FRAGER: How, exactly, did you change the business model?

"Gaming and entertainment, I think, are on a tremendous uptick right now. What I don't see, necessarily is any common understanding ... of the value of that experience."

MORRELL: Well, basically, coming from a retail CD-ROM type of marketplace, I did that for five or six years, and as I moved to the Internet, looking at the possibilities of gaming over the Internet; I saw a resemblance of aggregation of people, customers, consumers, around the ISPs or OSPs, and basically saw the game development companies having the same problem of trying to build product -- getting it in some format and then trying to get it all the way through to the customers.

I looked at Engage, and saw that Engage sits in between as an aggregator. But the best role we could play would be to supply, for the developers, those eyeballs from the ISPs and the OSPs.

FRAGER: What's the present state of online gaming?
MORRELL: I think online gaming is in a tremendous growth phase right now. I think more and more people are turning away from ... I'll say television because I think that's what the surveys I've been reading have said. I think chat was the first, most exciting thing. And then I think people like to chat and they like to explore, but then they like to do other things and like to have common goals.

And so gaming and entertainment, I think, is on a tremendous uptick right now. What I don't see, necessarily is any common understanding, for a consumer of knowing what the value of that experience is. Some places it's free, some places it's $40 to buy a game and then I can get it free after that, and some places it's a dollar an hour. C O N T I N U E D . . . 2 of 3
FRAGER: How do you see solving that mass confusion?

"Of course they want everything for free; why not? But when you give them free ... the level of quality ... becomes pretty boring after a while."

MORRELL: I think that solving is a tough word. I think the market will solve itself, and the consumers will vote with their dollars and the rest of us will follow. Part of what being at Engage is about has been listening and talking to our consumers. I mean, of course they want everything for free, why not? But when you give them free, and I won't name any companies, some companies have given free, the level of quality of game you give for free becomes pretty boring after a while.

It's my belief right now, with the data in today, if it doesn't change anymore, I think they want to give their money to a consistent marketplace, which is probably the ISPs and the OSPs, not necessarily individual gaming companies or aggregators.

FRAGER: Is there anything in a broad sense or a visionary sense that you want to talk about?
MORRELL: Interesting. I think the issue is, trying to find out what are some of the best experiences? What are some of the experiences people are willing to pay for in this gaming environment?

I sometimes struggle with "Do people really want to have the greatest, newest 3-D experience, or do they want to have a game that is more social and a game that incorporates some more traditional types of gameplay or entertainment?" I think I know the answer to it and I think the answer is "There are many types of different games and genres that will work."

But what I'm most interested in as a question is "How do people want to be provided with that information?" Is there a particular format that people like? Do people really like massively multiplayer games or do they like games that form smaller cliques and clubs? Is there an optimum grouping of people where a social experience is fun, and then, just like at a party, sometimes you get into a corner with a group of people because you can't deal with 100 people at one time.

FRAGER: You don't want to deal with 100 people at one time.
MORRELL: Exactly. It's kind of that overload. And why, all of a sudden in a game, a game may be chaos, but is chaos sustaining? Or is it just fun for a few minutes and then I just have to get out of there and go do something else? Because I think the overall online gaming experience will be developed by new games that are developed for the online medium alone. The social atmosphere and that interaction that is dynamic will be integrated by some bright group of people or game developer into this new genre of games that will really kick this industry into that "hockey-stick" growth that we're all talking about. C O N T I N U E D . . . 3 of 3
FRAGER: Do you think that there is going to be this revolution in gaming and building communities totally different from anything we've seen so far?

"I used to sell equipment to banks ... and we sold a device that people in the banking industry said would never catch on ... because it didn't dispense change -- you couldn't get coins out of it. Well this device is called an ATM now ... But years ago, when it was being introduced, people worried about 'How do I cash my check and get 17 cents back with it?' "

MORRELL: Yes. I think it's really going to come down to supplying a place for people to hang out, people to do whatever they want, and maybe just giving them implements or tools to invent their own games or have their own type of entertainment. So it's the same type of thing.

The Internet for gaming, is so new that most of the people are just now learning about it; probably the younger people who see it for the first time, will see it in a more natural state and will say, "Oh, that's really good and I can do this or that with it and create this new environment."

The example I use all the time in the industry -- and people always laugh at me because it states my age -- is I used to sell equipment to banks when I was at IBM, and we sold a device that people in the banking industry said would never catch on. Not to give it away just yet, but the reason they gave that it wouldn't catch on was because it didn't dispense change -- you couldn't get coins out of it. Well this device is called an ATM now and, of course, we can't live without them. I mean, who gets anything less than a $20 bill now out of a machine? But years ago, when it was being introduced, people worried about "How do I cash my check and get 17 cents back with it?" So that's the metaphor I usually use to say, "That same kind of thinking, breaking-the-mold thinking, will happen and I'm hoping that I'll be able to recognize it with the first group of people instead of watching the wave go by me.