Linux Gaming News

A primer on online gaming

“THIS IS our most recent family portrait, we’re all level 80 and we’re all riding our Frostwolf howler from the PvP Alterac Valley,” said Karen Burnitt, a middle-aged American and mother of two, in a youtube video entitled “The World of Warcraft Family,” as she points to an image of her family as their online game characters on the computer screen.

World of Warcraft (WoW) is a massively multiplayer online role-playing game (MMORPG) by American video game developer and publisher Blizzard Entertainment, Inc. Released in 2004, its popularity is limited to the US — it has been recognized as one of the most dominant online games in the industry worldwide.

MMORPG is a sub-genre of massively multiplayer online games, better known to the gaming community as MMOG.

Blizzard’s holding company, Activision Blizzard, Inc., declared in its annual financial report to the US Securities and Exchange Commission earlier this year that WoW accounted for 89% of Blizzard’s consolidated net revenues, which amounted to $4.4 billion in 2010.

The 2011 Guinness World Records Gamer’s Edition listed it as the most popular MMORPG by subscribers, and as of June this year, WoW is the world’s most subscribed MMORPG with 11.1 million subscribers.

Over the last decade in Asia, online gaming has been popular mostly in China, Korea and Japan. Forbes online reported last week that NetEase — a Chinese internet tech company who acquired the rights to distribute WoW in China two years ago — continues to profit from its production of the game and reported $275 million in revenue in 2010.

The rest of Asia has been catching up over the last few years. Niko Partners — a research firm focusing on the Chinese and Southeast Asian game markets — released its Southeast Asian Game Market Regional Report this year where it named the Philippines as one of the “fledging game markets” in the region, along with Indonesia, Malaysia, Singapore, Thailand, and Vietnam. The firm forecast that the online games market in the region will increase from $405.7 million in 2010 to $833.7 million by 2014.

Niko expects that “by 2014, there will be more than 90 million gamers throughout these six Asian emerging market,” pointing out that “Indonesia, Thailand and Vietnam present the most intriguing opportunities for online game publishers over the next several years.”

According to Kail Fajardo, marketing and brand manager of Cubinet Interactive Philippines Corp., the local online gaming industry has grown over the past few years. “We have had a number of foreign companies invest in the Philippines to tap the local market, which is a strong indicator of the potential of the gaming industry in the [country].”

He attributes this growth to the availability of technology to an increasing segment of the country’s population. “More and more people are exposed to entertainment that has an online platform, namely online games. Thus the target market is continuously growing without the need to promote the platform itself.”

Miguel Bauza, vice-president for marketing of publicly listed gaming firm IP e-Game Ventures Inc., similarly told BusinessWorld in an e-mail interview that “[the local online gaming industry] has definitely been growing for the past several years.” He noted that there are at least two to three new game publishers every year.

Two factors are driving the industry, he pointed out — cost and accessibility. “Cost, because gamers play only P10 to P15 for an hour of entertainment and fun. It’s one of the cheapest or least expensive forms of entertainment.” Plus, “with more than 15,000 internet cafe’s nationwide, strategically located near residences and high traffic areas, online games [are] very accessible.”

The latest data which Mr. Bauza has pegs the number of online gamers in the Philippines at 12 to 14 million.

What are online games?

For this article, online gaming will be defined as a game that requires an internet connection but is not online gambling. According to the Wikipedia page on Online games, “online games can range from simple text based games to games incorporating complex graphics and virtual worlds populated by many players simultaneously.”

These games can be found in many forms on web browsers, and mobile and downloadable installations for personal computers. Primary examples of these are: Farmville, which, according to the 2011 Guinness World Records Gamer’s Edition, is the most popular facebook game; and Angry Birds, which the top paid-for App game in most countries; and, of course, WoW, an MMORPG.

Farmville and Angry Birds may be considered as casual games distinguished by simple rules and requiring no long-term time commitment, as oppose to an MMORPG, which is more complex and time-consuming.

“An MMORPG is a type of online role playing game where a large number of people play and interact simultaneously. People assume different roles and play them out in a virtual game world,” explained Mr. Fajardo.

“This usually takes a long time; players can play an MMORPG for years and still not reach the maximum potential for a role.”

