MPG-Net, GameStorm, Simutronics: Three from the online wars
Multiplayer meets multipayer in the online marketplace
by Robert Mayer 04/10/1998
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AOL and Kesmai duke it out in the courts The online marketplace is a tough place to make money. If the dispute between Kesmai and AOL is any indication, it's also a litigious place. Kesmai is one of the older online game providers in the business; America On Line (AOL) is the biggest online service on the planet. The spat between the two, which grew out of AOL's new WorldPlay game channel, gave birth to the Kesmai-centered GameStorm online service in 1997. Though naturally reticent to discuss particulars (the case is scheduled for trial sometime this Spring), GameStorm CEO Chris Holden was adamant about Kesmai's position. He maintains that AOL has used monopoly power to force competitors under, a tactic made possible, he claims, by AOL's dominant market position. "We had distribution relationships everywhere," he recalls, "including the Internet and the web, yet literally 950f… [our] revenue came through AOL." Given that Holden believes everyone outside of AOL is losing money hand over foot on the web—he cites TEN's losses, for example, at tens of millions of dollars with little to show for it—Kesmai had little interest in leaving the AOL fold. Yet their situation became untenable when Kesmai refused two offers from the online service to buy the company. Spurned by Kesmai, AOL purchased the moribund Imagination Network from AT&T, and reconstituted it as WorldPlay. With its own game service in place, Holden asserts, the harrowing began. According to Holden, AOL gave WorldPlay complete control over the games channel on the service, and killed off all the competition, "because no one of course wanted to subsume themselves under their competitor." He asks, "why would you do that? If you're Coke, would you agree to let Pepsi do your marketing and handle your brand?" Ultimately, it was he says a case of flight or fight. "If you couldn't afford to fight, you either rolled under WorldPlay or you were forced off the AOL service, and several companies went out of business because of this." Kesmai then turned to its corporate parent, News Corporation, and called in the lawyers, filing a thirteen-count suit that alleges, among other things, anti-trust and monopoly violations, trademark violations, and breach of contract. All Kesmai wants, Holden avows, is to make AOL "do the right thing." The entire online industry, he claims, has a stake in Kesmai's suit. "If they are going to try to control that market and shut out competition, since they own a multiplayer games company, then that's bad news for everybody." Size is the big problem: "They control this huge market. They just passed eleven million subscribers, and when they eat up CompuServe they'll got to fourteen million subscribers and they will be seven times bigger than all of their competitors combined," Holden laments. A copy of Kesmai's complaint is available at www.kesmai.com/press, and though it doesn't exactly match a decent novel for entertainment value, it provides a good summary of Kesmai's grievances against AOL. What's missing, of course, is AOL's side of the story; officials at AOL and WorldPlay, however, decline to comment on the lawsuit, preferring to let the case play itself out in the courts. It's likely, though, that from AOL's perspective, it's their service, and they have every right to set up their own games channel. This case points out some of the difficulties of carving out businesses on the digital frontier. Everyone wants a captive, paying audience, yet the Internet is built on choice and flexibility. Cooperation makes sense when trying to build a customer base, but once that base is built, suddenly it's like Highlander: there can be only one. Previous

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