Canada's Internet Regulations Threaten Gaming Business Models - RaychelSnr's Blog

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RaychelSnr's Blog

Canada's Internet Regulations Threaten Gaming Business Models Stuck

Posted on February 5, 2011 at 01:11 PM.

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Anyone running a business model with the internet should be very wary of what happened in Canada this week.

There have been two camps in terms of the internet's future -- one which postulates that the internet can grow with its traffic via innovation and investment and the other which basically says there is a limit to what we can actually transfer without costs getting ridiculously high.

It appears bigger internet companies are set to score a big 'W' in Canada, where unlimited internet could no longer be an option -- and unlike the hilarious parody South Park managed to create, Canadians won't be able to travel to Californee for a little bit of internet.

Capping usage is a trend which seems to be taking hold more and more with ISPs internationally and even in America, although it is not as big of a movement just yet. If/when American companies decide that's the best course of action -- we could see some shifts in how gaming companies approach online gaming because they will suddenly be faced with competing for limited customer bandwidth with other services.

Current gaming business models assume more and more people will be logging in to play games for more and more hours. That's where companies like EA are placing their bets for the future. However, there is no place in a limited internet for a family to be gaming, Netflix-ing, and YouTube-ing all at the same time each night.

Right now, plans to meet high demand users in Canada go for a rather large chunk of change -- although the prices are far from unreasonable. I did an exaggeration of my internet useage and came up with about 70gb per month of transfer. That type of plan would for for somewhere in the range of $60 here in America. More expensive than I pay now, but definitely not in the realms of unreasonable-ness.

It is probably only a matter of time until usage limits come to America as well -- it just makes too much sense for an ISP to do that. Add in the extra bonus of powerful lobbies like the RIAA jumping all over the thought of limiting people's ability to transfer huge files via torrents due to usage limits and you probably have a powerful set of lobbyists from big media descending upon the FCC daily.

Gaming companies and gamers probably wouldn't need to change too much if everyone opted into the bigger transfer packages -- but most people won't. And that's where the problem of the current business models in gaming are going to suffer down the road. Many of gaming's newest customers via social gaming are people who don't usually game and probably won't consider larger packages to continue their new hobby if it came to it.

Just 10% of Social Gamers actually spend money on their games, and while that's a huge amount of revenue for games such as CityVille, it also means that a big chunk of 90% of their customer base probably considers the game to be dispensable if it came to paying $10 more for internet or losing the ability to play the game all the time. Thus, I can see big problems for anyone who relies on big bandwidth to keep their business afloat in the next decade.

But reeling this back in to what this means for Canadian gamers -- it simply means you may have to pay a premium to game online. The offers aren't unreasonable, but they definitely aren't unlimited either. However, the days of downloading 4GB files are probably going away soon as the party of limits to the internet and greater profits slowly wins the day.

Comments

# 1 boxboy99 @ Feb 5

WTH is going on in the world today.

# 2 Uncle Stumpy @ Feb 5

Thanks for the article! As of today the Canadian government has vowed to kill this specific deal by the CRTC, which is a good thing for Canadians, but it will be replaced by something else including a cap in the near future I'm sure. Too bad, really.

# 3 adembroski @ Feb 5

The FCC has already declared itself arbiter of internet usage after the Supreme Court and Congress have both rejected "Net Neutrality", of which this is one small part of.

Internet is the one bright spot in a world in which the very concept of liberty is fading from people's collective understanding. With the internet, you can literally invent your own job. It's the greatest creator of opportunity in the world today, and anyone, big or small, can benefit.

Any attempt to limit access or regulate the internet, especially at this juncture, would be a damn shame.

# 4 gsr888 @ Feb 6

I'm in Canada and live with another gamer who plays online a lot. I have a 60GB cap and rarely go over it. I just have to watch out with using Netflix too much!

# 5 BlackRome @ Feb 6

adembroski: It's coming. The FCC basically said to "We The People" the ISP's own the internet. It's a shame we are a fascist country now and no one has realized it. The Corporations own our government. But I've got to practice my Fight Night 4 and the Super Bowl is on today.
Good times.

# 6 Uncle Stumpy @ Feb 8

thats good to hear gsr888- I'd basically only be online for gaming and a little facebook and fark..was curious how close I would be to capping out I would be.