Game Hosting vs. Other online Markets Advice

kingkobra435 · #1 07-03-2007, 02:29 AM

Hey guys,

I think this site is great and everything it offers is very insightful to people interested in starting their own company. After browsing this section of the forum it seems that people have alot of different things to say about starting up a game hosting. I have above-adequate knowledge of CS

,a pretty amazing server and a nice internet connection (faster than t1). The only dilemma is I can't decide what is the best way to invest my time and money. Some of you say server hosting is a tough biz and monopolized by the corporate masterminds and others say small-timers like myself can flourish and create a profit from this business. So basically, at this point I am just look for some advice. Is the game server industry the way to go or should I look into webdesign or reseller hosting? I have heard alot about hosting third party downloads and then making a percentage of the software price. I donno if this is a load of crap or not. Help me out guys!

Roughly, here are the specs on my current server:

Intel Core 2 Duo T7700 Merom 2.4GHZ Socket P Processor
2x 150 Gig. 10,000 RPM Raptor X's
2x 2 Gigs of Corsair X PC2 6400
500 Watt Power Supply
Guessing about 15 MPBS Transfer or more...

Everything else isn't really relevant.

So what do you guys think? I would really appreciate the feedback, thanks in advance.

Chris "The New Guy"

CArmstrong · #2 07-03-2007, 04:45 AM

Go into business in the industry that you have the most experience in but also have a niche or some other way of breaking in. The entire hosting sector is relatively saturated, and you'll need some way of setting yourself apart from all the other companies.

Game hosting is particularly rough because of the very low profit margins. I have a lot of experience in the game hosting industry, and I can say that most (about 90%) of game server providers fail relatively quickly. The main reason is that customers are buying on price and price alone, and have no reservations leaving at the drop of a hat.

Think a lot about what you really want to go into business doing, write a business plan, then execute it. Good luck.

tollfree · #3 07-03-2007, 02:23 PM

I agree with Armstrong.

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Game hosting is particularly rough because of the very low profit margins. I have a lot of experience in the game hosting industry, and I can say that most (about 90%) of game server providers fail relatively quickly.
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I am getting into this soon and cannot say how true is this. There are many many hosting providers out there and the entire industry is almost saturated.

Every industry is saturated, however there is some niche somewhere you would like to gain on. Good luck!

Defcon|Rich · #4 07-04-2007, 02:29 AM

There are plenty of companies offering CS hosting so I wouldn't bother with that since you will need to offer dirt cheap servers to even get into it. Problem with that is you now have to load up every machine to the max to generate a profit and that's being done all over with terrible results.. Bad for your new company and worse for your retention rate.. There are dozens of other games to host, I would advise looking at some of the ones that aren't beat to death.

My opinion is like most "emerging technologies" if you get in at the right time it's lucrative. But I'm afraid Game hosting is far too saturated at this time and doesn't quite fit that profile anymore for the average startup. If you want to make a few bucks and pay your server costs you can get by but don't quit your day job for a few years unless you have funds put away for this specific venture.

PS. Hey Chris! Go Steelers!!

warrive · #5 07-29-2007, 10:19 PM

Hmm I was also thinking of starting game servers.. Will continue reading other threads before I make a decision. Thanks for this read!

hiryuu · #6 07-30-2007, 11:51 PM

If you think a T1 and a dual-core box is worth anything in game servers (or even web hosting), you have a painful lesson coming your way. Just a couple moderate (16-20 player) servers will turn that into a spiky mess.

With a couple rented servers or a colo rack, you can make a small profit and host some friends. Game servers need monster hardware, and the big players have cut margins to the point that only venture funding could enter the market with full-time staff.

You need a way to differentiate yourself from the herd, without a lot of cost. That pretty much means some type of design, development, or consulting.

Adam H · #7 07-31-2007, 07:29 AM

Whos noticed alot of game server/web hosting companies start up during the summer holidays and shutdown a couple of weeks after

MrRadic · #8 07-31-2007, 09:16 AM

Quote:

Originally Posted by kingkobra435

Guessing about 15 MPBS Transfer or more...

Are you sure that's 15MBPS of upload? Unless you're running fiber to your house, I doubt you have more than 2MBPS of upload -- which honestly can't handle more than 10 - 15 players.

