Online Gaming Updates

THE WALL STREET JOURNAL ONLINE
December 30, 2005
http://online.wsj.com/public/article_print/SB113529311826629896-D5ElsazTwuJgA_Yth540V57qAPk_20061229.html


Microsoft Corp.'s new Xbox 360 videogame console comes bundled with lots of bells and whistles, such as movielike graphics. But Microsoft's bid to reshape the videogame industry largely is tied up in one feature: the machine's emphasis on online play.

Microsoft is making a big -- and risky -- bet that videogame players will flock to the opportunity to play lots of games against each other over the Internet. The Xbox 360, released in the U.S. last month, lets users play more games online than the original Xbox. It also lets users purchase and download games.

The company has spent hundreds of millions of dollars on its online service, Xbox Live, analysts say. To attract more online users, Microsoft is bundling free but limited access to its online service with the Xbox 360. But to play games against others, users must subscribe for $50 a year. That doesn't include the cost of games, or the required high-speed Internet access.

The Redmond, Wash., company's strategy may usher in a new era in the $25 billion games industry. Sony Corp. and Nintendo Co. are expected to make online gaming a key component of their new systems, scheduled to be released next year.

Online gaming isn't new. It blossomed in the 1990s on personal computers, where tech-savvy players dueled in fantasy games. In recent years, console makers entered the field, allowing online matchups in a limited number of games. Now, the industry thinks it can expand the audience, due in part to increased adoption of high-speed Internet connections. The expansion may help the industry build new revenue streams, including online advertisements targeted at gamers.

But the big move into online gaming carries risks. It is not clear that companies like Microsoft and Sony will be able to lure large numbers of players -- each has attracted a small fraction of users to online play with their previous consoles. The companies also must be careful about new business models for distributing games -- such as games-on-demand -- so as not to alienate game publishers, who still rely heavily on in-store sales. And games designed for multiple players have a mixed record of attracting customers.

The challenge is to expand the appeal of online gaming beyond the core audience of hardcore gamers, and casual players may not bite, said Michael Goodman, senior analyst with Yankee Group, a technology-research firm in Boston.

Added Michael Pachter, an analyst with Wedbush Morgan Securities: "At the end of the day, we don't play games for social interaction … We play games to escape." Microsoft's strategy is "absolutely flawed," he said.

Online Focus

Even before the launch of the Xbox 360, Microsoft was the most aggressive of the console makers in championing online gaming. More than 150 games for its original Xbox, launched in 2001, allow gamers to play against each other online as long as users pay the Xbox Live subscription fee.

The appeal of online play is that users can quickly find human competitors -- whether they're friends or strangers -- without having to gather in someone's living room. For instance, a user wanting to find a competitor in Electronic Arts Inc.'s Madden football game late at night easily can log on to Xbox Live and find a foe within seconds. Each player would coach a virtual team in the same game.

More than two million users of the original Xbox have subscribed to Xbox Live, or about 10% of the customer base. Adoption has been "much faster than expected," said Aaron Greenberg, Microsoft's group marketing manager for Xbox Live, who declined to say whether the service is profitable. With the Xbox 360, Microsoft hopes to persuade 50% of users to hook up to the Internet, he said.

One of Microsoft's strategies to garner more online users is to make it easier to sign up. Unlike with the original Xbox, users of the Xbox 360 don't have to buy a special online kit at a store. If they get the $400, premium version of the new console -- or pay for extra memory for the $300 core model -- they get a free subscription to a service called Xbox Live Silver. It lets players buy and download certain games and send text or voice messages to other users. If they want to compete against others online, they must upgrade to the pay service, known as Xbox Live Gold.

Users pick a nickname -- called a "gamertag" -- that identifies who they are in any game they play on the Xbox 360. This makes it easier for other users to find them and communicate, and it allows Microsoft to offer features in the Gold service such as a tool that assigns a rating to players and pairs them with competitors of similar skill levels.

