Online Gaming : New front for Developers in the ´Syste

Templehorn · Post by **Templehorn** » Tue Sep 17, 2002 3:20 pm

http://www.cnn.com/2002/TECH/fun.games/ ... index.html
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 Game developers gear up for cyber wars
 Online gaming key to beating the software competition
 September 17, 2002 Posted: 10:28 AM EDT (1428 GMT)
 
 
 TOKYO, Japan (Reuters) -- Online gaming is still seen as a risky business, but Japanese software developers are positioning themselves -- some aggressively and others cautiously -- for a new battle over the next frontier of videogame play.
 
 And analysts say online games, in which users go head-to-head over Internet connections, could hold the key to success in boosting their war chests over the long term.
 
 "We are talking about incremental revenues, subscription-based business and very stable revenue streams for a company that is engaged in a hit-or-miss business," said Jay Defibaugh, an analyst at Credit Suisse First Boston.
 
 Japanese game publishers are expected to ring up profits, at least for a few years, from brisk sales of traditional software as the three mega console makers -- Sony Corp., Nintendo Co. Ltd. and Microsoft Corp. -- wage price wars, spurring demand for hardware as well as software.
 
 But the longer-term prospects for Japanese game publishers appear less rosy than they would like.
 
 The costs of developing software titles are rising as consoles have become highly advanced, armed with powerful chips that offer faster games and dazzling graphics.
 
 
 Some analysts also noted that ordinary packaged games, which usually sell for $55.50, now look expensive compared with the consoles and may have to undergo price cuts.
 
 With console systems all hooking up to the Web, growth of the online game market is expected to accelerate.
 
 Sony began selling network adaptors early this year while Nintendo, which had been the most wary about online gaming among the three, plans to release a similar device in October.
 
 Microsoft, the most aggressive of the three, will start a trial run for its online game service, Xbox Live, some time after October in Japan.
 
 The earlier the better
 Daisuke Kobayashi, a game developer at mid-sized software firm Enix Corp, says having a head start is key as players tend to concentrate on a few online game Web sites and are unlikely to move on to newer offerings.
 
 Unlike conventional software business where games can be popular even if similar titles exist, only one or two online games per genre can survive, he said.
 
 "It´s very much like an oligopoly," said Kobayashi. "It´s first come, first served."
 
 In July 2001, Enix launched the online game "Cross Gate" for personal computers and now has six million registered players in Asia, including Japan, with one-tenth of them being avid users.
 
 Kengo Nakajima, president of CommunityEngine Inc., an Enix affiliate that offers online game system solutions, said publishers need time to groom new types of creators as online games require a different set of skills than traditional titles.
 
 "You need people who know the power of having a mass audience, who can communicate with them and are flexible about listening to them," Nakajima said. "It´s like being a politician, and we don´t see many people who meet these criteria."
 
 Capcom Co. Ltd. rolled out racing and fighting online games in 2000 for dial-up connections on PlayStation 2, and plans to offer its hit "Biohazard" action game for possibly broadband and "Tekki" for Xbox Live.
 
 "We are at the stage of planting seeds before the blooming season comes," a Capcom spokesman said.
 
 Sega Corp. also started offering its role-playing mainstay "Phantasy Star Online" games for Nintendo´s GameCube earlier this month in Japan.
 
 Uncertain market
 Still, some analysts said community-type online games in which a large number of players participate won´t take off for a few years, as they require hefty investments to run Internet servers and support other network systems.
 
 Instead, they said, online games where people play one-on-one, or with a small number of people, will likely be the main format.
 
 "Until the next generation of game consoles comes out, people will likely play peer-to-peer online games," said Takashi Oya, a senior analyst at Deutsche Securities.
 
 Oya also said software developers have been disappointed by a slow start for Square Co. Ltd.´s "Final Fantasy XI," an online version of its popular role-playing game that sold more than 38 million copies globally.
 
 Since its May launch, the online game so far has amassed 120,000 players.
 
 Credit Suisse First Boston´s Defibaugh said financial strength is a crucial factor, but added that just as original ideas brought major success to some small Internet businesses, online gaming could represent a vital opportunity for many firms.
 
 "I´m quite sure that they do see opportunities here and they do feel that at least early on, some amount of investment is required and appropriate," he said.
 
 [ This message was edited by: Templehorn on 17-09-2002 12:21 ]