Xbox Strategizes To Take Control Of Online Gaming

LOS ANGELES— Xbox used the recent Electronic Entertainment Expo to proclaim its intent to build on Xbox's launch success by seizing control of the next phase of the console market —online gaming.

Unlike rivals Sony and Nintendo, Xbox is approaching online gaming with a focus on broadband-only connectivity, because Microsoft feels that is the only truly compelling way to maintain the quality of action and graphics in new-generation platforms. In addition, early Microsoft studies indicate that almost half of the 3.5 million Xbox users have broadband Internet connections.

"We believe that broadband penetration is only going to increase over the years," said Laura Fryer, Xbox advanced technology group director. "We think that Xbox will play a big role in driving that broadband adoption rate."

Xbox plans to introduce its first Xbox live starter kit sometime this fall. That includes a one-year subscription, headset with microphone communicator set and Acclaim's ReVolt racing game. After 12 months, Microsoft said the monthly subscription rate "is valued at $9.95, but at that time I'm sure there will be tons of different packages coming out at different times with different pricing," Fryer said.

Microsoft's online gaming service, called Xbox Live, will offer a variety of enhancements, including voice communication (with voice-masking abilities), and a QuickMatch function that allows players to find opponents close to their skill level. The service also offers an invitation function that enables users to find and contact friends and favorite opponents playing other games online.

Microsoft will be spending a large percentage of its planned $2 billion advertising and promotional campaigns over the next few years on building the Xbox Live experience. Microsoft expects to spend almost $50 per Xbox user in that mission.

"Microsoft is looking to take the lead in online gaming, and when you look at our service and compare it with other services, I think you'll find that we are offering online gamers the best value," Fryer said.

"The online situation for a console gamer is very different (from the PC gamer). Console gamers aren't used to being on the Internet, and they are used to having a very secure system, where they don't have to worry about getting viruses or hackers."

She said Microsoft has invested heavily in security for the Xbox Live online service, and has included "military-grade" encryption in its packets to thwart cheating, hacking and sending viruses.

However, as TWICE went to press, an MIT graduate student reportedly hacked into Xbox's security system and published the findings on the school's Web site.

Microsoft said it continues to evolve its security and does not view the event as a threat to its online activities.

Microsoft will have at least five exclusive online playable games this year, including "NFL Fever 2003," "Midtown Madness," "MechAssault," "Whacked" and "Unreal Championship."

As for title development, Fryer said it will have a compelling library of more than 200 titles this year in both online and standard console versions.

"We are looking very good with games," Fryer said. "We now have a large breadth and depth of content."

She added, Xbox expects to enjoy an exclusive on a number of its games from 2002, because they were developed to use a hard drive, which neither Playstation2 nor GameCube currently have available.