Cashing in

Most gaming firms like Cubinet and IP e-Games provide their games for free. To make money they offer the purchase of “top-up cards” which translate to virtual cash which can be used in the game’s online item mall.

“The cards are there simply to enrich the playing experience of the players. These top-up cards are used to purchase in-game items that will help make their characters stronger, more powerful, or simply more fashionable,” states the explanation on the IP e-Games web site.

“There are certain advantages to those who are willing to purchase [items] via an online Item Mall (or cash shop). Items in the Item Mall are either slightly superior to their free counterparts or are [more] time consuming to acquire for free without paying,” said Mr. Fajardo.

For his part, Mr. Bauza sees the potential of online gaming as the next big step for advertising. “It’s non-obtrusive, very interactive medium for advertisers and it works 24/7.”

Advertising methods typically seen in online games are In-Game Advertising (IGA) or Advergaming. IGA refers to advertising in the game platforms while the latter is a game specifically made to advertise a product.

Media research firm Screen Digest reported in 2009 that spending on IGA is expected to reach over $1 billion in 2014, which will account for around 1.5% of global spending on digital advertising.

It is also interesting to note that US President Barack Obama used IGA as part of his election campaign back in 2009, pasting his face on billboards found across the virtual race-track of the racing video game Burnout Paradise.


So, who play these games? The answer may surprise some who expect this to be the purview of teenaged boys.

According to a June report by the Entertainment Software Association (ESA), the US trade association of the video game industry, 82% of gamers were adults (18 and above), with the average age being 37.

The majority were between 18 and 49 years old, followed by those over 50, with aged 18 and below making up the smallest slice of the pie.

Fifty-eight percent of these gamers are male and 42% female. “Women age 18 or older represent a significantly greater portion of the game-playing population (37%) than boys age 17 or younger (13%),” said the report.

According to the report, 19% of most frequent gamers will pay to play online games, with the top three most often played online game genres being: puzzle, board game, game show, trivia, and card games; action, sports, strategy, and role-playing; and persistent multiplayer universe.

Mr. Fajardo said that Cubinet gamers come from all walks of life. “Some of our consumers belong to the generation that experienced the abrupt shift to the digital age with the advent of the internet in the country, while others are one or more generations ahead, born into an age where the internet is practically part of our lives and the personal computer is viewed as a common household appliance.”

He added that “those who are not fortunate enough to own a computer and pay for internet services, rent computers and play in computer shops.”

Casual web browser games vs MMOGs

Mr. Bauza noted that at present, casual web browser games form a larger chunk of the local market. However, he commented that these casual games are doing a favor to MMOG by introducing them to the joys of online gaming.

“The ones who will eventually want something more complex/in-depth will eventually graduate or move onto our type of games.”

Both Cubinet and IP e-Games mainly publish MMOG’s.

Cubinet’s biggest consumers and targets are the most competitive players on its servers. “They rally people to their cause and spend significant amounts of resources to get an edge in-game,” said Mr. Fajardo.

On the other hand, Beatrice M.V. Lapa, a producer at Anino Games Inc. — a game developer producing casual games for the international market — said that casual games are attractive to Filipinos because of their ability to start and end play time depending on an individual’s schedule.

“Hardcore games require a lot of time and commitment, and as we grow older, those are two things that we have less and less of,” she said.

The advantage of casual games, Mr. Fajardo points out, is that there is virtually no installation necessary and they can be played on any computer that has a browser with the appropriate plug-in installed.

But he noted that “people who enjoy casual games more than full-fledged MMOG’s are less likely to continue playing MMOGs [when introduced] to them.”

He added that although casual games can also provide depth, they are still limited. MMOGs have the advantage of providing a fuller experience to gamers, in terms of graphics, gameplay and depth.

However, Ms. Lapa does not see a conflict between the two because of the gaming industry’s flexibility.

“Many new games (and gaming platforms) are actually just hybrids of old ones. Like, for instance, many MMOGs used to be client-based (meaning you need to install a game-specific software in order to run them). Now we see many browser-based MMOGs, like Battlestar Galactica Online, which only need a browser to run them.”

eSports and Starcraft

Forbes’ online tech contributor, Paul Tassi, described eSports as “a foreign term to some, but a lifestyle for others.”

