Company expects to profit by selling optional add-ons, such as extra weapons and game levels.
Sony online chief John Smedley reveals plan to release games free, charge for add-ons.
By Bob Sechler
DOW JONES NEWSWIRES
Top-notch online video games now cost upward of $30 million to produce, making it imperative that game producers expand the market for them, Sony Online Entertainment Inc. President John Smedley said at a video game conference Thursday in Austin.
Smedley said his company aims to do just that with a plan to break from its existing subscription-based business model and release a game title next fall that can be played free of charge.
Sony Online Entertainment, a division of consumer electronics giant Sony Corp., expects to more than make up for the lost subscription revenue by selling optional add-ons, such as extra weapons or game levels.
"We're going to be launching this quickly," Smedley said, though he declined to reveal the game title. "We see it as a powerful way of getting people in" to online gaming, because many video game aficionados are put off by subscription-based games.
The worldwide market for video games is estimated at about $12 billion, with online games accounting for $1.5 billion to $3 billion of the total.
Sony Online Entertainment is a leading maker of multiplayer online games.
Its titles include the hugely popular "EverQuest" and "EverQuest II."
Earlier this year, Sony Online introduced a Web site, called Station Exchange, where players of some of its games can auction off characters or game items to other players for real money.
The move was designed to give Sony Online a cut of an activity already happening on unauthorized sites.
Smedley said Thursday that Station Exchange is paying off.
"It's a real business," he said. "It has a very meaningful revenue stream, and it's growing."
But Smedley said online game producers must do more than simply find innovative revenue streams and tinker with their business models.
He also thinks future games must be designed to operate seamlessly across a variety of electronic platforms, whether it be standard desktop computers, hand-held game machines or cell phones.
"We want you to be able to log into your virtual world with any device, from anywhere in the world," Smedley told participants at the Austin Game Conference.