RealTime IT News

Xbox Live Comes Online

Microsoft swept in a new world of online console gaming Friday, unveiling its "Xbox Live" broadband game service for its Xbox game console.

While Microsoft is the last of the big three console makers to enable online play on its console, the Redmond, Wash., software behemoth is pursuing a very different strategy from Japanese firms Sony and Nintendo. Sony and Nintendo are only providing network adaptors that allow connectivity, customers must supply their own Internet Service Providers and game publishers must supply infrastructure for their own games.

Microsoft, on the other hand, is positioning itself to take a more central role in online gaming -- and to create a new revenue stream -- by supplying gamers with connectivity services and game publishers with the underlying infrastructure to enable online play. Of course, Microsoft, as one of the world's largest game publishers, will benefit from the infrastructure it has put in place.

"I think that they have different places in the market," David Cole, president of DFC Intelligence, a market research firm focused on the gaming industry, told internetnews.com in September. "Sony has a nice install base and is comfortable in its leadership position. Microsoft is trying to be a pioneer, to build a new market. Both strategies make sense in terms of these companies' respective positions."

In research published in August, Cole noted, "It is important to understand the strategies of the three major players. There is a big difference between the attitudes of Microsoft, Sony and Nintendo. Microsoft is making a big bet that the future of console online gaming is now. They have built-in online support and are spending a great deal of money building a proprietary online service. On the other hand, Sony and Nintendo seem to be of the attitude that, in the short term, online gaming will be something for the hard-core. Their current systems require separate add-ons to play online games. Even more telling, neither Sony nor Nintendo will launch their own proprietary online game service in the short term. Instead they are leaving it to individual publishers and developers to create their own services for individual games. Of course, this does not mean that down the road Sony or Nintendo will not build their own service."

To access Microsoft's service, Xbox gamers have to buy a $49.95 starter kit, which includes 12 month's worth of access to the Xbox Live service and a headset kit for voice communications. Microsoft said about 16 games with online play capabilities will be available by the end of the year. To support the service, Microsoft has built data centers in Seattle and Tukwila, Wash. (as well as London and Tokyo, to serve European and Japanese gamers).

The Xbox Live service offers gamers a number of features, including:

  • Gamertag, a unique online ID for all gamers across the service
  • Friends list, a feature that will allow gamers to find friends online and invite them to a game
  • Xbox Communicator, integrated voice communication that allows for voice interaction with teammates and opponents, and also features voice masking, global muting and parental control
  • Matchmaking, which allows players to enter games and find opponents based on similar skill levels
  • High-speed downloads to the Xbox hard disk.

Microsoft has sunk $2 billion into its efforts to bring online console gaming to its customers in North America, Europe and Japan -- all in the hopes of capturing a commanding position in the online gaming market. London-based audio/visual media research firm Screen Digest predicted in October that online game revenues will be more than $1 billion by 2006 -- including PC-based online games, like Sony's subscription-based massively multi-player online roleplaying game (MMORPG) Everquest, which draws 430,000 players worldwide who buy the software and pay $13 a month to play in the online realm. And DFC Intelligence believes there will be 23.4 million online console gamers by 2006.

The general video game market racked up $9.3 billion in revenues last year, outgunning Hollywood's box office take of $8.1 billion by a cool billion dollars. According to research firm InStat/MDR, console games accounted for nearly $7.4 billion of that revenue.

Sony unveiled its Network Adaptor, with a price of $39.99, on August 27. Its Network Adaptor allows both broadband and narrowband connections. The firm has sold about 200,000 Network Adaptor's since the launch and predicts it will sell 400,000 by the end of the year. Meanwhile, Nintendo launched its network adapters in October, at price points of $34.95. Consumers have the choice of narrowband modems or broadband adapters.