Tuesday, June 17, 1997

AOL expected to announce hourly fees for games

By George Mannes

New York Daily News

(KRT)

America Online, which triggered a stampede of all-you-can-eat pricing in cyberspace, is returning to an a la carte menu.

Scarcely six months after AOL introduced a $19.95-per-month pricing plan for unlimited usage, the company is expected to announce Tuesday that it will start charging subscribers extra if they want to play games in a new section of the service.

AOL refused to provide details on the move Monday, but published reports said the company would charge roughly $2 an hour for some games.

The move would give AOL, the largest online service provider in the world, a chance to get a piece of the extra subscriber revenues it lost when it stopped charging per-hour usage to most subscribers and started offering a flat rate instead.

That prospect boosted AOL's stock Monday, sending it surging 2-1/2 to $61. The rise also came as the service announced that it had reached 750,000 subscribers outside the United States a year and a half after launching its first international service.

While Wall Street is embracing AOL, consumers are sure to be steamed by the company's move to charge so soon after it introduced flat-rate pricing.

The company's reputation has already been bruised by the traffic jams on its network that occurred in the months following the service's move to a flat rate. That prompted Chief Executive Officer Steve Case to vow consumers would get the service they paid for.

Monday, gamers chatting on the service said they were dead set against paying the reported $2 an hour AOL would be charging for some games.

"FLAT is FLAT, no extras," wrote a user going by the name El Seth.

"yeah!!!!" responded DDeriso114.

Dave Cassel, an AOL watchdog, said he'd already received a piece of e-mail passed among dozens of AOL users protesting the move.

"Tell them you will not pay extra fees for any online game!" urged the letter.

Though per-hour game fees could turn off many users, the ultimate payoff for AOL could be huge, said Abhishek Gami, a vice president with the investment firm Nesbitt Burns.

Ninety percent of online users typically desert any online service once it starts charging subscription fees, Gami said. However, he estimated that within a year AOL could have 250,000 paying gamers, worth $14 million in additional earnings per year.

It is expected the service, known as WorldPlay Entertainment, will not charge users for all games. Many will be free, Gami said, and be supported by advertising instead of hourly fees.

One analyst who had previewed a version of WorldPlay gave it good reviews. "It's easy to use. It's a fairly comfortable environment," said Seema Chowdhury of Forrester Research. "I think it will appeal to first-time users."