Disney Is Backing Online Games Site
A pay-to-play online games venture, backed by Walt Disney Co. and hatched in the “idea factory” of Priceline.com Inc. founder Jay S. Walker, is set to launch next month amid a multimillion-dollar promotional blitz.
Boasting $1-million prizes, the venture smacks of Internet gambling. Disney, however, says that’s not the case.
Even so, a plunge into pay-to-play games may pose public relations problems for the family-entertainment firm.
“It does raise eyebrows,” said Andrew Wilder, press secretary to Sen. Jon Kyl (R-Ariz.), chief Senate sponsor of legislation to ban Internet gambling.
Disney executives say they aren’t worried. Unlike actual gambling, where the payout is determined by chance or a “contingent event” such as a horse race or a pro sports contest, these games involve pure skill or knowledge.
Skillgames, the name of both the Web site and the company running it, will exploit such Disney brands as ESPN, the cable TV sports channel, and the long-running ABC soap opera “General Hospital.”
Disney and Skillgames executives say the venture has passed legal muster with the federal government and 47 of the 50 states. Moreover, Skillgames has enlisted a board of advisors to address such issues as compulsive gambling.
“From Disney’s perspective, all of it has been incredibly carefully vetted,” said Dick Glover, an executive vice president in Disney’s Internet Group. “We want to be as far away from any sort of gray area as we possibly can.”
Skillgames bars children under 18 from the games, which require a credit card to play. And to keep players from getting in over their heads financially, losses are limited to $300 a month; hit that threshold and your access is denied until the next month.
Internet game-playing is a fast-growing industry with 2001 revenue estimated at $311 million, $185 million of that from advertising and $126 million from subscriptions, according to research firm Jupiter Media Metrics. Jupiter projects that annual revenue will crack the $1-billion mark by 2004.
But profits are proving tough to come by. Although game-playing sites are among the “stickiest” of Internet destinations, capturing visitors for longer stays than most categories, few of the advertising-supported sites turn a profit, analysts say.
Game-playing “is one of the few [Internet] content areas besides straight gambling and porn where there is real money being paid,” said Jupiter analyst Billy Pidgeon. “The problem has been how do you get Main Street to play?”
On the subscription side, much of the revenue comes from a fanatical but relatively small coterie of players who pay monthly fees averaging about $10 and log on for hours at a time to play graphically rich fantasy games against other players.
Skillgames, however, is aiming for a more casual but potentially far larger audience of people who aren’t interested in complex games but might happily pay $1 a pop for shorter, simpler games with a shot at cash prizes.
“This is a new way to look at building a business on the Web,” said Skillgames Chief Executive David F. Zucker, a 12-year Disney veteran who has held executive posts at ESPN and other subsidiaries.
Most of the prizes are in the $5-to-$500 range, but the company plans to offer grand prizes of up to $1 million.
To avoid clutter and keep the focus on the games, Skillgames won’t accept advertising. That will separate it from such competitors as Pogo.com, Uproar and Gamesville.