High Stakes

Mr. Goodman, the Yankee Group analyst, estimates that Microsoft spent more than $200 million just to develop Xbox Live. Mr. Pachter, of Wedbush Morgan, estimates the company has spent more than $1 billion total on the service, including marketing costs. Microsoft won't disclose the cost, though Mr. Greenberg said it has made "a huge investment" in Xbox Live. Microsoft pledged in 2002 to spend $2 billion over five years to beef up its Xbox business, including the development of Xbox Live and the Xbox 360.

The Xbox Live service is part of an entertainment division which includes the Xbox console, as well as PC games and interactive TV products. The division reported an operating loss of $391 million on $3.24 billion in revenue for the fiscal year ended June 30, 2005. Microsoft expects a wider loss for the current fiscal year, because of costs associated with the Xbox 360's launch.

Microsoft's ability to convince more users to pay for the online service will play a key role in the Xbox's profitability. While online gaming is growing in popularity – U.S. revenue is expected to climb to $1.6 billion next year from $1.1 billion this year, according to Dallas research firm Park Associates -- the concept remains unfamiliar to many users of console machines like the Xbox. And while many of the most popular PC games incorporate online play, such features are often included for free. An exception is multiplayer PC games designed for thousands of players, in which publishers typically charge a monthly subscription fee of about $15.

Microsoft could attract a higher percentage of online users for the Xbox 360 than it has with the original Xbox, industry analysts said, in part because the company has positioned the console to be a one-stop digital entertainment center, allowing users to download and play movies and music and view digital photos. But some analysts said they were skeptical that interest among gamers in playing online is strong enough for Microsoft to meet its goal of getting half of Xbox 360 users to use the online service. "The market for online gaming for Xbox is maybe 20%" of users, Mr. Pachter said.

One strategy Microsoft is using to expand its audience is Xbox Live Arcade, a service geared to more casual gamers that features games that are faster to learn, and don't take as long to play. It lets users download arcade-style games for free and test them for a few days -- or for a few levels of the game. If they like a game, users pay between $5 and $15 to keep it. Multiplayer titles include Gauntlet and Joust, popular games from the 1980s.

The company also will allow players to buy add-on content for games, such as special characters and weapons, and Microsoft will share the revenue with publishers. The move could help push more publishers to make online-compatible games for the Xbox 360.

A Centralized Service

Among console makers, only Microsoft has launched a centralized online service. Sony and Nintendo allow online play for their existing consoles, but users must subscribe for individual games through services offered by game publishers, and typically don't pay extra fees to play online.

Sony has said little about the online gaming features that will be available on its PlayStation 3, scheduled to be released next spring, though spokesman Woodrow Mosqueda said "online gaming is going to be a really big deal." He declined to say whether Sony will charge users a fee to play online on the machine. About 5% to 6% of users of the five-year-old PlayStation 2, the world's most popular console, play games online, estimates Yankee Group. More than 30 million of the consoles have been sold in the U.S. alone, about double the number of Xboxes sold. Sony's lead world-wide is even larger.

Nintendo's four-year old game console, the Gamecube, allows users to play some games online if they have a special adapter. Its next-generation console, code-named Revolution, will offer more online gaming, including a centralized service where users can access multiple games. The company said gamers will be able to download popular older games made by Nintendo. It hasn't said whether a fee will be charged, though its first iteration of the service -- for its portable game-playing device -- is free.

Webzen Sells China Rights to Soul of the Ultimate Nation for $13 Million to The 9
Tuesday December 13, 2:09 pm ET
The Largest Export Transaction in Korea's Online Game History 22% Royalty Based on Revenues for Three Years After Starting Service

SEOUL, South Korea--(BUSINESS WIRE)--Dec. 13, 2005--The export contract price for a Korean online game has just passed the $10 million mark. Webzen, Inc. (NASDAQ:WZEN - News) today announced that it has signed an export contract for its much-anticipated massively multiplayer online role playing game (MMORPG) Soul of the Ultimate Nation(TM) with China's premier game publisher The 9.

