Chapter 2.7: Online Business Models: Using the Net for Profit

Overview

Sande Chen

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With estimated revenue of $635 million to be earned in 2003, online gaming has emerged as a likely powerhouse in the industry's future. Consulting firm DFC Intelligence reports that 2001's top online games each cashed in over $100 million in revenue and predicts that by 2006, 114 million people worldwide will be playing games online. Other analyst groups support the high projections: IT researcher IDC forecasts $1.8 billion in U.S. revenue for 2005, while Jupiter Media Metrix predicts $2.55 billion in 2006. Game companies, from Microsoft to small independents, are eager to develop online business models capable of capturing this lucrative market.

Online gaming, while wildly popular, is just one of the ways to capitalize on the Internet's potential. Web-savvy companies can sell directly to customers, serve as intermediaries, or employ a combination of online strategies. This article by no means intends to discuss the myriad possibilities. Instead, relevant examples will be examined using the structure of atomic business models explained in [Weill and Vitale01].