Forbes article about XB-live

Discussion in 'Console Technology' started by Deepak, Jul 28, 2003.

  1. Deepak

    Deepak B3D Yoddha
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    Microsoft's underdog Xbox is looking like a leader online. Sony had better look alive.

    Microsoft's videogames have had more fits than starts. Its console, the two-year-old Xbox, loses something like $100 per unit sold, or a billion dollars a year. Xbox had a disastrous launch in Japan and still runs far behind Sony's PlayStation 2 in worldwide sales. But the game's not over. Witness the Electronic Entertainment Expo, or E3, the gaming industry's annual confab in May. For the goateed and backpack-toting attendees, E3 is a big, honking sneak peek at the next killer games, and Microsoft had the best of them all: Halo 2, the sequel to its 2001 sci-fi action masterpiece. People waited hours in line just to see the eight-minute demonstration. "It's one of our most ambitious projects," says Robert (Robbie) Bach, the Microsoft senior vice president in charge of Xbox. "It's a title that will sell anytime, anyplace."

    But it will play only on Xbox. And if you want to blast away online with far-flung friends you have to pay $50 a year to subscribe to Microsoft (nasdaq: MSFT - news - people )'s new gaming network, Xbox Live. Halo is just the first of several new Xbox and Xbox Live exclusives, including sure hits such as Doom 3, Project Gotham Racing 2 and Counter-Strike. All of them, Bach says, play better online.

    More than anyone predicted, online gaming is driving the all-important software sales that are the profit engine of the $10 billion videogame industry. Dwarfed by Sony, which claims 60% of the North American market, Microsoft has bet far bigger and bolder to grab the online advantage as both feverishly race to get their next-generation consoles into stores by 2006.

    "This generation we were statistically out of the playoffs before we even laced up our shoes," concedes J Allard, vice president in charge of Xbox Live. "Next season, there won't be an 18-month head start. We'll be neck and neck right out of the gate, and Xbox Live will give us a huge online head start."

    The Xbox Live network launched in November and passed the 500,000 subscriber mark in seven months, beating, by 80,000, the number of people registered to play PlayStation 2 games online, despite the fact that Microsoft has sold only 9.4 million Xboxes to Sony's 51 million PlayStations. Nintendo, with 9.6 million GameCubes sold, has limited online ambitions.

    Consider the case of Ghost Recon. This military-style shooting game was released on both Xbox and PlayStation 2 in November. The Xbox version was online-enabled, and the PlayStation version wasn't. Despite the enormous differences in installed base, more copies of the game have sold on Xbox, (650,000) than on PS2 (550,000).

    Sony (nyse: SNE - news - people ) sniffs at the comparisons. "Online gaming is a very important part of our strategy, but not the end-all and be-all," says Kazuo Hirai, the president of Sony Computer Entertainment America. "When you're losing market share, you're tempted to talk about things down the road."

    Microsoft has a habit of herding customers into its own technology corrals. Xbox Live is no exception, with Microsoft reaping nearly all of the financial benefits and exerting total control over the game network. PlayStation throws the gate open to allow any game developer to run its own player network. In May Electronic Arts (nasdaq: ERTS - news - people ), the world's biggest game publisher, shunned Microsoft and announced that through March 2004 its bestselling sports games will be playable online only with Sony.

    But Microsoft may be onto something. There are currently 28 online games for Xbox and 18 for PS2. By January the gap will widen a bit: 50 for Microsoft, 32 for Sony. Bach has directed much of his reported $500 million marketing budget toward Xbox Live games such as Mechassault. Live kiosks are now prominent at many retailers, and Xbox is sponsoring high-profile events like this summer's Lollapalooza rock tour.

    In June Microsoft launched the XSN Sports network, which will allow players to create leagues and maintain long-term records while playing games such as NFL Fever, a nice counter to the Electronic Arts snub. The network will also be capable of paging cell phones and PDAs to invite players to join games. "Xbox is the superior online gaming platform, and by the next wave of consoles, Xbox will be the online brand,"says Daniel Hsu, editor of Electronic Gaming Monthly magazine.

    Xbox Live's success almost didn't happen. In 1999, when Xbox was still a skunkworks project, Allard and online strategist Cameron Ferroni wanted to produce a console without a jack for what were then ubiquitous dial-up modems and install only a jack for speedier broadband cable or DSL modems. At the time broadband was only in 4.6% of U.S. households, and most analysts were saying it would take years to catch on. "My attitude has always been to bet on the future, not against it," says Allard.

    Bach and gaming content vice president Edward Fries were adamantly opposed. Says Allard: "Bill [Gates] played both sides, but Ed and Robbie said the numbers were not enough. Their first-year subscriber estimates were between 20,000 and 80,000, and we needed hundreds of thousands of gamers online in the first year, and millions by the next generation, to be successful."

    So Allard and Ferroni conducted a survey with 3,000 gamers, who told them they craved the ability to quickly download large files such as new game levels and characters, making broadband a must. Bach got the picture, but he didn't make the financial decision to go exclusively with broadband until the summer of 2000, several months after Xbox was officially announced. Since then, broadband penetration in the U.S. has doubled, to 20%.