The value of this contract is the largest single export transaction in Korea's online game history. With the included minimum annual guarantee, the total contract price comes to $13 million. In addition, after commencement of service in China, 22% royalty based on revenues will be paid to Webzen, Inc. for three years.

"We're quite pleased with this first deal, which is the result of a whole lot of investment and effort," said Nam Ju Kim, chief executive officer, Webzen, Inc. "Along with China, we have also been discussing the Soul of the Ultimate Nation service with companies in Europe and other areas of the world. We are confident that we will continue to get great results. With this contract, Soul of the Ultimate Nation's value and interest will increase in the global market."

Zhu Jun, chief executive officer, The 9, said, "The signing of this contract has taken the relationship between the two companies to another level, and as we did with MU, we'll be proving our operational capabilities once again with Soul of the Ultimate Nation. After completing its localization and stabilization, we'll be in the testing phase by the end of 2006."

Having achieved more than 56 million registered users worldwide with the company's first MMORPG MU, Webzen, Inc. is poised to create another legend in Asia with the signing of the contract for Soul of the Ultimate Nation with The 9, one of China's top three publishers."

Although the official announcement isn't scheduled for weeks, a clear picture of Howard Marks' new company has formed. Ironically, the new company will have an old name--that of Acclaim Games.

Marks picked up the Acclaim name shortly after the company filed for bankruptcy in September 2004. Marks secured the rights to the name for a reported $100,000.

According to a job listing for the new company, Acclaim Games will "be the first US major brand to bring some of the most successful online games in the world, specifically designed to meet the community and multiplayer experience that the 36 million U.S. tweens and the 41 million European tweens want." (Tweens are typically defined as children aged 9 to 13.)

Marks is no stranger to the game business. While a student at the University of Michigan, Marks and roommate Bobby Kotick started Arktronics, a software development company that created business-application technology for the Apple II platform.

Then, in 1991, the two bought a 30 percent interest in an ailing game publisher, Activision. The company was in a precarious financial state and the two investors took the company through bankruptcy proceedings and then rebuilt it from the ground up. Now, the game maker is considered the second-biggest third-party publisher in America, after Electronic Arts.

Of course, Bobby Kotick is now Activision's CEO. Marks remained with the company in an executive role until late 1997. Marks founded business-application software company eMinds in February 1998.

Today, Marks hopes to introduce casual MMO PC games, a genre that is wildly popular in Asia, to stateside gamers.

Acclaim's products will be based on the microtransaction-based business model made popular by Korean titles like Go Pets, Kart Racer, and Hangame. Marks has said "these small content transactions are a proven model for millions of gamers in Asia and is directly analogous to the explosive $4 billion worldwide ring tone and wallpaper mobile phone market mainly consumed by the 8-16 group [in the US and Europe]."

The company will license game content from Korea, then localize and support it for Western markets. Its launch title will be B.O.U.T., a "robot fighting game" for PCs with "an incredibly easy interface," according to Acclaim. The title is currently owned and operated (in Korea) by Seoul-based publisher NHN Corporation. NHN is widely credited with pioneering the micropayment strategy almost four years ago.

B.O.U.T. will be a free game that will entice gamers to buy from among 15,000-plus in-game robot parts using real-world cash. Parts can then be used and combined by gamers to make their robots better fighters.

At the recent G-Star game summit in Korea, NHN president Whee-Young Choi said that B.O.U.T. will mark the "starting line" of collaboration between Korean and US companies. He also alluded to B.O.U.T. having an anime component, though he offered no specifics.

Expect Marks and Acclaim Games to launch its lineup of casual, item-based games sometime next year.">Acclaim: back from the dead - News at GameSpot: "Acclaim: back from the dead
Former Activision exec will launch new company with old name; business model to focus on bringing Asian MMOs to North America and Europe.

See it �

Although the official announcement isn't scheduled for weeks, a clear picture of Howard Marks' new company has formed. Ironically, the new company will have an old name--that of Acclaim Games.

