Making sense of a complex world Online gaming : Real issues in virtual worlds
Media Industry Accounting Group
Online games can be categorized by how they are monetized (i.e. how the game enjoyment experience is sold), and by game type and genre. Delivery of an online game to paying and non-paying players often involves the following roles. These different roles can be carried out by different entities or one entity may serve one of more of the roles.
IAS 18 Revenue recognition does not provide industry-specific guidance and indeed was written long before online gaming even existed as a concept!
Online games, Game types, IFRS guidance, Virtual Items, Virtual Currencies, Multiple Element Arrangements, Unused Currency and Unused Items
What are the most common online gaming business models?
Online games can be categorized by how they are monetized (i.e. how the game enjoyment experience is sold), and by game type and genre.
Monetization: Subscription-based games are monetized by either a periodic subscription fee, a download fee or other usage fee. Non-subscription-based games are typically free to play (lsquo;freemiumrsquo;) but are monetized through the sale of virtual items or other premium content to the game player (lsquo;gamerrsquo;). Successful monetization of a freemium game involves creating a gaming experience where players are incentivized to spend money on virtual items that enhance overall enjoyment. A virtual item represents either the digitization of a real-world product (e.g. virtual hat) or a digital concept with its own meaning within the game (e.g. power, magic, special ability).
Game types: Games can be for a single player (solo) against pre-scripted rules or for multiple players in a world designed to foster collaboration and/or competition. The types of online games can be summarized in many different ways but perhaps most commonly as follows:
– Large multi-player games – often termed lsquo;massive multi-player online gamesrsquo; (MMOGs), these games are characterized by longer playing periods and high game intensity. The gamer makes a significant emotional and/or cognitive investment in the game, and game play may last for a few hours per session, with many such sessions. These games are typified by the virtual gathering of multiple players in the same online environment (via internet connection), with gamers often cooperating or competing in the context of an epic adventure or thematic experience. MMOGs typically require dedicated software to be downloaded through which the game is delivered and played on computer screens of video game consoles. Large multi-player games can be delivered on a subscription or non-subscription basis.
– Web games – also known as browser game, these games are played over the internet via a web browser, generally on PC. Web games include all game genres (such as hardcore games, mid-core games, casual games, social games etc.) and can be single-player or multi-player. Unlike MMOGs that attract more hardcore players, web games appeal to a wide spectrum of age groups and demographics due to easy and free access. Also, they are often played in more frequent, shorter sessions compared to traditional MMOGs. One popular type of web games are those social games played on social network platforms. Web games typically do not require any software installation apart from a web browser or sometimes browser plug-in. Web games are often free-to-play but players can choose to purchase virtual items to enhance the game-playing experience (the lsquo;freemiumrsquo; model).
– Mobile games – are those games played on smart phones, tablets, PDAs and other mobile devices. They share a lot of the same characteristics as web games, such as that they include all game genres, can be single-player or multi-player, and appeal to a broader audience. However, mobile games are even easier to access than web games so people tend to play in even more frequent and shorter sessions. Due to the limitations of the screen, mobile games tend to be less complex and include more casual games and social games. Unlike web games, mobile games require the installation of software known as the application (lsquo;apprsquo;). Apps are generally downloaded by players from mobile app stores but sometimes are pre-installed by mobile carriers and mobile device makers. Mobile games can be played both online and offline. The pay-per-download model is most common but subscription-based and freemium model are also becoming more popular. With the development of cross-platform delivery of content, publishers are increasingly delivering a seamless connection between web games and mobile games. Gamers are able to play their chosen games on both their computers and their mobile devices.
Game genres: Within both single –and multi-player online games there are numerous genres including action, sports, mystery, fantasy, adventures, science fiction, and so on. Often, the game environment is adapted from a popular trademark (brand), book or movie with the right to use such intellectual property licensed from another party.
Who have the key roles in delivery?
Delivery of an online game to paying and non-paying players often involves the following roles. These different roles can be carried out by different entities or one entity may serve one of more of the roles.
Game developers combine programmers, graphic artists and other specialists to develop the code and intellectual property (IP) underlying a game. Game developers may be involved in po