    Sony's original option for online gamers was to sell them a network adaptor as a separate $40 peripheral. Then it saw what happened last year when it released Socom Navy Seals. The military-style shooter sold 1 million copies rapidly, with nearly half of the buyers routinely engaging in online play. Lesson learned. In June Sony began prepackaging a network adaptor with every PlayStation. The next-generation PlayStation 3 will doubtless have a broadband jack built in.

    Xbox Live may gross $25 million this year, a nanoparticle on Microsoft's income statement. But for now, an online footprint slightly bigger than Sony's is reward enough. "Xbox Live will be in 20 countries this year," Allard says. "Most game developers don't have servers or lawyers in 20 countries."
     
  2. Phil

    Phil wipEout bastard
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    :roll:

    I wonder how the 'real' numbers stack up?
     
  3. zurich

    zurich Kendoka
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    That was a surprisingly poor article, normally Forbes is better than that.
     
  4. cybamerc

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    :roll:

    What a joke of an "article" (read: ad).

    Xbox Live isn't a success. It's a financial disaster with stagnating sales. I'm sure Sony with its 2.4 million shipped network adapters is feeling really threatended. As far as games with actual online play are concerned M$ only has an advantage by two. And that won't last long.
     
  5. zurich

    zurich Kendoka
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    Well, since sony started shipping the PS2 with the network adapter, you can expect their bragging rights to explode exponentially, regardless if they're actually subscribing/using the service.

    Personally, I would actually expect to see XBL subscriptions plummet once november rolls around. Many others, like me, are disgusted by the lack of dedicated hosting for bandwidth/server intensive games (ie: FPSs).
     
  6. Grall

    Grall Invisible Member
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    Oh but you forget! Most developers don't have lawyers in 20 countries! M$ does! ;)

    Just wait and see, soon they'll arm their briefcases and really go to work...


    *G*
     
  7. Deepak

    Deepak B3D Yoddha
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    "This generation we were statistically out of the playoffs before we even laced up our shoes," concedes J Allard, vice president in charge of Xbox Live. "Next season, there won't be an 18-month head start. We'll be neck and neck right out of the gate, and Xbox Live will give us a huge online head start."

    More proof that MS plans to launch XB2 alongwith PS3.... :D
     
  8. chaphack

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    With XB 'n' Live, i say MS is just preparing for next gen assault(duh!_). It should bode well for them if they play the right cards, seeing as the base and architecture are much more mature than their competitors.
     
  9. Deepak

    Deepak B3D Yoddha
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    and their competitors play badly....Sony need not concern about others' cards, they just need to play their cards well.
     
  10. marconelly!

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    Wow... This is flat out disinformation, so much that they actually shoot it down in one of the next paragraphs saying that on one game alone Sony has almost as many players as the whole XBL.

    It's been known for a while that nework adapters have been selling more, (and that is *before* they started bundling it!) I can't believe they just decided to overlook the facts.
     
  11. London Geezer

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    dont know about u people, but this generation is a NO NO on online play for me... way too confusing, slow-progressing and uninteresting....
    i'll just wait for the next gen to indulge in online play...
    also, i just know that i will get so addicted to it i'll stop eating, so i'm trying to delay my death as much as i can :lol:
     
  12. cthellis42

    cthellis42 Hoopy Frood
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    Many others, like me, are disgusted by the lack of dedicated hosting for bandwidth/server intensive games (ie: FPSs).

    Wait, you mean you pay money to let them use the bandwidth you already pay for! *GASP* *SHOCK* This canna be!

    I certainly approve of Sony's model more (since it basically reflects the way we do things PC-side), but wish some devs would get off their butts and stick even marginally interesting online play in games. It won't tax their development all that much, I figure, and will certainly enhance their desirability. (Not to mention better build up acceptance of the online platform for consoles in general.) But yeah, this gen is going to be pretty sheepish in other than a few titles, but it builds towards next gen though, so I hope we'll see much different developer mindsets by then!

    But hey, both PS2 and Xbox are going to get blown out of the water by the Phantom anyway, right? :p
     
  13. Squeak

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    One should think that such a big and rich company as microsoft should be able to provide a simple thing as a connection-establishment portal for a peer to peer service for free? Many others do.
    Makes one wonder if they are going to charge extra for such games as mmorpgs that require a big always on server? They did after all allow Sega to charge extra for Phantasy Star Online…
     
  14. cthellis42

    cthellis42 Hoopy Frood
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    Of course they will. They pretty much HAVE to, or else they'd suck a lot of personal loss to pay the developer's bandwidth and future development costs themselves. MMOs are an inherently "pay-to-play" model, which is why they're so appealing right now.

    The only one that I think will slip through is True Fantasy Online, which is pretty much all in-house for MS anyway, and I don't think will at all scale as high as the more mainstream MMORPGs. Still, it's good that wouldn't involve extra charges. ^_^
     
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