Marks picked up the Acclaim name shortly after the company filed for bankruptcy in September 2004. Marks secured the rights to the name for a reported $100,000.

According to a job listing for the new company, Acclaim Games will 'be the first US major brand to bring some of the most successful online games in the world, specifically designed to meet the community and multiplayer experience that the 36 million U.S. tweens and the 41 million European tweens want.' (Tweens are typically defined as children aged 9 to 13.)

Marks is no stranger to the game business. While a student at the University of Michigan, Marks and roommate Bobby Kotick started Arktronics, a software development company that created business-application technology for the Apple II platform.

Then, in 1991, the two bought a 30 percent interest in an ailing game publisher, Activision. The company was in a precarious financial state and the two investors took the company through bankruptcy proceedings and then rebuilt it from the ground up. Now, the game maker is considered the second-biggest third-party publisher in America, after Electronic Arts.

Of course, Bobby Kotick is now Activision's CEO. Marks remained with the company in an executive role until late 1997. Marks founded business-application software company eMinds in February 1998.

Today, Marks hopes to introduce casual MMO PC games, a genre that is wildly popular in Asia, to stateside gamers.

Acclaim's products will be based on the microtransaction-based business model made popular by Korean titles like Go Pets, Kart Racer, and Hangame. Marks has said 'these small content transactions are a proven model for millions of gamers in Asia and is directly analogous to the explosive $4 billion worldwide ring tone and wallpaper mobile phone market mainly consumed by the 8-16 group [in the US and Europe].'

The company will license game content from Korea, then localize and support it for Western markets. Its launch title will be B.O.U.T., a 'robot fighting game' for PCs with 'an incredibly easy interface,' according to Acclaim. The title is currently owned and operated (in Korea) by Seoul-based publisher NHN Corporation. NHN is widely credited with pioneering the micropayment strategy almost four years ago.

B.O.U.T. will be a free game that will entice gamers to buy from among 15,000-plus in-game robot parts using real-world cash. Parts can then be used and combined by gamers to make their robots better fighters.

At the recent G-Star game summit in Korea, NHN president Whee-Young Choi said that B.O.U.T. will mark the 'starting line' of collaboration between Korean and US companies. He also alluded to B.O.U.T. having an anime component, though he offered no specifics.

Expect Marks and Acclaim Games to launch its lineup of casual, item-based games sometime next year."

Acclaim v2.0 Launches
New company to localize online Korean products

According to a story by GameSpot, the publisher Acclaim is being revived, at least in name. The new Acclaim has been founded by Howard Marks, who helped boost Activision during the '90s. He purportedly secured the rights to the Acclaim name for $100,000 after the publisher went bankrupt in September 2004.

The new Acclaim's specialty will be leagues different from the old Acclaim. The focus will be on localizing popular online Korean games which use the microtransaction-based model. Acclaim's first title will be B.O.U.T., a robot fighting game with thousands of customizable parts."

Nintendo-themed ringtones for VIPs - Joystiq - www.joystiq.com: "Nintendo-themed ringtones for VIPs

If you’ve been debating the merits of joining the Nintendo VIP club, this may be the clincher. Nintendo have announced that, from next Monday, they’ll be offering game themes as ringtone downloads so that you’ll be able to really annoy everyone else on your preferred means of public transport. (At least it’s not the Crazy Frog.)

The means to pay for these downloads is the VIP club’s currency, stars, which are obtained by purchasing Nintendo goods. It’s almost a reversing of the micropayment idea, where you get microrewards and are encouraged to buy more Nintendo products to gain more stars. However, the exchange rate isn’t too bad—registering a single copy of Mario Kart DS netted 455 points, and a downloaded ringtone only costs 350."

According to a new report from videogame tracking firm DFC Intelligence, Microsoft's Xbox 360 and its Xbox Live features foreshadow the future of interactive entertainment.

David Cole, president of DFC Intelligence, believes that the Xbox 360 had one of the most well-rounded launch lineups ever, but that is not what will matter two years from now.

