market, and those who focus too much on competition right now will have to take their comfort in winning the world's tallest midget contest.

At the end of the day how many online game services do you think are going to survive? What is your strategy for making sure that Kesmai has one of them?

[CH] Kesmai is the largest, oldest, most experienced, and most technologically advanced online games company in the world. It is owned by News Corporation, one of the world's largest diversified media companies. We are committed to the future of online entertainment, and believe it to be an important part of the general entertainment mix in the future. The biggest challenge is keeping fresh content flowing into our services, and making more people aware of the fun and value of online gaming. The CD-ROM matchmaking services you see today are not, in my opinion, significant long-term players - they have no business model since what they offer is available for free all over the internet, and there is very little ad/sponsorship revenue out there. The long-term players are the major media companies who understand entertainment, brands, marketing, etc., and who successfully learn about community and the merits and weaknesses of the online medium. In addition to Kesmai, I think the industry will be led by companies like Sony, Hasbro, and AOL. Some of the major CD/console publishers, like Electronic Arts, Activision, and GT Interactive, have an opportunity as well if they partner with experienced online gaming companies and really go after it.

Let's switch gears for a little bit and talk about the technology behind all of this. When you first started up a 2400 baud modem was just a glimmer in some inventor's eye. How have the changes in technology in the last 16 years most impacted game development for you? Is your life easier or harder now when you start work designing and coding a new game?

[JT] When Kesmai started we did our software development in Basic, Fortran, Macro36 and BLISS using 300 baud modems. The "real" world did not use UNIX system found at universities, they used mainframes with proprietary operating systems and languages. We had to use traditional MIS tools to do untraditional things. We spent many years fighting limits: memory, disk space, I/O rates and CPU usage all were tightly constrained. This painful experience has proven to be invaluable in today's environment of massive product scaling; we became experts in network and CPU efficiency.

The next big change came in 1987 when we launched Air Warrior, the world's first graphic online game, on the General Electric GEnie network. Since then, all of our games have had a client running on the user's computer to provide graphics, sound and game mechanics.

Our biggest technological change occurred in 1992 when we started running our games on local UNIX systems and networking them into the online services. This was the beginning of Aries Online Games, Ltd., our multiplayer games wholesale and publishing business. We developed the first version of the Aries System to shift our internally developed products to the open standards of UNIX and TCP/IP. This proved so effective that we quickly added products from two other game developers and became the first publisher / aggregator of multiplayer games. Since we already were using TCP/IP to communicate internally the shift to Web launch-able products was a simple matter of modifying the client to connect directly.

Online game development today is much more complex than in the past. Consumers expect online games to deliver the same level of graphics and speed as traditional retail games. To be competitive today you must match retail production values on the client side as well as creating a compelling, secure, scaleable persistent world on the server side. Our games today have state of the art 3D clients as well as massively scaleable and secure server systems.

I am sure that a lot of people envision a huge room somewhere with a bunch of computers churning away to run a service like GameStorm. What's the reality behind the technology that makes it all work?

[JT] In fact, we have several large rooms full of computers with large Internet pipes. In addition, we have servers inside the AOL machine room to handle their members. The most important part of our technology is the massively multiplayer game development and production system which we called the Aries Platform. Aries handles all the client / server communications, server management, real-time speech, customer complaint system, real-time performance monitoring and back office accounting operations. The Aries system will verify that a player's software is correct and can update it if necessary. The Aries system has all the tools required for a developer to create a game that seamlessly scales to thousands of users across multiple servers. We have developed a comprehensive Software Developer's Kit to support our third party publishing efforts as well as Kesmai Studios. Aries runs on HP/UX, Solaris and Linux and can indirectly operate games running on Windows NT.

Looking into the future, what do you think is going to have the biggest impact on your ability to deliver high quality interactive entertainment over the Internet technologically?

[JT] The two most exciting technological developments are 3D graphics accelerators and high bandwidth Internet connections. The graphics accelerators are making it possible to create lavish worlds that boost user immersion in the game. This is complimented by higher speed network connections that can rapidly download the client software and graphics. The higher bandwidth connections also permit greater use of voice connections between the players.

Computer games have always had a sort of "geek" quality associated with them. Do you think that is changing now? Who do you see as your target audience now and how do you think that will change in the next 5 years?

[CH] I see the product mix in the marketplace diversifying in a fashion not unlike books or movies - different genres and approaches for different audiences. Right now today, if you browse our GameStorm service, you will see a variety of options cutting across many genres and skill levels (from high-end simulations like Air Warrior to first-person shooters like Aliens to gameshows like CatchWord, to sport titles like Jack Nicklaus Online Golf Tour, to card and board games.) Like any major publisher or movie studio, we will create original content and aggregate third-party content to compete in multiple genres and categories.

Can you tell us a little bit about the development projects you are currently working on? What new games will Kesmai be delivering in the next 12 months?

[CH] Top Secret! I'd have to kill you if I told you. But expect three games that are completely cutting-edge, delivering box-game production values with true massively multiplayer capabilities.

In closing is there anything else that you'd like to tell our readers about Kesmai?

[CH] Go to http://www.gamestorm.com/ and see what real multiplayer gaming is all about. Or, if you prefer, you can play many of our games on AOL at the AOL Games Channel, and we can be found on many other services (Compuserve, Prodigy, Earthlink, AT&T WorldNet) as well.