Posted on: Tuesday, May 21, 2002
Game makers see growth online
By Gary Gentile
Associated Press
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| Fourteen-year-old Darren Lau, right, is defeated by friend Benny Soo, 19, in the multiplayer interactive game of "Counter-Strike" at a San Francisco computer store that specializes in online gaming. The video game industry is revving up its online offerings this week after a flurry of console price cuts.
Associated Press |
LOS ANGELES — The video game industry is setting its sights online after a flurry of console price cuts that will put the focus less on the hardware itself and more on giving consumers reason to get hooked.
The big three machine makers — Microsoft, Sony and Nintendo — are hoping people will be willing to pay subscription fees for multiplayer interactive games. They're unveiling plans to allow play across time zones and even language barriers using high-speed Internet connections.
While the hype will run thick at this year's Electronic Entertainment Expo, many analysts say online games will take a few years to become more than a niche market as the industry works out issues starting with broadband availability and ending with their ability to offer compelling content.
"At the end of the day, online console gaming is going to be a very small market for the next couple of years," said Schelley Olhava, senior analyst at IDC, a market research firm.
The expo, which begins tomorrow and runs through Friday, gives software and hardware makers a chance to introduce new games and accessories. The industry generated $9.4 billion in sales last year, $3 billion from hardware. By contrast, Hollywood's box office gross last year was $8.4 billion.
Olhava and others believe online gaming will take off in 2004 or 2005, when the next generation of consoles rolls out and high-speed Internet is more pervasive. Currently, a little more than one in 10 U.S. homes have broadband connections.
"Right now, the goal is to create content to drive people who own the consoles to buy more games and, more importantly, drive people who don't own consoles to buy one," said Olhava.
Microsoft's online gaming network, called Xbox Live, is being offered for an introductory fee of about $49 a year, though officials weren't saying what they expect to charge after that.
The offer includes a headset that enables users to talk to one another via their Xbox consoles' broadband connection, effectively creating a phone service during gameplay.
Players can choose online nicknames and locate friends via a "buddy list," while the system maintains a record of their achievements and failures.
Microsoft said it would invest $2 billion in the Xbox, much of it to develop the online game network. Robbie Bach, the company's chief Xbox officer, said almost half the nearly 3.5 million Xbox owners have broadband Internet connections.
Later this week, software companies were expected to unveil versions of games for the Xbox network as well as Sony's PlayStation 2, which will provide online access later this year.
Unlike Microsoft's approach, Sony will not charge a subscription fee and will rely on the open Internet instead of its own closed network for interactive gaming.
Nintendo will start shipping modem and broadband adaptors later this year, but has downplayed the importance of online video gaming in the short term.
Nintendo's GameCube has shipped about 4.5 million units worldwide so far. PlayStation 2 is the clear industry leader with more than 30 million units sold worldwide.
Nintendo yesterday announced the latest cut in console prices, dropping the GameCube system down to $149. Last week, the PlayStation 2 and Xbox saw price slashes down to $199. Unlike its competitors, the GameCube lacks a built-in DVD player.
Online video games are already popular with PC users. Internet services such as Yahoo! and Electronic Arts host card games, chess and checkers and more elaborate role-playing games on their Web sites.
Games such as "EverQuest," made by Sony Online Entertainment, and "Ultima Online," from Origin Systems, have a loyal following of dedicated players who pay a monthly subscription fee plus the cost of software to play using their PCs.
"Online gaming in the past has been pretty clunky," said Scott Burnett, director of marketing at the IBM Global Digital Media Group. "You couldn't get the same experience you could from the box at home, whether it was because of bandwidth, the design of the games or processing abilities."
IBM recently said it would join with butterfly.net to provide the technological backbone to produce online games for personal computers as well as consoles..
