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RealArcade makes online games available

Some of the games on Real Arcade's Web site include racing, action, strategy, Sim, card and casino

By Dominic Gates

(IDG) -- The electronic games industry, a $6 billion-a-year software business, is expected to boom online when game consoles get networked. RealNetworks is betting that growth will happen sooner on PCs.

The Seattle-based streaming media market leader, in a move that aggressively expands its business beyond its core music and video distribution operations, announced on Monday a new consumer games service to capitalize on the expected growth in the market.

The launch of the service comes as all eyes in the gaming world turn to the E3 electronic games conference, which opens this week in Los Angeles. There, the focus of most attention will be the looming game console war between Microsoft, Nintendo and Sony. But if the RealNetworks model succeeds, the approach could shift the balance of power away from console games and toward PC games.

Dubbed RealArcade, the service aims to broaden the market for electronic games by distributing them online in a simple, manageable format for a mainstream mass audience. The games will sell for $10 to $20 each. The big question: Will enough people pay? It's a bold new business play in the online content arena.

"The big thing is bringing rich CD-quality games to the mass market," says Andrew Wright, general manager of the games division at RealNetworks. "The same will happen here as happened with online music distribution. It'll be big."

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RealNetworks is not quite the first mover in this market. Last week, AtomShockwave began selling video games at its Shockwave.com entertainment site. But given RealNetworks' huge audience reach -- it claims 200 million registered users for its RealPlayer streaming media player and already has some 3 million gamers downloading from a free Web site -- it has a chance to make a bigger impact.

The RealArcade service aims to address the frustrations of casual game players, who find it difficult to find suitable games through portals such as Yahoo! Games. Consumers will download RealArcade as a free piece of client software to their desktops -- like RealPlayer or AOL. (AOL Time Warner is the parent company of CNN.com.) When opened, this will then serve as a portal to available games, which the user may preview before buying. The service will categorize available games and store and manage all games purchased.

All of the RealArcade games will be certified virus-free and protected with digital signatures. And the service will speed downloads using a data compression-technology acquired when RealNetworks bought NetZip in January 2000. If a computer crashes, an online record of every purchase will allow a user to replace lost games for free.

At launch, the RealArcade service has some 120 PC games available. These include downloadable arcade-style action fighting games; simple traditional games such as checkers, card games and puzzles; and multiplayer online games. One typical downloadable game -- "Tex Atomic Big Bot Battles," produced by Monolith of Kirkland, Wash. -- is a 3-D arcade-style robot fighting game exclusive to the new service. It has the rich graphics usually associated with console games. True to the mass-market family-friendly stance the service aims for, there's no blood and gore (using fighting robots that end up as twisted metal is a standard game developer ploy when aiming for family ratings). And as an extra revenue channel, the game includes in-game ads: The robots go hulking past billboards showing video ads promoting Intel.

In choosing the PC as its games platform, RealNetworks is diverging from the currently crowded path toward advanced Internet-connected game consoles. Wright, who worked at Microsoft before joining RealNetworks in 1999, explains that decision as based on where the market is centered.

"We're focused on the Internet community," says Wright. "That market today is for PCs."

When the Microsoft, Nintendo and Sony game consoles do deliver connectivity, he points out, users will need broadband access to use it; in most homes that won't be available for some time in the living room or bedrooms where the games are played. In the medium-term future, mass-market connectivity will be through a DSL line or cable link to a PC. "It'll be three to five years before consoles are connected to broadband," says Wright.

Currently there's just one commercial niche for online PC games. Sony Online Entertainment, Electronic Arts and Microsoft sell multiplayer online strategy games -- such as "Everquest," "Ultima Online" and "Asheron's Call" -- to hardcore PC gamers. These games, which require initial purchase of a CD, have cult followings online and bring in respectable revenues via monthly subscriptions to continue playing. If Wright's analysis is accurate, PC gaming has time to expand and court a broader audience.

"The big debate at E3 will be over whether graphics and sound are king [as in console games] or whether we want to be able to play others at any time [as in Internet-connected games]," says Richard Doherty, an analyst with the Envisioneering Group. "Nobody has the answer yet. If network gaming wins, you can bet game console sales would slow."

In 2000, PC games racked up $1.55 billion in sales. Console games hit $4.1 billion. If bringing games to the PC masses works, then that balance could shift. While the makers of the PlayStation, GameCube and Xbox are battling for planet-domination, the game might be won elsewhere.