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Where the Net's Your Playing Field

Microsoft and Sony are the latest aiming to lure video gamers online. And charge for it. So far, the concept hasn't caught on too well.


For years, the makers of home video game consoles have chased the elusive dream of online play--using the Internet to not only connect far-flung players but deliver a giant menu of interactive entertainment.

Going online means being able to challenge opponents from across the world, not just across the living room. It means being able to download new levels, characters, weapons, outfits, missions and arenas for existing games. And it means a regular diet of new, "episodic" games and upgrades.

The prospect of charging eager gamers for these goodies has lured numerous companies through the years into the morass of online gaming. Nintendo Co. in the mid-1980s gave Japanese owners of its 8-bit NES console the ability to trade stock and bet on horse races. Sega Corp. last year spent $100 million to launch an online game network for its ill-fated Dreamcast console. Despite these efforts, the concept of Internet-capable consoles has yet to catch on with all but a small group of dedicated players.

The latest to fall under the online spell are Microsoft Corp. and Sony Corp., both of which announced ambitious efforts to take their new consoles online. Even Nintendo is taking another crack, albeit more cautiously.

The short-term potential looks bleak. Online revenue for consoles in the United States is expected to be a puny $620,000 this year, rising to just $3 million in 2002, according to an upcoming report from Jupiter Media Metrix. Online revenue from PC games, meanwhile, is expected to reach $350 million this year and $550 million next year, said Billy Pidgeon, analyst and author of the Jupiter report.

So why bother? The answer, said Jason Bell, senior vice president for creative development at French game publisher Infogrames, is simply that hope springs eternal. Console firms see big money in being a portal for digital entertainment. "It'll be a cable channel model," Bell said. "Publishers will develop content that they will sell to Sony or Microsoft, which will provide all the back-end support such as customer support, online infrastructure. Microsoft and Sony will be the equivalent of a television network."

In the meantime, what can gamers expect in the next two years? Here's a look at the strategies shaping up for each console.


Of all the console manufacturers, Microsoft is in the deepest.

Its Xbox console, expected to ship Nov. 15, will have a built-in Ethernet adapter and an 8-gigabyte hard drive, giving it an enormous technical advantage over other consoles.

Microsoft is betting on broadband, even though fewer than 10million households have high-speed Internet connections, according to Forrester Research in Cambridge, Mass. The company line is that dial-up connections cause lags and delays that make "twitch" games problematic. The hard drive also speeds up action by caching data and taking the load off the central processing unit.

A showcase Xbox title will be "Unreal Tournament," a classic shooter to be released next year by Infogrames. Gamers will be able to frag opponents over the Internet and communicate by talking into headsets. Microsoft and other console companies believe that players can be most effectively lured online by the social pull of playing against another person.

Another universal dictum is that getting online has to be seamless and simple. Ideally, once the console is hooked up to a broadband connection, the gamer pops in a disc and is automatically online.

To make this happen, Microsoft is devoting more engineers to creating an online environment than to making the box itself, said J Allard, Microsoft's general manager for the Xbox. Microsoft also has 100 servers to test more than 20 online games being developed by other game companies. "We're making a huge investment," Allard said.

To pay for that investment, Microsoft is expected to charge players a monthly subscription fee for the service. Although a price has not been settled on, Microsoft's internal market research has shown that many consumers are willing to pay as much as $10 a month, on top of any fees to get high-speed Internet access.

Microsoft also is said to be in talks with Square Co. to bring "Final Fantasy XI" to the Xbox, according to company sources, but those discussions are complicated by the fact that rival Sony recently purchased a 19% stake in Square.

Another glitch might be Square's strategy to develop a platform called "Play Online" for millions of "Final Fantasy" fans, regardless of whether they are playing on the Xbox, PlayStation 2 or PC. This runs contrary to Microsoft's aim of creating a tightly controlled environment for Xbox players only. The idea is not only to prevent PC viruses from infecting consoles and to keep hackers at bay but also to cultivate Xbox online as an exclusive games channel for delivering future content, be it games, music or other forms of digital entertainment.

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