As mentioned before, colocate a high end box, and go from there.

JordanJ · #9 07-31-2007, 10:01 AM

There are about 10-15 real game hosts on the market.

Velocity
NFO
Gameservers
FragnServers
Branzone
Aim2Game
HypedGaming
NXG
HIDef
and a couple others

These are the companies with a profit margin, and the ability to continue year after year. GSPs startup, lose money for a few months, maybe break even on one server, MAYBE get to 3 servers, then fail.

If someone wants to make a real stab at the market, has 30-50k to invest to do it right, PM me and we can talk.

Defcon|Rich · #10 07-31-2007, 10:50 AM

There are alot more then 10-15 GSP's on the market that make money. The ones you mentioned all share a narrow section of the market and specialize in HL type games. I'm surprised names like AOWC and defconservers didn't make your list Jordan.. Both have been around much longer then any of the above and even host or hosted a few of the guys on your list including -your- company..

30k likewise is not needed to start a business on the internet unless you plan on buying all the equipment needed to get started which in my opinion is a stupid idea anyway. Maybe a few years ago it was smart when colo prices were much lower but today it's a lost cause.

When you break it down it makes no sense. 1/3 of your profit on each machine goes to pay off the lease on it and once your at the point where it's paid you now have a machine that cannot run the latest games and is worth .25 on the dollar. Multiply that by 100 machines and you have a big problem.. Companies like TP can offer the servers at discount and move them but game hosters end up with a pile of worthless equipment and no funds to purchase more..

If you want proof look at the situation game daemons found themselves in and a few of the ones on your list above will no doubt be in very shortly. Your information is flawed if you think some of the guys above aren't carrying serious debt and in a few cases are dead in the water. Profit only comes from money in your pocket free and clear. There is no value in debt soaked funds and company worth is based on profit/loss figures which would probably have you re-thinking your plans if you took a look at them.

HiDef-Laws · #11 08-01-2007, 06:20 PM

Quote:

Originally Posted by Defcon|Rich

There are alot more then 10-15 GSP's on the market that make money. The ones you mentioned all share a narrow section of the market and specialize in HL type games. I'm surprised names like AOWC and defconservers didn't make your list Jordan.. Both have been around much longer then any of the above and even host or hosted a few of the guys on your list including -your- company..

30k likewise is not needed to start a business on the internet unless you plan on buying all the equipment needed to get started which in my opinion is a stupid idea anyway. Maybe a few years ago it was smart when colo prices were much lower but today it's a lost cause.

When you break it down it makes no sense. 1/3 of your profit on each machine goes to pay off the lease on it and once your at the point where it's paid you now have a machine that cannot run the latest games and is worth .25 on the dollar. Multiply that by 100 machines and you have a big problem.. Companies like TP can offer the servers at discount and move them but game hosters end up with a pile of worthless equipment and no funds to purchase more..

If you want proof look at the situation game daemons found themselves in and a few of the ones on your list above will no doubt be in very shortly. Your information is flawed if you think some of the guys above aren't carrying serious debt and in a few cases are dead in the water. Profit only comes from money in your pocket free and clear. There is no value in debt soaked funds and company worth is based on profit/loss figures which would probably have you re-thinking your plans if you took a look at them.

So true Rich, so true. I wouldn't count awoc as I thought they bankrupted earlier this year and have new ownership. It's not a great market for high profit. There is a VERY high operation cost. Just because you have revenues of 6-7 figures does not mean it's all profit...more than 1/2 is "spent" already (machine costs/rental costs, bandwidth, power, remote hands, travel, shipping costs, support staff, transaction fees, taxes, amortization of hardware, etc, etc). The odds of starting new and surviving 6 months is very slim. There are much better places to invest time and money than servers for teenagers/young adults.

fragnetworks · #12 08-01-2007, 06:53 PM

I agree with the both of you. But hey, if you have the money, the time, the investment, it's all about trial and error.

Reach your market, expand what you can do...

allanon · #13 08-02-2007, 07:43 PM

15MBps is available in some areas, especially in Europe from what I've heard.

The GSP market is really saturated, without big bucks and backing, it's going to be difficult. I considered this market but it's tough.

Webhosting is tough too, but isn't everything? I can't think of any ways to make a quick buck on-line these days.