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Game wars
Compiled from Times wires 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 and more on giving consumers reason to get hooked. Microsoft Corp. outlined plans Monday to launch an Internet gaming service for its Xbox game console. Starting this fall -- the company didn't specify a date -- Xbox owners who also have a high-speed Internet connection will be able to play each other through an online service called Xbox Live. For $49.95, Xbox owners in North America, Europe and Japan will be able to purchase a year's worth of access to the service and a headset-style communicator device that connects with the Xbox. 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. Internet connectivity for video game consoles such as the Xbox or PlayStation 2 has been the subject of a great deal of industry discussion and hype, but so far the only game console to let users play online has been the since-discontinued Sega Dreamcast. Sony is planning to announce today an online version of the best-selling computer game The Sims for the PlayStation 2. The third major consolemaker, Nintendo, recently announced that it will start selling Internet modems for its GameCube this fall. 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. 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. 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. Olhava and others think 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," Olhava said. Microsoft detailed its plans on the eve of the video game industry's annual expo here. While video games companies regularly jostle for attention at the show, the competition started earlier than usual this year when Sony and Microsoft announced a price cut in their respective consoles, from about $299 to $199. Not to be outdone, Nintendo also announced a cut in the price of its GameCube console, from $199 to $149. Unlike its competitors, the GameCube lacks a built-in DVD player. "Our goal is to get as many hardware units out there as possible so we can sell software against a bigger installed base," Nintendo marketing executive George Harrison said. "This year, it's going to be a battle of software." The expo, which begins Wednesday 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. -- Information from the Washington Post and Associated Press was used in this report.
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From the Times Business report
From the AP
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