The AOL List: Next Exit

David Cassel (
Wed, 20 Aug 1997 03:27:34 -0700 (PDT)

			   N e x t   E x i t


Another game area bites the dust. 

"On September 1, 1997, Sierra OnLine will be leaving America Online..." 
reads the announcement at keyword Sierra.  One AOL List reader remembers
visiting the game company's area in 1994, and since then it's become even
more popular.  Betrayal at Krondor -- a 10 megabyte game -- racked up
nearly 3000 downloads in the last five months, and playable demos of games
like 3-D Ultra Pinball and Caesar II have garnered over 4500 downloads --
one copy for every 1900 AOL users.

The 18-year-old game company represents one of the industry's giants. 
Sierra claims the largest share of the PC-entertainment market 
( ), representing 44 percent of
all adventure games sold in 1994.  500,000 households subscribe to the
company's "InterAction"  magazine, and box copy for their King's Quest
series calls it the best-selling adventure series in computer game
history.  (Other popular Sierra lines include Shivers, Phantasmagoria,
Leisure Suit Larry, and Gabriel Knight.)  The company reported revenues of
$63.2 million in one recent three-month span--which is no small feat.  The
Los Angeles Times cites Dataquest's estimate that last year, 96% of the
companies in the CD-ROM business lost money.  
( ) 

Sierra's defection is a vote of no-confidence for AOL.  At one time Sierra
even owned part of the Imagination Network -- the company which became
WorldPlay Games.  It's the service for which AOL now hopes to charge $2.00
per hour.  (AOL List readers see the strategy's flaw.  "The same games
that AOLers enjoy in Premium Games now are on the web for free at
Microsoft's," one reader commented in July, "along
with a host of other interactive games.")  Microsoft has seized the
opportunity. "We want to assure you that games and matchmaking here are
free," the Zone's front page announces (in a section titled "Welcome AOL
Players!") at "There's no membership fee," another
page announces, "and you get eight classic card and board games for free." 
(Bridge, Hearts, Spades, Backgammon, Checkers, Chess, Go, and Reversi.) 

AOL's pay-to-play plan may be faltering, according to analysis from Wired
News.  One AOL games trainer told them "Right now, we're getting no more
than 10 to 15 people on-line at any given time."  (Crowds of 900 routinely
visit other areas.)  They'll need a base of players for the games to
succeed, and "With the current situation, that will take a long time."  
( )  Others echo
their concerns.  "I've been in Worldplay," one AOL staffer posted in a
Community Leader board.  "There's 11 people there..."  WorldPlay looks
doubtful about actually making revenue from gamer fees. They recently
began searching for an advertising salesman and advertising sales manager
( )  But even that may not work. 
"AOL can't sell the advertising space they thought they could,"  a former
AOL staffer believes.  AOL announced that their ad revenues had increased
415 percent -- from where it was a year ago -- but just $25 million this
quarter. ( )

Wired delivered their verdict on the gamer dissatisfaction.  "In its
biggest test of community development thus far...AOL is failing
miserably."  Other users criticize AOL's policy of charging for games
still in beta.  "I'll be damned if AOL expects me to test pre-release
software that could wipe my characters, erase my scores or toast my hard
drive," one subscriber told the AOL List, "AND get charged for that
privilege."  The mis-steps are creating an industry shake-up.  "AOL gave
us a once-in-a-lifetime opportunity," a Simutronics insider told Media
Daily -- "to take our members with us. We weren't going to let that chance
slip away." (  
Others companies concur.  "AOL's demands that we begin to pay excessive
fees when none were previously charged, has accelerated our drive to
migrate our entire virtual community of computer graphics enthusiasts to
our World Wide Web environment as quickly as possible," MetaCreations
announced in a press release ( )  
Scott Kim, the creator of MetaSquares, points out that other venues were
always a possibility for his game.  In a post on an AOL bulletin board, he
observed, "now that AOL is wimping out on games, the incentive to get it
on other systems is stronger."

AOL's posting of an abrupt farewell notice on behalf of MetaCreations
fueled the game company's dissatisfaction.  Their CEO and two other
officials signed the statement: "AOL, this simply is no way to treat the
companies and customers who have helped to build your business." 
( )  But it's all
part of AOL's desperate bid for a positive cash-flow.  Wired News points
out that AOL has hidden their free games, and members signing onto the
service Tuesday received yet another pitch for Visa cards.  Monday's
Washington Post even reported on "paper profits" that bolstered AOL's
stock prices for company officials.  "That run-up produced millions of
dollars of additional profit for AOL insiders, who regularly supplement
their salaries by selling shares they get under stock option plans." 

Meanwhile a former staffer reports a rumor circulating in-house -- that
AOL plans to spin the Greenhouse sites into a separate company...."along
with all the other non-performing acquisition assets."  When the
account is done, will AOL show a profit?

Time will tell. 


With a cover letter stating "I know what customers look for and expect," 
New Jersey teenager Eric Zawid won AOL's "Steve Case for a Day" contest. 

One staffer recently revealed that Zawid spent part of his day as a Guide
-- patrolling AOL's "Cops Who Flirt" chat room. 

     David Cassel
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