"In the long term, the digital distribution features in the new Xbox Live service, especially the Live Marketplace, should end up having a much larger impact on the future of gaming than any individual launch title," said Cole. "Ultimately, Live Marketplace aims to provide a new paradigm of paying for and receiving content."

Microsoft's open market, which allows publishers, developers and gamers to buy and sell content freely in an open virtual market place. This digital distribution model, which currently focuses on games and game content, will eventually expand to traditional entertainment like movies, TV shows and music. It will also open up new opportuninities for game developers to create original episodic games and bypass both publishers and retailers.

"The basic concept is not a revolution by any stretch of the imagination," said Cole, who noted that iTunes has been making a go at digital distribution for some time. "Casual games, like those offered on the Marketplace, have been offered in downloadable form for years. What makes the Microsoft offering different is the integration between the various components of the package to form a platform for digitally distributed content: microtransaction ecosystem, hardware, and digital distribution delivery network."

Cole believes that Xbox Live has come the closest to approximating what mass market online gaming will look like in the future. Xbox Live "is simple, fairly clean, and allows richer media interaction than most computer online games through the extensive use of headsets. It is easily the most successful cohesive online gaming service ever offered on a console," said Cole.

Powering the Xbox Live Marketplace is a new prepaid "Points" card system, which are available at retail locations or online via a credit card. These card allows non-credit card holders to partake in the download community. A $20 card gets you 1,600 points, which can be used to buy games, pictures, logos, screen savers and other items for your Xbox Live Dashboard. Casual games currently range from $5 to $15. There are also free downloadable trailers, demos and music videos.

"In North America, the challenge has been building a microtransaction system to handle payments under $5," said Cole. "To some extent, Xbox Live Marketplace overcomes some of that challenge. If Microsoft is successful is gaining traction with its payment platform, it could really change the way people think about purchasing game, add-on, and other content. Instead of buying games in large $50 chunks, other types of purchase options become available."

Anyone who has played online games on Xbox or Xbox 360, compared to PlayStation 2, will see an immediate difference. Microsoft has invested millions of dollars in its Xbox Live, and the fruits of that labor are already evident through the service. The new Live Marketplace and 360 hardware open up new opportunities for gamers and game creators to interact in a safe system. The opportunities for interactive and traditional entertainment on Xbox Live are endless. And with each new console, Microsoft can continue to build on its stellar online system. Xbox Live and its Marketplace will flourish as the future of gaming expands beyond retail and into digitally distributed model.

"What remains to be seen is whether the next generation of consoles will be used not just for online play, but also for digital distribution and payment," said Cole. "If one or more of the three consoles can unite those three components in a user-friendly and compelling package, we might be looking at a very different interactive entertainment industry value-chain by the time the next next-gen consoles roll around."">Inside Video Games - BLOG: "Gaming's Online Ventures

Xbox_2According to a new report from videogame tracking firm DFC Intelligence, Microsoft's Xbox 360 and its Xbox Live features foreshadow the future of interactive entertainment.

David Cole, president of DFC Intelligence, believes that the Xbox 360 had one of the most well-rounded launch lineups ever, but that is not what will matter two years from now.

'In the long term, the digital distribution features in the new Xbox Live service, especially the Live Marketplace, should end up having a much larger impact on the future of gaming than any individual launch title,' said Cole. 'Ultimately, Live Marketplace aims to provide a new paradigm of paying for and receiving content.'

Microsoft's open market, which allows publishers, developers and gamers to buy and sell content freely in an open virtual market place. This digital distribution model, which currently focuses on games and game content, will eventually expand to traditional entertainment like movies, TV shows and music. It will also open up new opportuninities for game developers to create original episodic games and bypass both publishers and retailers.

'The basic concept is not a revolution by any stretch of the imagination,' said Cole, who noted that iTunes has been making a go at digital distribution for some time. 'Casual games, like those offered on the Marketplace, have been offered in downloadable form for years. What makes the Microsoft offering different is the integration between the various components of the package to form a platform for digitally distributed content: microtransaction ecosystem, hardware, and digital distribution delivery network.'

