Capping Online Game Growth and Popularity

With AT&T’s announcement that its 16 million broadband customers would be subject to a usage cap starting Monday, May 2, the company joins Comcast, which is the nation’s largest broadband service provider, in the stated objective to limit the users who hit the Internet buffet for third and fourth helpings every month. AT&T will limit users to 150 GBs per month for broadband service and 250 GBs per month if they’re U-verse (premium plan) plan subscribers. The kicker is that if a user crosses the limit, they will be charged $10 per month, a recurring fee for each additional 50 GBs burned through.

So, now a majority of U.S. broadband consumers will fall under the shadow of having to wonder “Is this download, or is this surfing going to put me over my limit?” What was once a “them” concern is slowly and steadily becoming an “us” concern. By “us,” I mean not just consumers — a lengthier line of thought — but for the purposes of this article, let’s consider the impact spreading bandwidth consumption caps could have on game developers and gaming consumers.

Leading streaming video service provider, Netflix, has the most to lose in this equation, with about 20 percent of the Internet’s traffic being generated through Netflix during peak hours. But there are rising stars in the subscription-based streaming game distribution service that have a lot to lose, too. OnLive, one of the better-known entrants in that field, requires a gasoline pump from a super-sized bandwidth jug. One user clocked the data transmission at about 2.9 GBs per hour. By comparison, one estimation of Netflex’s 720p bandwidth consumption is around 1.8 per hour. Netflix has had to create a lower-quality, smaller bandwidth streaming option for Canadian customers affected by even more draconian broadband caps. What might OnLive have to do to optimize content delivery? No one’s going to be itching to play a game like Borderlands if it looks like a stuttering webcam video of the game being played somewhere else.

It’s hard to imagine that innovation would be moving in a positive direction, toward increasingly imaginative uses of movies and games, supercomputer-caliber games being streamed through the cloud at high-quality, when gaming-from-the-cloud companies will have to figure out how to optimize the services they already have to stabilize their customer base who are affected by caps. OnLive, and companies like theirs, have a lot at stake. Needlessly to say, the ISPs implementing the caps are not making their jobs any easier.

Not only does the rising cost of bandwidth consumption to the consumer threatening to undermine the cloud game delivery services business model, it’s also poised to take away a key argument from them that they staked their success on: the value of content experienced through physical media.

It’s not just companies delivering games for play that will be affected by the imposition of caps, but any company that deliver games at all will be affected. Few are more well-known than Valve’s Steam, whose sole purpose is to deliver games as streaming downloads to a user’s PC. Steam serves up some of the biggest files in game distribution, such as the recent launch of the 20 GB file download of Shogun 2.  Any gamer saddled with a cap might be discover how rapidly downloading files like that can eat into their fair use allotment in just a few days time.

Playing traditional massively multiplayer games are less bandwidth-heavy, dealing in tens of megabytes per hour by numerous estimations across MMO site forums. These massively multiplayer online games contribute to the problem of bandwidth consumption when it comes to the often very heavy free-to-play client downloads and patches and other content updates.

This situation leaves the business end of the traditional game industry in a bind. For years, developers have been moving away to digital distribution as a way to make content accessible, give it a longer monetization tail, and discourage piracy. Yet, as current trends go, consumers will be stretching out play times with their existing games and downloading less, and even then putting off content, mod, and patch updates to meter out their Internet usage. Companies like Steam and OnLive could be forced to revisit the way they do business with the consumer and the developers, for good or for ill.

The only beneficiary in this equation, aside from ISPs, are social and casual game developers.  This industry’s Flash, Unity, HTML5, and Java games will hardly make a dent in anyone’s bandwidth cap, no matter how addictively a gamer plays.

But what about those ISPs? What’s their motivation in changing the way they package Internet service, which has thrown a wrench into the forward-moving gears of the game industry? Bandwidth costs continue to drop. “Time Warner Cable brought in $1.13 billion in revenue from broadband customers in the first three months of 2011, while spending only $36 million for bandwidth — a mere 3 percent of the revenue,” according to writer Ryan Singel on Wired.com. Time Warner doesn’t currently impose bandwidth caps, but they have indicated that’s always an option. AT&T and Comcast have vested interests in their respective properties, including the former’s premium VDSL U-verse service and Comcast, as a major cable operator and media property stakeholder, is competitive with with the fast-growing Netflix and its services. These companies are also publicly traded, so increasing the bottom line through a “gotcha” clause is another viable rationale over which to stroke one’s chin in thought. Ostensibly, whichever ISP is making the  argument for bandwidth caps, the stated intention is to encourage a small percentage of users from using an unfairly large percentage of bandwidth, especially during peak hours. There are many, of course, who disagree with the effectiveness of bandwidth caps, which don’t target peak hours, just monthly usage.

Whatever the rationale, when it comes down to it, there is little argument that bandwidth caps will affect the development of streaming game technology and creative development of games where file size starts to become a consideration. On the consumer side, legitimate downloading habits are curbed, while some online games could go unplayed for fear of starting a patch that may put them over their limit. The continuing, and growing, implementation of bandwidth limitations could bust a cap in the online game industry — and the consumers who log online to play them.