Online games studios vs offline ones - who's the best?

Online games studios vs offline ones - who's the best?
Michael French

By Michael French

August 28th 2008 at 2:07PM

Spoiler: the one with long-term revenue streams. Yet the UK still lacks multiple major MMO firms...

We're often told, and have been guilty of saying it ourselves, that online is the future for the games market - both the industry itself and consumers.

But if that's the case, why does the UK only boast one major MMO firm, Jagex?

In Games Investor Consulting's latest Mind Your Own Business column for Develop, Rick Gibson looks to answer this question, comparing and contrasting the fundamental differences between online and offline games studios.

Some elements won't surprise you - online games studios can generate more revenue across a longer period of time than offline ones (surprise!), and are far more less concerned with building new IP than they are building a viable service operation for their players (surprise!).

But did you know that MMO studios can generate four times more revenue per staff member than an offline games team? (£45,000 on average at an offline team compared with £185,000 at an MMO studio.)

What about the fact that, despite the self-funded and slow-burn nature of the business, online games studios are usually bought for much more money than offline ones? It breaks down to five to 10 times their turnover, as opposed to offline games teams' five to 10 times profile valuation - meaning the 'sell out' exit or acquisition strategy for an online firm can be as high as £350m (offline studios can sell for £40m).

More details differing the clash between online and offline can be found in the full feature.

But as to why so few UK studios have made the transition to seize this opportunity, Gibson is frank: "It's a complicated and far-reaching leap.

"Making the transition from an offline to an online business is far from easy, requiring a major reorientation in strategy, restructuring of resources and finances."

Click here to read the full piece