Microsoft Tests Rent-a-Game Market

Renting entertainment could be the wave of the future, and Microsoft isn’t about to miss it.

The company that brought us “Janus,” the digital rights management (DRM) scheme that allows subscription music services like Napster On The Go to exist, has announced a deal with Exent, of Bethesda, Md., a provider of “games on demand” technology.

Under the agreement, Microsoft will allow six of its most popular personal computer games to be delivered to online gamers through Exent’s on-demand technology, which is used by broadband providers such as Comcast, Yahoo, Bell Canada, Turner Broadcasting and RCN.

Licensed to the on-demand service — which costs from US$4.95 to $14.95 a month for access to anywhere from 50 to 300 titles — are Microsoft’s “Age of Empire,””Age of Mythology,” “Dungeon Siege,” “Mechwarrior,” “Rise of Nations” and “Zoo Tycoon” product lines.

Committed to Expansion

“We are definitely committed to helping expand the PC games market and the PC games industry so we’ve licensed some of our IP [intellectual property] on the games for Windows platform to Exent to put on their service,” Microsoft Game Studios Global Group PR Manager Genevieve Waldman told the E-Commerce Times.

Jarad Carleton, an IT Industry Analyst with Frost & Sullivan in Palo Alto, Calif., praised the Microsoft move.

“The concept is a good one because one of the well-known aspects of computer gaming in general is that the majority of the revenues from a game title will come within the first quarter it is released,” he told the E-Commerce Times via e-mail. “It appears that Microsoft is making a well thought-out business decision that should open the door to increased computer gaming revenues for the company.”

Evolutionary Leap

As for Exent, it’s happy to have Microsoft on board.

“The addition of Microsoft to our growing line-up of game publisher partners is a leap forward in the evolution of games-on-demand,” CEO Zvi Levgoren said in a statement.

“Customers will be pleased with the richness of our expanded content offering, augmented by the unique suite of usability features provided as part of our services,” he added.

Retail Angst

Almost as important as beefing up Exent’s catalog of 2,500 games is the message the move is sending to gaming retailers, some of whom are distrustful of the subscription model.

“Microsoft allowing us to distribute their titles signifies that it doesn’t see games-on-demand as a retail-competitive offering,” Exent Vice President for Product and Marketing Strategy Yoav Tzruya told the E-Commerce Times.

“One of the biggest worries of game publishers is that because they are so reliant on the likes of Electronics Boutique, GameStop, Best Buy and Wal-Mart to distribute their games, they don’t want to alienate them with distributing their games online,” he explained.

Not Cannibalizing Market

He revealed that Exent was able to induce Microsoft to dip its toes into on-demand gaming by persuading it that such a move wouldn’t cannibalize its retail sales and, in fact, expand its market.

One way it would broaden the market for Microsoft games is by extending their shelf life, Tzruya maintained. “After 12 to 20 weeks, a game is taken off the shelf by a retailer,” he explained. “Through games-on-demand, the shelf life can be prolonged and create additional revenue for the publisher not generated by the retail channel.”

Moreover, the audience for on-demand gaming is different from the that of the retail channel, Tzruya contends. He said that more than 50 percent of on-demand users are women and more than 40 percent are 35 years old or more. “Those aren’t the type of users going to EB [Electronics Boutique] and buying games [there],” he said.

Nevertheless, Microsoft appears to be approaching the channel cautiously. Only a few dozen titles, including six product lines, from its library ofsome 47 games will be licensed to Exent initially.

Hollywood Emulation

What Exent is trying to do with its technology is to create a release Window strategy similar to the movie industry, where a film is initially released to theaters, then goes to DVD and subscription broadcast TV, and finally to broadcast TV.

“Video games do not have a secondary release window,” he explained. “There is only retail.”

“By using gaming-on-demand, video game publishers are trying to create those additional release windows,” he said.

Death of Retail?

However, some game enthusiasts see on-demand gaming as poison to retailer and publisher alike.

Joe Blancato, writing for the WarCry Network, a nest of Web sites that attracts more than one million enthusiasts of games, technology and entertainment, observed of the Microsoft-Exent deal:

“It’s just another baby step toward the death of retail, that glorious day when we’re not paying $20 for a box and $20 for a game. Instead, we’ll probably just be paying $40 for just the game, but at least it’ll go into the developers’ pockets rather than a publisher.”

“If bandwidth were a stock, I’d start buying. Digital distribution is only getting bigger.”