Online playing field

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After months of secrecy and speculation, the big three video-game console marketers announced preliminary plans for online gaming services. Sony Computer Entertainment America, Microsoft Corp. and Nintendo of America will each take the first steps this fall toward online console gaming with the first games for release delivered via dial-up and high-speed broadband Internet connections.

Nintendo, heretofore the most tight-lipped about online plans, will release Sega Corp. of America's "Phantasy Star Online Episode I & II" for the GameCube. To enable online gaming, Nintendo this fall will sell a modem adapter for dial-up Internet access and a broadband adapter for the GameCube for $34.95 each. For now, Nintendo doesn't plan to charge online gaming fees. Sony, which will release "EverQuest Online Adventures" for the PlayStation 2 early next year, will release an adapter for ethernet and dial-up access for the PS2 in August. Both Nintendo and Sony will offer kits to software developers to help them create online versions of console games.

International Data Corp.'s IDC projects 500,000 video-game consoles will go online by year's end-10.6 million by the end of 2005, driven in part by household broadband penetration. With hardware pricing on a downward spiral-for example, Sony's May 13 price-cut on PlayStation 2 from $299 to $199 and PS One from $99 to $49-cultivating revenues from fee-based games, subscriptions and sponsored content could eventually be as important as selling software at retail.

"It's a new market and nobody knows how it's going to unfold. Everyone's planning on online console gaming, but no one has a solution," said Schelley Olhava, IDC's senior analyst-interactive gaming. Ms. Olhava said business models haven't come to fruition as to how software publishers will make money from online gaming.

Meanwhile, dubbed Xbox Live, Microsoft's online strategy involves a monthly fee to use the Xbox online. The Xbox comes with a built-in ethernet port for high-speed Internet access. While Microsoft hasn't publicly announced pricing, IDC estimates it will charge $9.95 a month for online access and eventually may offer tiered online game packages.

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