A big fish in large ocean
Without a doubt, Kesmai represents the high end of the online gaming gamble. A subsidiary of News Corporation (along with ARIES, their online technology company and publisher), Kesmai Studios is now the core of GameStorm, an ambitious and sprawling web-based multiplayer pay-for-play service. Bringing together Kesmai's existing stable of multiplayer games and blending in the whole of the Engage service and most of SegaSoft's HEAT Net, GameStorm is taking the all-you-can-eat approach to luring customers. With a now-standard $9.95 a month fee, the service offers games in nearly every genre, and lots of them. Using a standardized web interface, and standardized but custom-fitted game APIs and interfaces, GameStorm offers everything from 3D shooters (Aliens Online) to sports (Jack Nicklaus Online Golf Tour) to flight sims (three flavors of Air Warrior). Through Engage and HEAT, the service supports virtually every networkable CD-ROM game, and provides access to non-Kesmai games (such as Engage's When Darkness Falls or HEAT's Net Fighter) either for no extra charge or at a substantial discount.
All of this represents the culmination of many years of effort. Kesmai itself began life in the early 1980s, when John Taylor and Kelton Flinn founded a company around the ability of early computers to generate two-syllable words. "Kesmai" was one of those words, and a name was born. According to GameStorm CEO Chris Holden, it took some seven years and over $25 million to build Kesmai, and he credits the company's current success to the effort of its early visionaries, who he claims virtually invented the multiplayer gaming industry. Kesmai, though, has only recently made the move to the world wide web, with the GameStorm experiment; for most of its life, it was beholden to online hosts like America Online (AOL), and to a large extent still is. A subset of Kesmai's most popular games is available on the giant online service, despite a messy lawsuit that has embroiled Kesmai and AOL for nearly a year now. Indeed, it was the love-hate relationship with AOL that was the inspiration for the GameStorm gamble.
Holden isn't reticent to discuss GameStorm's origins. "It became clear that we were in a position of being overly dependent on a single huge distribution partner," he notes, "and that's where most of the business was coming from. He notes that the other companies that have tried to turn a profit with Internet-based game services have so far lost over $100 million "So you ask why the hell are we trying it now? Because when we looked at the situation with AOL and compared the revenues coming from AOL with the revenues coming from all our other wholesale partners, we realized there really was no other option, if we were going to try to get healthy again, but to say 'ok, we're now going to look to the web, we're going to try to do what no one has succeeded in doing before, and that is to build the first viable web-based game service.'"
The GameStorm CEO feels Kesmai went in to the whole experiment with their eyes open, aware of the dangers. "So, we said, 'let's study what everyone else did, and let's learn from their mistakes, first of all. Let's find a business model that actually makes sense, both to consumers and to us, and let's pull in good partners so that we can consolidate the threads of the industry.'" The idea was to combine the variety that the matchmaking services, such as the Total Entertainment Network (TEN), the Microsoft Internet Gaming Zone, and Mpath offered, with the depth that massively multiplayer providers such as AOL's WorldPlay, Engage, and Kesmai itself offered. Simply becoming a matchmaker wasn't going to cut it: "You can't really charge for that, because it's available for free in multiple places on the Internet." "That," Holden emphasized, "you can charge for, that's really not available for free anywhere, and hasn't been historically. So we figured we needed to pull both these threads together, because they are two distinct audiences and it was time to get some consolidation going there." The result was GameStorm, which Holden claims encompasses "virtually every massively multiplayer game that exists."
GameStorm is nothing if not ambitious. In addition to offering a staggering array of games, the service also plans to provide exclusive computer game editorial content through a deal with the GameSpot online magazine, where GameSpot will offer content available only to GameStorm members. Members of the service will also be able to purchase HEAT Net premium services at a substantial discount (no details have been forthcoming), and will see only one, integrated billing statement each month. When asked how many paying subscribers the service currently has, Holden dodged the question. "We're not going to give out numbers just yet. We may in the future, but I can tell you that we launched it on November 21st [1997]…and this value proposition we have pulled together has really resonated with consumers." He was excited, he said, about the pace of subscriptions, and said they were running ahead of their already optimistic forecasts. Still, reality bites, and Holden was careful to emphasize that they weren't out of the woods yet. "This is a very large business…and and it's expensive to do what we do." He said it would be a couple of years before they had a real handle on how things were going.
Holden did admit that GameStorm needs nearly 150,000 paying customers, at $10 a month, to put the service in the black. "No [game] service has ever even come remotely close to doing that," he notes, though obviously a general-purpose service such as AOL has far more members. And GameStorm will continue to vend its wares through other channels, including AOL and Prodigy, even while the web remains the focus for the future. "We're putting a lot of resource and effort and energy into trying to build this GameStorm business into the first ever successful web-based game service." Clearly, Kesmai is hedging its bets, given the volatile nature of the online marketplace. Volatile, and litigious, it seems; the main reason GameStorm is even around is because Kesmai and AOL had a falling out in 1997, resulting in a major lawsuit and prompting Kesmai to set up shop on its own.
Still, GameStorm isn't waiting around for the courts to decide things. Though founded as a supplement to existing revenue sources, Holden plans for the web-based service to be aggressive in exploiting all possible profit centers. Advertising, commerce, and direct sales as well as subscriptions are all part of the revenue mix. Advertising, though, isn't expected to be a big player in the near term. "We look at it as a tiny revenue stream today that will grow increasingly important over time," the CEO says, "and we'll continue to go after it, but it's going to be years, years, before advertising money will sustain a service like this. And if there ever is enough money to do that, then you can stop charging subscriptions. Today, though, there's no other way to do it." Holden isn't too worried, though. While other pay-for-play games are generally one-product deals, GameStorm is much more versatile. "Is someone going to go to a car dealership where there are two cars sitting on the lot, or to a car dealership where there's 200 cars sitting on the lot?"
Of course, if the comparison is between two hundred Yugos and two Jaguars, the analogy might not hold up. As is always the case, the game's the thing, and in that area GameStorm has been trying to cover every base. With a mixture of internally and externally developed games, running the gamut from 3D shooters to card games, GameStorm hopes to draw in a wide cross-section of gamers. So far, the service's game offerings are a decidedly mixed bag, with the most interesting things still in beta and many of the existing games showing their age.
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