BarrysWorld gets turned upside down by investors.

Online gaming giant feels the pinch and goes belly up

Posted by Staff
In a move that, to be honest, surprised absolutely no-one, BarrysWorld has called in the receivers, proving the time-honoured tradition of making more money than you spend is still relevant, even in the digital age. This follows the company being informed by investors in November of last year that they were looking for an ?exit strategy?. Following Red Hot Ant down the dotcom u-bend, BarrysWorld has further emphasised the point that business cannot function if you simply give away your goods or services. ?We?re proud of what we?ve achieved, we?ve stuck to the plan. We and our investors always knew that we?d need further funding now,? said BarrysWorld favorite TedTheDog, ?but the whole market is falling apart and everyone is frankly too scared to invest the amount of money BarrysWorld requires to run in its current form.?

The whole market is falling apart? If falling apart means that investment institutions are starting to require tangible business plans from their E-investments, well it?s about time.

As the Internet went mainstream at the end of 1997, a strange phenomenon gripped the financial markets of the world?s leading economies. The Internet gold rush was underway. Stories started to appear in the tabloids of eighteen year-old spotty geeks floating companies that began in their bedrooms for millions. All of a sudden it seemed that there were untold amounts of cash to be made, very quickly, and with very little effort. It sounded too good to be true.

What BarrysWorld?s revenue model was remains unclear. The site carries several banner ads and a click-through to a video games E-tailer. In the long term, BarrysWorld would have implemented subscription charges to access their online games servers. There is a fatal flaw in this plan. It is very difficult to convince the consumer that he should suddenly start paying for something that he has received for free in the past. To value your main offering, i.e. online gaming, at nothing at the birth of your business, conditions the player to playing for free. It is unlikely that the player will continue to use the service once he has to pay. He would simply jump ship to the next venture capital funded games servers. Consumer Internet loyalty is as rare as it is expensive.

We spoke to Geraint Bungay, commercial director for BarrysWorld while he was on his way to a meeting at the Institute of Directors. He told us that BarrysWorld is looking to secure further funding or a buy-out from one of three sectors. The first and perhaps most logical is to approach an ISP (Internet Service Provider.) This would provide an established ISP with a dedicated community of online gamers to do with what they saw fit. Another escape plan being considered by BarrysWorld is to merge with a games publisher. This has obvious benefits for the publisher but at what price? The third avenue left to explore is a buyout from, or merger with, a telecommunications company. Cash rich, with an attentive eye on Internet gaming, this would be one of the more likely rescuers for BarrysWorld.

Geraint again blamed the state of the market for the withdrawal of funding. ?With the financial climate the way it is around Internet based companies, it is a shame that we couldn?t have continued to trade. We were expecting to break even across the board by June of this year. We have, in the past ten months, received somewhere short of 3 million in funding, and we expected our combined business interests to cover this amount over the next six months or so. We are trying to keep the company together but pressures to split the assets may become overwhelming.? The fact still remains that around half of the company?s outgoings went on promotional and advertising campaigns. That?s a lot of revenue to recover.


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