By Zach Kaufmann
23 February 2009

Last October, the Cyberathlete Professional League (CPL—yes, there is such a thing) announced it’s first ever $1 million Halo 3 competition at the Extreme Winter Championships in Dallas, Texas. This was an unprecedented amount of money to give away at a video game tournament, even for CPL, which, in the last 10 years, has given away more than $4 million in cash and prizes. The competition was in part prompted by the Major League Gaming Association (MLG) signing four Halo 3 gamers to a $1 million contract the year before. The CPL and the MLG (along with half-a-dozen other companies) host tournaments for other video game systems and games: PS3, Nintendo Wii, etc. Halo 3 just happens to be the most popular.

So this was pretty big news for college students who spend more hours a week playing video games than studying for classes. Finally, a way to make money that doesn’t involve a college (or high school) degree. Unfortunately, professional video gamers who actually make money off playing video game tournaments practice anywhere from 8 to 10 hours a day, so it’s not really something just any old college student with a GameCube or and Xbox can afford to do. However, some avid college video gamers have turned their love for first-person shooters and RPGs, as well as their IT programming knowledge, into a whole lot of money—by designing their own online video games and user-created video game hosting sites.

Four of the top Internet games sites: Runescape, PopCap Games, Newgrounds, and Miniclips—with 43 million users per month—is also the largest privately held Internet website. All four sites were founded in the late ‘90s or early ‘00s by college students or recent college graduates. Miniclips, founded by Robert Small and Tihan Presbie back in 2001, turns about $35-40 million in profit annually, most of it through advertising, paid subscriptions for certain games, and sponsorships from film studios, which pay Miniclips to make games like Spiderman and Pirates of the Caribbean, timed with the release of the films themselves. Small, now 32, had only recently graduated from college when he and Presbie founded Miniclips. With about $70,000 as an investment startup, some of it borrowed from Small’s grandfather, the two set up the site and designed a popular game called Dancing Bush, in which users could make an animated President Bush dance around. That game got them 2 million users by the end of their first month, and everything went from there.

Runescape, a free Java-based Massively Multiplayer Online Role-Playing Game (MMORPG), also officially debuted to the public in 2001. Andrew Gower designed the game when he was an undergraduate at the University of Cambridge, working on various beta versions from 1998 up until its official release. Runescape has 14 million registered users with more than 150 game servers worldwide. Gower has since partnered up with other games sites, including WildTangent, and developed his own official games site, Jagex. According to the UK Business Times, he’s worth around $210 million.

So what advice can gaming entrepreneurs like Small or Gower offer you? For starters, know your audience and draw them in early. When Gower founded Runescape he set a goal of 5,000 users by the end of the month, which he met through constant tweaks and updates taken from actual player suggestions. A video game site can’t afford to ignore its users’ feedback, particular in the early weeks and months. As Gower told GamePro magazine, “We are constantly updating, adding to and improving the game. If you look at the game now and compare it to five years ago is has come a very long way and it is continually progressing and getting better. I think this commitment is important because it gives something for the players to look forward to, RuneScape is never standing still.

"Secondly it means the game is continually expanding and hopefully staying ahead of the demands of our gamers.”

Small says much the same thing. “Make your product great,” he told the UK Business Times in an interview earlier this year, “and it will get talked about. Don’t get distracted by PR and marketing until you’ve got that right.”

And like Gower, Small knows about the advantages and disadvantages of the Internet: it makes for cheap and easy start-up, but a lot of competition. “It helped to be small,” Small said. “We could make decisions instantly and get things done quickly. When you are small, you should capitalize on the opportunity this gives you to move quickly. First-mover advantage can be very powerful.”