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Online Gaming Gains Console Converts

27 Nov, 2003 By: John Gaudiosi

As Sony heads into the fourth year of PlayStation 2 and Microsoft's Xbox marks its third anniversary, the focus for both companies has been software. In addition, both Sony and Microsoft are pushing their online gaming initiatives with completely different business models.

Last fall, Sony shipped a first-person shooter made in conjunction with elite Special Forces soldiers. The game has sold more than 2 million units worldwide and helped Sony launch its online initiative. More than 40 percent of SOCOM users are playing the game online, and the game helped Sony sell more than 880,000 units of its Network Adaptor ($40), a small fraction of the more-than-20 million PS2s in North American homes -- not bad for a $40 add-on peripheral. Sony's SOCOM II and the release of the PS2 hardware bundle for $199 -- which includes the Network Adaptor, a PS2 and the online game ATV Offroad Fury 2 -- have enabled more than 1 million PS2s to connect online.

With the largest online console gaming community in North America, Sony will continue to push the online content for PS2. Sony EVP Andrew House said that 20 percent of the 200 titles shipping this year will have online game play. There are 25 online-enabled games on store shelves, with an additional 25 expected to ship by year's end. Electronic Arts, the biggest game publisher in the world, will provide online gaming for 13 of its titles exclusively for PS2, including its best-selling sports games, James Bond: Everything or Nothing, Madden 2004 and The Return of the King.

Sony will stick with its open model for online gaming, allowing third-party publishers to charge monthly subscriptions for online games (Square Enix's March release Final Fantasy XI will have a $12.95 per month fee), to charge users for downloads to existing games or to provide free content.

In March 2004, Sony will ship a 40GB hard-disc drive for $99, which will come installed with Final Fantasy XI. The plug-and-play device will slide into the back of the PS2 and allow gamers to download and store new game missions for such games as SOCOM II and Syphon Filter: Omega Strain. A media player comes installed on the disc drive, allowing for video and audio controls. House said that down the line, he expects PS2 players to create original content and share it with other PS2 players (something PC gamers can do). In the future, gamers also will be able to download and store other forms of entertainment.

Microsoft is charging Xbox Live gamers to play online. The Xbox retails for $179 with two free games included and has a built-in 10GB hard drive and Ethernet port, while an Xbox Live membership costs $50 a year, or $5.99 per month. In addition, gamers can buy a Voice Communicator for $30 or an Xbox Live Starter Kit, which comes with the Communicator and the online game MechAssault, for $70.

By year's end, there will be 70 Xbox Live-enabled games available, including Project Gotham Racing 2, Counter-Strike, Crimson Skies: High Road to Revenge, Star Wars Jedi Knight: Jedi Academy, Rainbow Six 3 and Ninja Gaiden.

“Although console gamers like to play games alone, according to a survey we recently did, most gamers were interested in at least trying out an online game,” said Billy Pidgeon, analyst at The Zelos Group. “Online game play has become a staple of sports and military sims, to the point where games that don't support online gameplay aren't selling as well as those that do.”

Everyone from Microsoft (XSNsports.com) to Electronic Arts (EA.com) to Sony (989Sports.com) to Sega (ESPNVideogames.com) has an online sports Web site set up for players to compete online in full virtual seasons and tournaments. Team-based military games like Sony's SOCOM, which allows 16 players to compete on two teams and an additional eight players to view the action, supports 11,000 to 14,500 simultaneous players and between 50,000 and 60,000 people a day.

Experts expect console online games to help drive broadband sales when the next generation of game consoles launch in late 2005 or 2006. During the current life cycle, Sony and Microsoft are getting console players used to online gaming, which has long been a staple of PC gaming. Analysts believe Nintendo's decision to stay out of the online game space with GameCube, due to the lack of a guaranteed profitable business model, hurt the console's sales. Pidgeon said that online gaming functionality is a selling point, even if the consumer doesn't plan on playing online games today.

The next generation of machines, which will come equipped with hard-disc drives large enough to store downloadable movies and games, also will open up unique rental and direct-purchase opportunities for gamers via broadband.

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