Lycos Prays GoD Will Deliver Revenue

Lycos announces that its Gamesville on Demand service allows users to pay-to-play popular PC games without purchasing the software, and the company also announces a new alliance with Intranet.com to provide additional services to Lycos' small business customers.

by Dan Muse of internetnews.com [March 20, 2002]

Continuing its transition from free to fee, Terra Lycos has launched a subscription video game service through its Gamesville on Demand (GoD) section.

The offering allows users to play popular PC games such as "Roller Coaster Tycoon," "Slingo" and "Centipede" at any time without purchasing the software.

"Our unique offering will attract a whole new audience of users who are looking to take advantage of their high speed connections with premium services," said Meredith Hanrahan, vice president of entertainment for Terra Lycos.

According to Jupiter research, more than 47 million consumers currently play PC games each month. And online gaming revenue is forecasted to grow from $210 million in 2001 to $2.5 billion by 2006. The Gamesville on Demand service is powered by Into Networks, a streaming software provider.

Terra Lycos, a Spanish Internet giant with U.S. operations in Waltham, Mass., outlined several pricing options for Gamesville on Demand. In addition to promotional trials, they include: one game, seven days, $4.99; five games, 30 days, $7.99; or all games $14.99, 30 days.

The company, which operates a network of search, e-commerce, and information sites, has introduced paid services to offset the year-long slump in advertising revenue. Other paid sites include Tripod, Angelfire, MatchMaker and Lycos InSite.

In related news, Intranets.com and Terra Lycos announced a partnership to offer Lycos's Communities and Small Business site members intranet services. Subscribers to the new service will be able to exchange documents, share information, create schedules and calendars, and have discussions online.

Under the terms of the partnership, Intranets.com will host and support two private-label products: Lycos Premium Communities and Lycos Business Intranets. For Lycos, the partnership will provide a new source of subscription-based revenue. For Intranets.com, the deal represents a shift to a private-label sales approach to complement its direct sales.

"Lycos is a perfect fit for our private-branded intranets," said Rick Faulk, CEO of Intranets.com. "Lycos has established a large base of loyal users who, by virtue of their participation in the Communities and Small Business websites, have shown a need for the communication and collaboration power of our intranet service."

Lycos Business Intranets features 12 intranet applications including a drag-and-drop document sharing library, a contact database, a group calendar, discussion groups with threaded discussions, group polling, a task manager, an expense report application, threaded discussions, and 100MB of storage. Users can sync information with Microsoft Outlook and Palm devices as well as access information via WAP-enabled phones.

The Lycos Premium Communities will give new and existing communities members access to a set of communication applications including document libraries, a group calendar, member and contact databases, group polling announcement posting, and discussion forums. Unlike Lycos' current offering, the Lycos Premium Communities intranet will be free of banner advertising.

"Our users have been asking for their own private and secure Web-based communication platform without banner ads, as they want to communicate more effectively within their own business, group, team or club. Lycos Intranet premium services reinforces our commitment of moving our users from strictly free services to higher value, paid services," said Bryan Burdick, vice president of portal services for Terra Lycos U.S.

The subscription service is $29.95 per month for five users, and $5.95 for each additional user.

Intranets.com is a company that knows a thing or two about converting from free to fee-based services. Last June, the company made the transition from a free, ad-revenue based service to a paid model. Having lived in the ad-supported world, Intranets knows where its new partner is coming from. "For portal providers, ad-revenue support isn't enough. They need to get subscription revenue where it needs to be," Faulk told ASPnews.

Since converting to a paid model, Intranets.com has focused primarily on a direct sales approach. However, Intranet president Tim Peacock told ASPnews that the company's goal is a 50/50 split between direct and private-label partner sales.

The model Faulk and Peacock envisions is similar to the strategy employed by companies such as Trellix, which provide private-label website building tools to ISPs, hosting providers, and telcos.

While following the lead of website tool building providers makes sense, Intranets.com executives know selling intranet services will bring unique challenges, and the company needs active partners with loyal subscribers. "It's difficult to market intranets services with links," said Faulk. "Lots of people approach us to partner. We are very selective in who we go after. They need a salesforce on the street."

Faulk said that Intranets.com is also looking to partner outside the realm of ISPs, telcos, hosting providers and portals. "Other potential targets are franchise verticals such as national real estate agencies."

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