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Future of the game server business - is it dead?

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  #1  
Old 04-03-2007, 04:42 PM
eming eming is offline
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Future of the game server business - is it dead?


Guys,
I am doing a bit of research into the game server industry and its potential growth/stagnation/drop considering the major players that has entered the market the last years and the game consoles with online presence outside of the traditional game server scene.

How do you see the market evolving in the short to middle term?

Any input?

Thanks
Ditlev

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  #2  
Old 04-03-2007, 06:13 PM
ITHost-KoreyR ITHost-KoreyR is offline
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This may not be the reality, but from what I've gathered from people here is that the clients are 15 and have some b-day money they can blow for a few months, then youre clientless.

If you're going to get into it, I'd start with something solid before offering game servers. Either that or start with a reseller

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  #3  
Old 04-03-2007, 06:23 PM
eming eming is offline
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we, uk2.net, use to be one of the biggest game server hosts back in our hey-days with cyborg2.com - we only have a few 100 left now, but are considering making a move incl. a few acquisitions to get it rolling. This is why I am asking

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  #4  
Old 04-03-2007, 06:29 PM
SwiftModders SwiftModders is offline
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I have been in talks with one of the best game server providers in Velocity owned, Summit-Servers.com and talking with the owner Jon Biloh he explained to me that the state of the industry is pretty unstable. You have many new GSP companies popping out, but the average life span of these companies are about 2-5 months at most with very little profit if any. The industry is really sticking to the hosts that have been in the business for a while and can provide the best service.

My suggestion is to not get into the industry again unless you are VERY serious and can provide HIGH QUALITY game servers. Otherwise it will be waste and you would be likely to die out soon. Best of luck to you though and let us know what you decide to do.

Also, make sure you can afford quad core servers, most large companies are doing "game servers have their own CPU" now.

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  #5  
Old 04-03-2007, 06:55 PM
eming eming is offline
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thanks john, good advice

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  #6  
Old 04-03-2007, 08:14 PM
cywkevin cywkevin is offline
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The profit margins appear to be thin. I'm not sure why you would want to run a GSP. The amount of time spent working on it could be applied to flipping hamburgers and you'd probably get higher take home pay.

  #7  
Old 04-04-2007, 04:34 AM
Kemik Kemik is offline
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Quote:
Originally Posted by eming
we, uk2.net, use to be one of the biggest game server hosts back in our hey-days with cyborg2.com - we only have a few 100 left now, but are considering making a move incl. a few acquisitions to get it rolling. This is why I am asking
Ah yes. I remember the UK2.net cs_assault servers

The market's prices are always falling and then cost of servers stay about the same. Even thought you might be able to fit a few extra clients on to the box. The clients are very demanding, and unlike many web hosting clients, will notice the second their server goes down or there is even a slight network problem.

You have to be specialised in the game your offering servers for and not just as a player but know every server configuration cvar, exactly what it does and how it will affect your server.

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  #8  
Old 04-12-2007, 09:39 AM
eming eming is offline
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seems our time+money is better put somewhere else

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  #9  
Old 04-29-2007, 07:27 PM
capeto capeto is offline
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Most of the GSPs I spoke with ( with exception for a few UK providers, who oddly enough, seem to be making pretty good ) have a very narrow minded idea of where they need to be.

The fact is, most of them ignore the fact that they are in the content distribution business ( games being the content ). Game console is actually just a delivery, technology, and by far, outdated, in the new world of IP.

There are also barrier's from the technical and economical standpoint associated with this model, such as:

*The rising cost of quality data centerer colo space. I can't tell you how many times they came back to me with unreasonable target rates for bandwidth and colo space.

*Consoles need to be placed closer to customers. Most GSPs won't invest in the footprint or do not have the right relationship with Tier 1 providers to create presence and generate economies of scale.

*Most GSPs are averse to CDNs , even though that could be the best solution to their needs. Entry cost, and copyright issues are the main barrier for technology adoption.

