Wednesday, June 20, 2007
Game Developers chase Serious Games Business Models
Via: Mass High tech News
The ideas for Serious Games technology -- from military simulation to personal health care -- are coming quickly for entrepreneurs, but establishing a business model is a different story.
The traditional model for many entertainment-based games -- a boatload of development before revenue, followed by huge amounts of marketing and retail distribution -- are not practical for the budding "serious games" industry.
Kent Quirk, for example, started CogniToy LLC in 1997 to develop entertainment-based games. The company was "moderately successful," according to Quirk, with a title called "Mind Rover," which sold about 20,000 copies in the late 1990s.
But now he is working on a game called "Melting Point," which has been built to educate both children and adults about the environmental factors of global warming by allowing them to experiment with various environmental, scientific and political factors in a simulation game. Quirk originally wanted to take Melting Point to consumers in the traditional gaming manner. But as the idea came closer to commercialization, he realized that he couldn't follow the same blueprint.
"Originally I was going to sell to the mass market as a downloadable game that took two hours to play," Quirk said. "But it's too difficult as a small company with limited funding, so I have simplified it to a 5-minute Flash game."
That short game will act as a marketing tool for a full-length game that Quirk hopes will be adopted by a partner and become server-based, where it can be sold to educational institutions or individuals.
CogniToy, however, is just one model in a nascent serious-gaming industry looking for a standard approach. Others, such as Compass Rose Games LLC in Marblehead and Dragonfly Game Design Inc. in Westborough, have adopted a contract model.
Compass Rose is working on a game that helps patients with diabetes modify their behavior to control their disease. The company works under a model in which it is hired to develop games for third parties. CEO Tom Hunter would not divulge client names.
The nine-person DragonFly, which was spun out of Worcester Polytechnic Institute in 2003, works on a similar contracting model. It has developed a budget-balancing game for the U.S. Government Accountability Office.
"We chose that model because it's more stable," said Michael Gesner, CEO of DragonFly. "You don't have to rely on royalties after the product is developed to move forward."
Lexington's Whatif Productions LLC develops simulation software for the U.S. military, COO Fred Skoler said.
Venture capitalists have tended avoid game companies because of the uncertainty involved, said David Rauktys, a partner at Burlington-based consulting firm Venture Advisors.
"Generally, VCs avoid a lot of traditional gaming companies because the success models behave more like Hollywood: It's a consumer-driven blockbuster model," Rauktys said.
Despite the uncertainty of a standard go-to-market model for "serious games," most insiders are optimistic about their commercial future. And while the serious gaming segment is still too young to have significant market numbers attached to it, observers think it could capture a portion of the traditional gaming market (expected to reach $44 billion by 2011, according to California-based research firm DFC Intelligence) over the next several years.
Dragonfly's Gesner added that the ongoing experimentation with business models is part of the maturation process, and that once someone sets a standard, innovation will follow.
"I think there is plenty of money to be made in this industry. It's just a matter of someone taking the ball and running with it," he said.