[MUD-Dev] Game On(line) for Microsoft, Sony
talien at toast.net
Fri Apr 18 08:14:19 New Zealand Standard Time 2003
Game On(line) for Microsoft, Sony
By Byron Acohido
April 15, 2003
Microsoft (Nasdaq: MSFT) and Sony (NYSE: SNE) share a conviction
that playing video games over the Internet is ripe to become as
popular as e-mail or instant messaging -- only much more
lucrative. 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.
That presents potential partners with a choice: embrace Xbox Live
and let Microsoft take care of security, billing and nurturing a
cohesive gaming community, or go with Sony's laissez faire approach.
"It's an open vs. closed architecture bet," says Jay Horwitz,
Jupiter Research senior technology analyst. "Sony is saying, 'We
don't know what this is going to look like, so let's make it as open
and extensible as possible to see what works.'"
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% of U.S. households, and be in 14% of U.S. households
Those projections have grabbed the attention of console makers,
gamemakers, 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
"We're very hopeful they will succeed ... and create new business
opportunities for us all," says Ken Goldstein, executive vice
president of Disney Online.
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 mah-jongg tournaments.
Microsoft has been the most proactive, earmarking $2 billion to
establish Xbox Live, a meticulously controlled online service that
has earned rave reviews. Launched in the USA in November and
recently in Japan and Europe, 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 across town or abroad, 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
But for now -- and for years to come -- 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. And the future of gaming will be
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 (NYSE: IBM) computer grids -- networks of computer servers that
can be exploited to crunch vast amounts of data swiftly -- along
with new software from start-up 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.
That approach has lowered the entry barrier for start-ups like
Sherman3D, based in Malaysia, to begin developing virtual
playgrounds accessible via multiple computing devices.
"You'll be able to play our game on a PlayStation 2 at your friend's
house, then go home and play the exact game on your PC, or play it
on your mobile phone," says Curt Benefield, Sherman3D CEO.
Movie, Cartoon Games Next?
While new gamemakers get rolling, old-line content providers like
Disney and AOL Time Warner (NYSE: AOL) have their eye on the
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 underway about converting Warner
Bros.' movie franchises, such as Harry Potter or The Matrix, into
online console games.
Foreshadowing partnerships to come, AOL, a frequent Microsoft rival,
last fall teamed with game publisher Electronic Arts (Nasdaq: ERTS)
to promote NBA Live, a PlayStation 2 online basketball game. Players
who used aol.com to access the game received special cheat codes and
a one-of-a-kind music track by rap artist Busta Rhymes.
"We believe in the open approach," says Matthew Bromberg, AOL's
games vice president. "We're going to partner with the broader
community to help them figure this out and help the industry grow."
Butterfly CEO David Levine contends too many iterations of
partnerships and specialized gaming services will emerge for
Microsoft to dominate. "Xbox Live will become this archipelago
completely separate from the mainland of online gaming," Levine
But Allard says Microsoft will do what it takes to make Xbox Live
the de facto standard, providing a spectrum of games that attracts a
"The big question is whether we can get you to come back, bring
friends and spend some money with us, our publishers and our
retailers," Allard says. "That's when we all can look at this as an
enormous fiscal opportunity."
Mike "Talien" Tresca
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