*GSPs don't own the content, or have limited licensing rights to it. Large scale distribution would imply they need to negotiate royalty payments, or revenue sharing.

*Lack of loyal customer base. Gamers will change GSP's or stop using their services at moment's notice. Actually GSPs are at fault, since most do not have any customer retention incentives program.

*Not much of depth in running support operations (billing, customer acquisition, support).

*Lack of funding to invest in technology and personnel.

Now, if you heard Game Developers before, most will say that their business is a tough one to make, that they hold the smallest share of the revenue published games generates, and that they are by contract held hostage by publishers.

The money in the gaming business is ultimately for Publishers. They own the content, they can negotiate better distribution terms with network providers, content developers, and any other distribution channels ( retail ).

Yet some might argue otherwise, and for those brave hopefulls, I have a word of advice:

If you want to succeed into this business, borrow the model from the Online Adult/Porn industry. People might twist their noses at the Adult Business, but they know a thing or two on how to survive despite all of these barriers, and with the Government hell bent in putting them out of business. I've seen a lot of what they do and how they do, and baffles me that no one has payed attention to their business model, other than just surfing for porn.

That's my 5 cents.

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Last edited by anon-e-mouse; 04-29-2007 at 08:17 PM.
  #10  
Old 04-29-2007, 09:59 PM
XeHSean XeHSean is offline
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The game server business is far from dead - the companies that are well established are, and will continue to profit nicely.

It is very hard to break into the business though - too much competition nowadays. Think about it, you'd need to give someone quite a big incentive to choose your new company over one of the big name companies that have been around for a while. As Jon said, this causes many of the new companies to die within 6 months.

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  #11  
Old 04-30-2007, 03:40 AM
JonBiloh JonBiloh is offline
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capeto has made some excellent points. If this board allowed for a plus/minus rep system, he'd be getting a + for his "5 cents."

It's all been said before; the market is tough to get into, and until the economies of scale are working with you, not against, your almost doomed to fail.

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  #12  
Old 04-30-2007, 09:26 PM
Defcon|Rich Defcon|Rich is offline
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It depends on who you talk to. I know quite a few up and coming GSP's that seem to be doing well so I would disagree that the market is dead. But it's hard to say who's doing well and who isn't since everyone you talk to will say they are the world's largest GSP..

But seriously, It's not as easy to make a substantial profit as it once was but like any other market there is always room for a new idea.

  #13  
Old 04-30-2007, 09:59 PM
GLucas GLucas is offline
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Apart from my company, I work for a big game server provider company and to be honest, there is daily signups and servers being tested, and the competitive field of game servers is growing nicely.

  #14  
Old 05-01-2007, 01:39 AM
HiDef-Laws HiDef-Laws is offline
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Frankly, from my knowledge of the GSP community I wouldn't trust a single thing said in this thread (except maybe Rich's comment: "everyone you talk to will say they are the world's largest GSP.."). More than half of the companies are operated by teenagers with mommy and daddy's credit card who have no concept of economics or honesty. Some of the persons posting in this very thread have in the past lied about their age, their accomplishments, their infrastructure and their companies size (and they know who they are).

Truth be told, we're all sharing each other's clients on a monthly cycle. Those who keep enough to pay their bills each month will live, those who do not will die. It's not a place to start a business unless you have ample time on your hands with little expectation for return. The odds of turning a startup game server host into a respected "enterprise" (and I use that term very loosely) are not good. The only true way to succeed is to own all of your equipment, be aggressive with reducing accounts payable and be honest with clients at all times. Until early cancellation fees become common in this industry (like in cell phones, etc), there will always be constant client flux (due to said teenagers with mommy & daddy's credit cards going out of "business").

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  #15  
Old 05-08-2007, 11:13 PM
Tsohxert Tsohxert is offline
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HiDef-Laws, Very well said and I completely agree with your point of view on the entire outlook of the GSP industry.

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