Cole believes that Xbox Live has come the closest to approximating what mass market online gaming will look like in the future. Xbox Live 'is simple, fairly clean, and allows richer media interaction than most computer online games through the extensive use of headsets. It is easily the most successful cohesive online gaming service ever offered on a console,' said Cole.

Powering the Xbox Live Marketplace is a new prepaid 'Points' card system, which are available at retail locations or online via a credit card. These card allows non-credit card holders to partake in the download community. A $20 card gets you 1,600 points, which can be used to buy games, pictures, logos, screen savers and other items for your Xbox Live Dashboard. Casual games currently range from $5 to $15. There are also free downloadable trailers, demos and music videos.

'In North America, the challenge has been building a microtransaction system to handle payments under $5,' said Cole. 'To some extent, Xbox Live Marketplace overcomes some of that challenge. If Microsoft is successful is gaining traction with its payment platform, it could really change the way people think about purchasing game, add-on, and other content. Instead of buying games in large $50 chunks, other types of purchase options become available.'

Anyone who has played online games on Xbox or Xbox 360, compared to PlayStation 2, will see an immediate difference. Microsoft has invested millions of dollars in its Xbox Live, and the fruits of that labor are already evident through the service. The new Live Marketplace and 360 hardware open up new opportunities for gamers and game creators to interact in a safe system. The opportunities for interactive and traditional entertainment on Xbox Live are endless. And with each new console, Microsoft can continue to build on its stellar online system. Xbox Live and its Marketplace will flourish as the future of gaming expands beyond retail and into digitally distributed model.

'What remains to be seen is whether the next generation of consoles will be used not just for online play, but also for digital distribution and payment,' said Cole. 'If one or more of the three consoles can unite those three components in a user-friendly and compelling package, we might be looking at a very different interactive entertainment industry value-chain by the time the next next-gen consoles roll around.'"

Disney Online Launches 'Disney's Game Cafe,' a New Games Site with Grown-Up Appeal; Site Features Popular Games from Disney, FreshGames, PlayFirst and PopCap

NORTH HOLLYWOOD, Calif.--(BUSINESS WIRE)--Nov. 30, 2005--Disney Online, part of the Walt Disney Internet Group and the leader in kids and family online entertainment, today announced the launch of Disney's Game Cafe (www.disneysgamecafe.com), the company's first downloadable games collection and Web site specifically tailored for a 'grown-up' audience.

An extension of Disney Online's Disney Game Downloads (www.disneygamedownloads.com) business, which offers premium Disney games most appropriate for kids age five and up, Disney's Game Cafe launches with 20 exciting games with appeal for adults 25-45 who can easily download and play offline with friends and family. With plans to add more games in the future, the initial line-up includes Disney titles, as well as the following popular titles from leading online developers and publishers:

-- Cubis 2 Gold and Word Mojo Gold from FreshGames

-- Diner Dash and Subway Scramble from PlayFirst

-- Bejeweled 2, Chuzzle, Zuma, Bookworm, Rocket Mania, Insaniquarium, AstroPop, Typer Shark, Dynomite, Pixelus and Big Money from PopCap Games

Games are available for downloading for $9.95 to $19.95 or a free trial is available by visiting www.disneysgamecafe.com.

'We are pleased to expand our downloadable games offering, broadening our appeal to include a diverse collection of games the whole family can enjoy,' said Steve Parkis, vice president of premium products for Disney Online. 'By partnering with the best developers and publishers of downloadable games, we are able to expand our commitment to providing high quality online entertainment for both kids and their parents.'

Since Disney Online (www.disney.com) launched in 1995 it has become the number one kids and family entertainment destination on the Internet, with an estimated 77 percent of traffic from adults (comScore Media Metrix, October 2005). Disney Online provides an interactive gateway to family entertainment that features many of the popular Disney characters.

For more information regarding Disney's Game Cafe and to access the games line up, please visit www.disneysgamecafe.com."