2004 Web and Downloadable Games White Paper 

IGDA Online Games SIG 

Internet fraud and game hackers, some players are reluctant to play skill based games for real money.  

Many skill based gaming tournament providers are trying to address this concern by encrypting 

connections for all passwords and financial information, and doing their best to eliminate security flaws 

which some users attempt to exploit in order to hack the games to gain an unfair advantage over honest 

game players.   

Even if security concerns are addressed, skill based game tournament providers still have to address 

player concerns about competing in tournaments against other game players they do not know.  Once a 

player has paid his or her  tournament entry fee , they are faced with the issue of finding other game 

players, of similar ability, with whom they can compete.  Aware of this issue, skill based gaming 

companies have created ranking systems that ensure that players are matched up against others with 

similar ability in tournaments.  In addition to utilizing different software to match players of equal skill, 

several skill based gaming companies leverage the communal component of their site, allowing users to 

choose who they compete against.   

Skill based gaming tournament providers retain a fee for hosting the tournaments.  As

compensation for 

promoting the tournaments on their site, tournament providers share a portion of the proceeds with their 

respective partners.  Because agreements between the skill based gaming companies and their partners 

are often revenue share based, partners have an incentive to promote their skill based game tournament 

offerings.  Depending on the traffic to the site, revenue to partners can often reach well into six figures 

annually.  The coming year will be a good indicator of the growth potential for this gaming segment. 

I. 

European Issues 

1. 

Online game purchase 

When looking at the paid download content market, the increased number of offerings can be credited to 

two major factors: broadband penetration and more user friendly payment systems. For the first factor, 

Europe has witnessed a major increase of Internet and broadband penetration in the last few years, to a 

great extent thanks to the proliferation of flat rates. From 2000 to February 2004 the number of online 

households in Europe nearly doubled to over 200 million, compared to the 215 million households in 

North America

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. However, the European market is still not as attractive for online distributors. 

For Europe, a more user friendly payment solution, is one that addresses credit card fraud and multiple 

currencies issues. Usually, US online customers simply punch their credit card information into apparently 

secure online e commerce forms to buy products and services online. European online customers have 

been trained to be much more wary of potential fraud. This has created a market opportunity for micro 

and macro payment solution providers, such as Paypal and Firstgate. In a recent Forrester Research 

study, about 60 payment solutions were analyzed and evaluated. In some cases, faced with the options 

of paying either via telephone bill, SMS, or credit card, each solution attracted about 1/3 of the surveyed 

panel. Very specific regional user habits and bank infrastructure variables are considered by those 

payment solution providers in order to provide a feasible alternative to plain credit card purchase. Of 

significant interest is the number of people who carry credit cards. In North America nearly 80% of the 

population has a credit card, while in Europe less than 60% do. 

In the chart below, some differences can be seen graphically. On the lefthand side, we see the growth in 

absolute number of internet using households in North America (320 million households) and Europe 

(700 million households, including Russia). Both geographical areas had roughly 100 million internet 

enabled households in 2000, and the number has grown in each area to over 200 million today. However, 

on the righthand side of the chart, we see these numbers compared as a percentage of total population. 

The lower line represents Europe. In 2000, 14% of European households had internet connectivity, and 

that percentage has grown to 33% today. The North American line however shows that internet 

connectivity has grown from 33% of North American households in 2000, to 66% today: a much higher 

penetration rate. 

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 http://www.internetworldstats.com/stats.htm 

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