Enemy empires do battle as gaming goes online

By NIGEL COPE

It's game on in the battle of the computer games consoles. Anyone who is anyone in this cut-throat $US20 billion ($45.6 billion) industry has been in Los Angeles for e3, the big trade show where key launches are showcased and deals announced.

With gaming now a bigger business than Hollywood or music, the show opened last weekend with the stakes higher than ever as the industry's titans squared up to each other with their latest consoles. First out of the blocks has been Sony with its PlayStation 2, launched last year. Next up is Microsoft, the software giant which has announced the launch of its XBox machine in the United States in November. Then comes Nintendo with its Gamecube, which is due to hit stores next year.

But this next generation of hardware is about more than just consoles, where people play against their friends at home. The new battleground is online gaming where enthusiasts will be able to play anyone, any time, anywhere.

A British company managed to get in on the act when Telewest signed a deal with Sony to combine its high-speed internet network with the PlayStation 2 system. The idea is that fans of PlayStation 2 will be able to use Telewest's broadband technology to play their favourite games. In theory this will enable an Arsenal fan to challenge a Liverpool supporter to an FA Cup final rematch. Or it could mean motorsport buffs linking up to a central server and waiting for a full grid of fellow racers to do the same.

"People who play games are really up for this," says David Docherty, managing director of Telewest's broadband. "Our market research shows that demand is though the roof."

Telewest will start technical trials of the games later this year with consumer trials early next year. It will test a range of pricing models including monthly subscriptions and pay-per-play.

The trial will be based initially on games only but could extend to other internet services such as e-mail and chat. This would enable opponents to send messages during games as the action unfolds.

All this is part of Sony's plan to make the PlayStation 2 a home entertainment centre rather than just a games machine. The Japanese consumer electronics giant has also signed an alliance with AOL that will enable PlayStation 2 users to access the web via a special browser from Netscape.

Also championing the cause of internet-enabled gaming is the mighty Microsoft. Its XBox is being backed by a $500 million marketing budget over the next 18 months. It will be priced at $299 in the US, though Merrill Lynch has estimated that Microsoft will make a $125 loss on every console it sells.

However, the key to its success might be its ability to launch popular games on its format. It was this which hampered Sega Dreamcast, which was the first console with internet access but is now being phased out. Slower internet access was also a problem as Dreamcast was based on narrowband technology.

The only one of the "Big Three" console makers which is standing aside from the internet frenzy is Nintendo. Its Gamecube, which is also due for launch in the US in November and in Europe next year, is intended purely for games.

"We believe ourselves, above all else, to be a gaming company," Nintendo's president Saturo Iwata, has said. "We believe other companies [in the games sector] see themselves primarily as technology companies."

Who will win? Analysts believe the games consoles will prove a more attractive way of accessing online games than the personal computer. As one sector watcher points out: "The people who play online games on PCs tend to be very computer literate and can download games and reconfigure their machines. The man on the street can't do that. He just wants to plug a console into the telly."

Who will win? Historically the market has only supported two successful players with the third falling by the wayside. On sheer financial muscle Microsoft has the edge, though it has no experience in the hardware market and much will depend on its ability to sign up top games.

Sony's advantage is that PlayStation 2 has been available for six months. It also has a stellar list of games such as Lara Croft and the Final Fantasy series.

Nintendo's niche is the younger market where games such as the Pokemon and Mario series have proved great successes. But the Japanese group is hoping the Gamecube will help it to target the key video game age range of late teens and early 20s, taking it head-to-head with Sony and Microsoft.

Some analysts believe that the market may now be big enough to support all three. As one games expert says: "The market is more mature now and the age range is broad enough to support three players."

It promises to be quite a battle.

- INDEPENDENT