[MUD-Dev] Game developers gear up for cyber wars

[Michael Tresca]

http://www.cnn.com/2002/TECH/fun.games/09/17/japan.netgame.reut/index.html

Incremental revenues...the wave of the future!

Mike "Talien" Tresca
RetroMUD Administrator
http://www.retromud.org/talien

<EdNote: Below>

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Game developers gear up for cyber wars
Online gaming key to beating the software competition

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.
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