In an article published last April, he recounted that this year, many competitive video games can be played at a professional level. Aside from Halo, Call of Duty and Counterstrike, which have had pro leagues for years, “one title has spawned a world-class sport unlike any other, Starcraft.”

Starcraft was developed by the same makers of WoW. It is a real-time strategy video game set in the 26th century for the personal computer, and may also be considered an MMOG. The game is still being played 13 years after its original release.

Its sequel, Starcraft II: Wings of Liberty, released in 2010, was ranked by the ESA as the top-selling computer game of the same year (based on the units sold) — trumping the expansion pack for WoW, which ranked second.

According to Mr. Tassi, “the rise of Starcraft as a legitimate sport started in South Korea, where the best players are often treated with the kind of celebrity status an actual professional athlete might face.”

In fact, in 2008, Guinness said the game offered the “largest income in professional gaming,” and had the “largest audience of a game competition” for the final SKY proleague season 2005 held in Busan, South Korea, in which 120,000 attended to watch the event.

SKY is an acronym for the three most prestigious universities in South Korea: Seoul National University, Korea University, and Yonsei University.

One of the reported high earning pro-gamers is Lim Yo-Hwan (better known by his Starcraft alias “SlayerS_BoxeR”). In 2010, his earning came in at around $400,000, with additional endorsement contracts which bring in an average of $90,000 per year. Most in the top 10 highest earners are Korean pro-gamers.

Mr. Tassi pointed out that locally it was only recently, with the release of the second installment of the series, that “[Starcraft] started to take hold in a similar way that it did in Korea and interest appears to be growing exponentially.”

The best players in the game usually have a huge and loyal fanbase who watch their favorites — both live and on the internet — play in leagues and tournaments around the world.

The Wall Street Journal reported last August that Starcraft II became the newest barroom spectator sport, with fans organizing so-called Barcraft events, taking over pubs and bistros from Honolulu to Florida this summer. “For sports-bar owners, Starcraft viewers represent a key new source of revenue from a demographic — self-described geeks — they hadn’t attracted before,” the report said.

John Gaudiosi, Forbes online tech contributor, attributed the pro gaming explosion in the US to the live streaming of video game competitions across the nation and around the globe. The most recent event of the US based Major League Gaming (MLG), which includes Starcraft II competitions, attracted 20,000 spectators to the Anaheim Convention Center and delivered over 35 million stream view.

“With over 1,000 gamers from around the globe competing, viewers from 171 countries watched four live streams during the three-day, double elimination tournament online at for a total of more than 2.6 million hours of video consumed.”

He speculated, “what advertisers… love about these events is that gamers are glued to their screens. The average user time per stream was more than three hours… The growing number of people attending the live events are exposed to all of the major sponsors.”

eSports and online gaming in the Philippines

In an earlier report by BusinessWorld, IP e-Games mentioned that its target was to amass 1,000 internet cafes in two to three years, aiming to hit P5 billion in revenues. The acquisitions are in keeping with the firm’s strategy of creating a digital consumer platform.

The firm already has three brands under its belt — Netopia, I.T. Log Park, and Cybr (under CyberOne Technologies).

“We want to legitimize and professionalize online gaming.” said Mr. Bauza, while Mr. Fajardo added that “with the competitive and resourceful nature of Filipinos, there is vast potential for eSports here in the Philippines.”

However, he noted that eSports is far from mainstream locally, especially when compared to the likes of China, Korea, Japan, Europe, and the US.

“Local culture has yet to accept it like it has accepted basketball, boxing or billiards. I believe that as more generations pass in this digital age, the acceptance for eSports will keep on increasing to a point that eSports will be held in high regard locally.”

Mr. Fajardo is highly optimistic about the online gaming industry’s future in the Philippines. “What started as an alternative to non-online games is now very common, especially with the younger generations.

“More and more companies are tapping this growing market. More and more people are becoming aware of the online gaming industry and with the ease of access they provide, it is only a matter of time before online gaming gets a significant share of online entertainment enjoyed by everyone.”

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