People of all ages and from all walks of life spend a large amount of time and money on online games, which makes it a billion dollar industry. Looking into the Business Model adopted by this billion dollar industry.

MMO Games (Massively Multiplayer Online Games):

Over the last few years, MMO games have taken the world by storm, success stories of games like WOW have inspired literates to write books and take surveys explaining the phenomenon. These games are played by millions and are bandwidth eaters, which do not bite cost but gulp it. MMO games are high expenditure ventures and need a lot of funding to continue with game development and server maintenance.

Critics argue that the state of art business model is still in a divergent state. Every author is elaborating different proposals. However, the current scenario supports the following business model.

1. Initial Game Title sales: This revenue ensures to keep the development momentum going and helps pay for the initial development cost.

2. Time Based Subscription Model: The revenue model is based on a simple fee, which gives unlimited access to the game during a certain period of time, usually a month, but with other subscription rates for three, four, six or twelve months.

3. Virtual Currency Model: Revenue model is based on selling currency for use in a virtual in-game economy.

4. Virtual Real Estate Ownership Model: Second Life® came with a new concept of MMOG. Their producers, Linden Labs, provide the infrastructure that is the open virtual word. Their expected revenue will come from subscription fees, in US dollars, and land taxes, in Linden dollars (the in-game currency). These Linden dollars (L$) that can be traded for real money, at a variable rate, depending on the law of supply and demand.

Interesting News ( a fact on the value adding within the Game itself – which eventually adds to the capital of the game producers – taxes paid on the property worth) : http://www.gamespot.com/news/6162315.html

5. Brand merchandising: MMO’s are also involved in selling branded products to fans and user alike for a profit consideration.

6. Paid sponsorship for product promotion: Companies are using the MMO platform to promote their products for a consideration of promoting their products within the MMO community.(growing in millions) http://video.google.com/videoplay?docid=-1175367493081978705

7. Expansion: Expansion is added to make money on user up gradation and also ensure a continued interest in the games.