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Microsoft's Gates Details Plan for Xbox in Japan

On the heels of yesterday's agreement to partner with NTT Communications to put the celebrated Xbox on broadband in Japan, Microsoft Corp. Friday expanded on this and all but vowed to corral the gaming market in Japan.

As the keynote of the 2001 Spring Tokyo Game Show, Microsoft Chairman Architect Bill Gates outlined a strategy to entice game makers to build content for the device. Gates' said he has secured commitments from more than 70 Japanese game companies, including powerhouse Sega Corp, which he said would furnish 11 titles on the device. Xbox is slated to hit stores in fall 2001.

"With Xbox, our goal is to create the future of video gaming, and our work in Japan will play a key role in achieving that," Gates said.

Microsoft's pledge is no small undertaking; the software giant has pledged to pump $500 million in the first 18 months of the Xbox's launch on marketing. One of the company's main selling points is to tempt developers, and ultimately consumers, that the game console would yield three times the graphics of current game systems, including the vaunted Sony PlayStation 2.

With tough competition from mainstays Sony and Nintendo, securing Sega, which boasts a net worth of $2.5 billion and is acknowledged as the industry leader in interactive digital entertainment media, is a quality score. Sega will premiere "Jet Grind Radio Future" (tentative title), the latest version of "Panzer Dragoon," "GUNVALKYRIE" and the latest version of "Sega GT." Sega also agreed to consider harnessing the Xbox Ethernet port and hard disk drive features to create new online games.

Jefferies & Company analyst James Lynn told On24 Friday that having Sega games made exclusively for the device could attract more users to the console.

On the flipside, the deal is highly positive for Sega, which desires to beef up its game software development.

In Thursday's deal with giant telco NTT Communications, Microsoft said the two firms would work together to build a broadband online gaming service for Japan. Gates also touched on a plan for online video games, in which Xbox gamers can connect to a high-speed, always-on game network. This new service, slated to launch in 2002, will offer gamers in Japan a new way to experience game play and potentially evolve the idea of connected gaming from a novelty to a standard method.

NTT Com, Japan's leading telecommunications company, will provide Microsoft with access to ADSL through OCN's broadband services.

Microsoft has also said it would create an Xbox Division in Japan to facilitate the online gaming services. The division is responsible for managing third-party relationships with Japanese games companies, and for managing Xbox operations, marketing, research, sales and support in Japan.

Gates said he envisions scenarios for Xbox online game play in the future, including the notion that Xbox gamers will be able to connect with online gaming communities to compete in social environments.

Earlier this week, Microsoft announced changes to the pending game console, including an upgrade from an 8-gigabit (GB) hard drive to a 10 GB device. It may be used to save games, download add-ons and new games, and support other functions.

The company has also promised to use an encoder chip made by Conexant Systems to hook up the Xbox to digital and traditional analog TV sets.

*Clint Boulton is Assistant Editor, InternetNews.com, a property of Internet.com.