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