At 63, Elnor Smedley seems an unlikely target for a video game industry that zeros in on acne-prone adolescent males.
These days, though, the silver-haired grandmother of five is the belle at a billion-dollar ball thrown by video game companies eager to court mainstream consumers via the World Wide Web.
Microsoft Corp., Sony Corp., Vivendi Universal and Electronic Arts Inc. are among several companies pouring vast amounts of money into online games. It’s a bid to both broaden the appeal of video games and establish long-term revenue streams through subscriptions to a constantly updated cache of games.
That strategy of selling digital fun as a service is the current rage among software and entertainment companies searching for ways to make money on the Internet and move beyond one-time sales of shrink-wrapped music and movies.
“Games take a long time to build,” said Erick Hachenburg, chief operating officer for EA.com, which in February paid more than $40 million to acquire Pogo.com. “And we’ve been making the investments to build them. We believe people will pay for online games.”
For now, the games are free and the sites are supported by online ads. But with online advertising dollars at a nadir, game sites desperately need other sources of revenue.
“The model is cable TV,” said Stan McKee, EA’s chief financial officer. “Years ago, people asked why anybody would pay for cable when they can get broadcast TV for free? The reason was that cable TV offered content that wasn’t available anywhere else.”
McKee predicted that EA.com’s rate of loss will ease once it begins broadcasting games such as “Majestic” and “Harry Potter Online.”
The riskiest game in the lineup is “Majestic,” a conspiracy game in which players solve a mystery with clues delivered via e-mail, phone calls and faxes. Already several months behind in production, the game’s four monthly “episodes” are due out sometime this summer. The fall will bring another lineup of games, including “Motor City Online,” a game that lets players buy, collect and trade virtual cars.