But where many game companies are announcing cutbacks, online free-to-play game maker Acclaim announced on Wednesday that it plans to expand through several acquisitions this year.
Acclaim CEO Howard Marks tells Edge that his company expects to expand by one acquisition per month, or six or seven by year-end. And it's the recession that has created this opportunity for Acclaim.
"What's happening is that with the capital squeeze, a lot of companies who were expecting to do the next [capital] raise are finding that's not an option any more. They want to at least monetize what they already spent," Marks said in a phone interview. So acquisition deals with a game maker with scale, resources and an established online community can prove to be beneficial for developers that need the extra push to release a game, the exec said.
The free-to-play model has proven to be a viable business model in Asia, where such games generate revenues from virtual item buys and advertising. Acclaim is one company at the forefront of pushing the model in the West, where it's trying to gain more traction.
Marks revealed that Acclaim is in talks with an unnamed European company as part of its newly-announced acquisition initiative, and an announcement is expected in about a month. Chief creative officer David Perry says Acclaim is looking for multiplayer games that are compatible with the free-to-play business model.
Acclaim is hunting for entire companies, as well as individual online games that can be integrated into the game maker's growing community, which is nearing 10 million registered users.
"We're not a marketing company," says Marks. "We don't just want to lend our users. We want them to stay in our community, so we're choosing to acquire the game or at worst, license it ... and grow it from there."
While Acclaim's primary focus is on adapting Asian games for Western markets, the company is working to mix in more Western-derived content. For instance, David Perry is directing the online multiplayer music game Rock Free as well as Prize Potato.
Marks attaches a large dollar figure to another Western-developed Acclaim game: "Spellborn [pictured] is coming out in the next few weeks, and that's a big $25 million MMORPG developed in Europe." Acclaim is the operator and publisher for the game in the U.S. and Europe.
With the economy in the tank, Acclaim has not only found it advantageous to search out new properties, but Marks also says that cash-strapped consumers can turn to his company's "free" entertainment as opposed to more expensive games that use traditional packaged or paid subscription business models.
"Everybody knows that the economy is awful, and what we're finding is that this is a great time to really get on the offensive. We believe very strongly in our free-to-play model, and we believe it's going to benefit from this recession," he says. "I think with the recession, the notion that you spend $300 on a console and $60 per game is postponed. The alternative isn't to play nothing, but to try some free-to-play games.
Asked if he feels like he's competing head-to-head for dollars and mindshare against major paid online game companies, Marks replies, "...It's the free model versus the pay model. We compete on a different level. The biggest hurdle we need to overcome is the perception hurdle. People don't understand the free-to-play model in the U.S. [as they do in Asia]. The question really is how that will evolve in the U.S. and Europe."