Consoles bet on online video games
By Byron Acohido
USA Today
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Likewise, they have begun marshaling allies and are maneuvering to capture the loyalties of game designers.
Still, they are blazing divergent paths. While Microsoft strictly controls how games are presented on its service, Sony leaves it up to game publishers, Internet service providers and telecoms to decide how to offer online games — and work out how they get paid.
Whatever approach emerges as dominant will lead what is expected to be a strong market. Jupiter Research expects the number of game consoles connected to the Internet to double this year to 2.1 million, or 2 percent of U.S. households, and be in 14 percent of U.S. households by 2007.
Those projections have grabbed the attention of console makers, game makers, Hollywood studios and telecom players.
If Microsoft and Sony can sow the seeds, online gaming could blossom into a multibillion-dollar boost for broadband use and paid Web services.
Big bucks, big hopes
For now, both companies are rolling out ambitious plans to get consumers to link Microsoft's Xbox console and Sony's PlayStation 2 console to Internet-based gaming services that allow players to team across the Web and zap aliens, seek lost treasure or join cross-state mahjongg tournaments.
Microsoft has been the most proactive, earmarking $2 billion to establish Xbox Live. Launched in November, Xbox Live has attracted 350,000 patrons, thrice what experts predicted.
A $50 starter kit includes a headset that allows players to chatter in real time with other players and 12 months of free access to any Xbox Live-enabled game, purchased separately. Microsoft hopes to cash in by someday charging subscribers monthly fees for various levels of service, much like cable TV. Its goal: 10 million paying Xbox Live subscribers in five years.
But for now, Xbox will operate at a loss. "We view this as a 20-year investment," says J Allard, Xbox platform vice president. "This is all about creating a foundation that enables the future of gaming."
Meanwhile, Sony has sold 500,000 PlayStation 2 Internet adapters. And its PlayStation console has outsold Microsoft's Xbox 50 million to 9 million.
"Microsoft is still trying to find some hook to get consumers interested," says Jack Tretton, executive vice president for Sony Computer Entertainment America. "We see online gaming as an added benefit to consumers who've already purchased our machine."
In a bid to increase its lead, Sony recently announced it will tap IBM computer grids — networks of computer servers that can be exploited to crunch vast amounts of data swiftly — along with new software from startup Butterfly.net to enable game developers to more cheaply handle the complex links that let thousands of players interact in an always-on virtual world.
Butterfly CEO David Levine believes that too many iterations of partnerships and specialized gaming services will emerge for Microsoft to dominate.
Are movies, cartoons next?
While new game makers get rolling, old-line content providers such as Disney and AOL Time Warner have their eye on the emerging market.
Disney is testing a PC online game, Toontown.com, with no violence or sexual innuendo, which it may later make available as an online console game. Discussions are under way about converting Warner Bros.' movie franchises, such as "Harry Potter" or "The Matrix," into online console games.
Foreshadowing partnerships to come, AOL last fall teamed with game publisher Electronic Arts to promote NBA Live, a PlayStation 2 online basketball game. Players who used AOL to access the game received special cheat codes and a one-of-a-kind music track.
