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The Place for ISPs in Gaming is as a Pipe What is most painful about the potential outcome of the elimination of net neutrality is that a typical access provider has few, if any, prospects of building a genuine business around gaming. No matter how magnificent their delusions of grandeur, ISPs have no true focus, no core IP to leverage, no pre-existing partners to prop up or acquire in gaming. In other words, if they kill off Blizzard Entertainment or Sony Online Entertainment, they will not receive any profit that would not immediately be absorbed in the call center handling customer satisfaction issues due to loss of existing games. Unlike video and voice, where mainstream ISPs tend to have at least some competency depending on their heritage (cable vs. DSL), most access providers have no idea about what it takes to create and maintain a viable value proposition in the world of gaming, especially online, interactive gaming. To date, not a single top gaming company has been owned or funded by an ISP – and with good reason. The first tangible manifestations of an ISP’s gaming strategy9 are little more than casual gamer portals, dozens of which are already on the market10 with marginal branding and success rates. Of course, the failure to date of a massively multiplayer online role-playing game to emerge from an ISP is not a particularly damning statement given that even top-notch developers have flopped in fostering true game communities (see Sims Online for example). However, the mere glimmer of success in multiplayer online gaming is nowhere to be seen for today’s ISPs. No set top box or other interface provided by an ISP can provide an experience similar to a console or PC, even for single player games. At best, it can be the platform for a casual gamer whose taste extends no further than card games. Given that online gambling is not something an on-shore company will want to touch with a ten foot pole, the upside on an ISP’s venture to provide games is highly limited in both reach and potential revenue per user, with annual gross/net revenues topping out at seven figures at most. On the other hand, building and maintaining a truly open pipe for low latency broadband can and does fetch a premium. If the ISP is not in the business of telling anyone what to play or how much to play, but simply sells a bigger, faster pipe, the upside is astronomically larger. For example, Verizon’s FIOS is expected to reach profitability by 2009 with potential revenues well into the billions. Compared with the pennies to be made on building another version of Solitaire for the set-top-box, there is no contest. Parallels with Mobile To see the gaming world of tomorrow without net neutrality, we can look at the fate of mobile gaming. When RampRate conducted a primary research study on mobile application and game developers, we saw that despite some bright spots, the majority of developers were a sorry lot. To list just a few complaints, developers: * Were forced to assume substantial business risk with limited upside due to draconian revenue shares; * Waited on overdue payments from carriers for months with no leverage to collect; * Had no access to the end consumer to determine customer satisfaction and potential for future offerings; * Lived and died by their placement in portals or “decks” which was determined by methods that were at best inscrutable and at worst corrupt and arbitrary; * Were repeatedly let down by operators, distributors, and retailers in developing coherent marketing resources. In short, when the network controlled the content, developers could not effectively iterate towards improvement or be fairly rewarded for their accomplishments. Their businesses and products suffered, which in turn severely retarded market development. Mobile gaming today is probably better on an original GameBoy than on the latest smartphone. And for all the limitless possibilities of using unique portability and location features to create new gaming communities, there is no World of Warcraft or Everquest or Second Life on mobile. If IP networks become akin to mobile networks in their restrictiveness, we may all find out why billion dollar revenue generators such as these die off. What Next? The course of action is clear for each party involved. Gaming communities are powerful, profitable, and yet very fragile. Hasty change in this area can drastically undermine that which has already been accomplished – reducing the total size of the pie to the point where no entity will benefit. Regardless of position in the value chain, we should take careful steps towards change while retaining the basic premise of net neutrality. Specifically, we recommend the following steps: * For ISPs — If ISPs are granted veto power over packets in their networks, the best course of action is to let gaming live as it does today. Considering the load on call centers, the publicity fallout, and the resultant future regulation that could be more stringent than that proposed today, any move to restrict gaming carries dangers far in excess of potential rewards. ISPs should understand that gaming is not a core competency in any sense, and better revenue opportunities from packet prioritization exist in taxing Google and locally monopolizing VOIP instead. By far, the best value proposition in this industry is to become the best pipe a gamer can buy, and make fast, neutral access a strength of the portfolio. * For developers and publishers of online games — Flexing some muscle as both big spenders and influences on the user is the optimal path for guarding the status quo. Given that operators of online games have spent millions on network infrastructure and hosting contracts, directing the spending to ISPs that commit to keep their network neutral can be extremely powerful. From a consumer perspective, gaming companies have on occasion succeeded in forcing regional European monopolies to build better peering networks because they directed users to complain to the ISP about slow performance. It may be difficult to invigorate the entire horde of gamers to engage in direct political action (to paraphrase South Park , “how can you mobilize that which has no life?”). But game developers have many carrots to dangle in front of an unmotivated user – from virtual gold to über equipment -- and creativity is their strong point, so perhaps some incentive can walk the fine line between mobilization and buying petition signatures. * For commentators and press — The media should understand the value and fragility of the online communities being threatened. Instead of focusing on video as the dominant metaphor of net neutrality, there are profound stories to be written about gaming as a social network that, in mere months of existence, has already produced deep human relationships — passions, jealousies, even marriages. There are stories about how it added billions to our GNP and became a top export from the U.S. to Asia ; how it helped push the boundaries of software and hardware development; and how it added cross-cultural and cross-continental communications in a fragmented world. Each of these stories bears a mention about how it is threatened by the loss of net neutrality. * For defenders of net neutrality — The coalition built to protect net neutrality should explore the ramifications of gaming as a threatened species. Potential allies exist in publishers, developers, network operators, and players. Gaming also opens up legal avenues to finding precedents for blocking packet prioritization on the basis of the irreparable harm done to gaming communities. Conclusion Out of all the victims of the loss of net neutrality, online gaming is likely to be the most fragile and irreplaceable. However, the immediacy of the harm and the lack of any tangible alternatives by ISPs may serve as sufficient cause to block actual widespread packet prioritization policies with regards to online games, whether by overburdening support resources (bottom-up action) or by tying up the matter in courts under the principle of irreparable harm (top-down action). For more resoureces about Sourcing Advisory and more related subjects with Sourcing Advisory Services please review this website http://www.ramprate.com
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