There may be nothing new under the sun, but just try and convince a flurry of new video game companies that. Each, in its own way, is trying to serve a different sort of gamer –- whether they be casual, hardcore or somewhere in between. And each is attempting to cash in on the new Wild West of online digital distribution where there's money to be made but, doggonit, no one is exactly certain how.

Take San Rafael, CA-based Telltale Games, which opened its doors just in June, three months after its founders waved goodbye to LucasArts. They had been working on "Sam & Max: Freelance Police," the sequel to the popular 1993 adventure game "Sam & Max Hit The Road," when the publisher abruptly cancelled the project.

Having also worked on another classic -- LucasArts' 1998 "Grim Fandango" -- the trio prepared to ignite an adventure game revival of sorts, this time using the Internet as their means of distribution.

"The beauty of adventure games is that their mechanics is very similar to that of casual games, which are so popular these days," explains CEO Dan Connors. "It's all point-and-click, which makes it very accessible to the large mass market audience who are not necessarily hardcore gamers."

Connors also believes that the segment of gamers who enjoys the adventure genre of video games -- which focus on a story containing puzzles that the gamer must solve to advance the plot -- are underserved in the marketplace. A quick scan of video game store shelves reveals a huge choice of first-person shooters and strategy titles, but hardly any adventures.

In two weeks, Telltale Games plans to announce its first title, licensed from a currently popular comic book series (which Connors chooses not to reveal yet), that will be released in the Spring in episodic form. Gamers will be able to use their credit card to download the game online and, if they enjoy it, the second chapter will go on sale three or four months later. Once the company has geared up, expectations are for an episode a month.

"We believe the future is gamers gathering around their TV sets on Friday night and playing episodic, interactive games with their family and friends, just as they watch popular TV shows like 'CSI' and 'Law & Order,' " says Connors. "We want to get into a mode of almost TV-style production where our characters are involved in different adventures. So instead of it being a 30-hour investment in time -- as exists in most of today's retail games -- once a month you get a nice four-hour play experience with your favorite characters ... and then they'll be back in another episode a month later."

Telltale's business model is to use a small team of 12-15 and to contain budgets to $500,000 an episode.

"The trick is that once you build the game world and the characters, the next time all you need to do is change the plot and the puzzles," he says. "So there are a lot of economies of scale in choosing a license and fleshing out its characters and its story and having it play over time."

Connors says that the beauty of containing costs is that it will require a sale of just 39,000 units per episode to break even. That compares with average budgets of $10 million for typical retail video games that then must sell a million units to recover costs.

Meanwhile, San Francisco-based PlayFirst -- which announced itself just two weeks ago -- has its own strategy for taking advantage of the online distribution space. CEO and president John Welch contends that casual gamers -- whose coveted demographic is made up of females over the age of 30 as opposed to the 18-to-34-year-old males who make up the hardcore game demographic -- are ready to step up to games that fit nicely in the space between casual games and retail-quality games.




PlayFirst founders, from left, Brad Edelman, Jason Rubinstein and John Welch

"We're calling our games 'popular games,' " he explains. "We're trying to create a distinction between casual games -- which can be very simplistic -- and what we intend to do, which is to build downloadable, small-file-size games that are rich, beautiful, have full-screen graphics, and a higher level of story than what you associate with casual games."

PlayFirst intends to stick with the try-before-you-buy business model, allowing gamers to play its games for an hour or so before committing their credit cards. Plans are to announce its first batch of fewer than 10 games in a few weeks and make them available for download before year-end. At the same time, PlayFirst will reveal the names of the developers whose games it will be publishing.

But while Telltale Games and PlayFirst both see the online space as a match made in heaven for the tiny, typically smaller-than-8-megabyte games that casual gamers crave, San Francisco-based IGN Entertainment has bigger plans -- much bigger plans, t least in terms of the size of the games it's serving up. Seven weeks ago, it launched its Direct2Drive service for hardcore gamers who think nothing of downloading retail-quality games as large as a gigabyte, which is over 12,000 times the size of the typical casual game.

"The sites that are carrying casual games are making tons of money and we see the gamers who play those titles as being serviced very well," says Jamie Berger, vp and general manager of consumer products. "Our market is the hardcore gamer who is passionate about gaming but, until now, has had not much opportunity to download the games they care about."

Berger claims that IGN was perfectly positioned to create its Direct2Drive business; its FilePlanet site has a long track record of being able to download large game files, IGN already had a robust e-commerce model with its magazine subscription business, and, most importantly, it already had hardcore gamers visiting its other divisions, notably GameSpy, the popular game site with which it merged earlier this year.

IGN's one concern was whether hardcore gamers, who are used to buying their games in stores, would see what Berger says is the advantage of downloading the same games instead -- that is, not to save money, but to avoid trips to the local mall and to have access to popular games that may be out-of-stock elsewhere.

"We needn't have been concerned," he says. "Our customers are the guys who have been downloading music for years now, were probably the first to go out and buy an Ipod, and for them this is a natural way of buying media, whether it's music or games, whatever."

Direct2Drive has signed deals with six publishers so far and currently has over 50 titles -- both new and older games -- on its site.

"The reaction from publishers has run the full spectrum," Berger says. "We've signed a 10-title deal with Eidos, 12 or 15 titles with Ubisoft., two with Sony Online, and more. Others want to take a little more time to decide. Every publisher has a different perception of how important digital distribution is to them. But I think many feel they need to have an online distribution strategy. They saw what happened in the music industry and no one wants to relive those mistakes."

Berger believes two factors will eventually ignite the popularity of online gaming sales: the growth of broadband and the appearance of a "killer app" -- a must-have game that may be first available online or only available online.

One such game may be the long-awaited first-person shooter "Half-Life 2" from Vivendi Universal which is expected in stores Nov. 16. Its developer, Valve, intends to make the game available for download on its www.steampowered.com site at the same time.

But David Cole, principal analyst at San Diego-based DFC Intelligence, is much more conservative when it comes to declaring digital distribution as the next big thing in game distribution.

"Digital distribution is just another form of distribution," he declares. "And the important thing about distribution is getting your product in front of as many people as possible. The key then is to get into as many channels as you can with digital distribution being just one of them."

He recalls a number of start-up companies that started with digital distribution but, once successful, they expanded into retail.

"Consider Id Software which began with the digital distribution model over 10 years ago with 'Doom' and 'Quake' as a form of guerilla marketing," he says. "But as soon as they had a bigger budget -- boom! -- they were in all the retail stores which is where they made most of their money."

Commenting on what PlayFirst, Telltale, and IGN are doing, Cole says he's seen it all before: "A company called Arush Entertainment was going to sell episodic games but they ended up moving into retail and now they're developing a video game based on 'Fear Factor.' As for selling retail games online a la IGN, there are others doing that, including Yahoo.

"What you're seeing is three different variations of digital distribution," says Cole, "and you're going to see lots more experimenting going on. But my best advice to game companies is to sell everywhere you can. Otherwise it's like saying you're just going to sell your games at Best Buy and not any other retail chain. I don't think that would be the smartest strategy in the world."

Paul "The Game Master" Hyman was the editor-in-chief of CMP Media's GamePower. He's covered the games industry for over a dozen years. His columns for The Reporter run exclusively on the Web site.