Microsoft's Xbox goes online

Will consumers pay $49 per year to play video games over the Internet with

friends and others? Microsoft is betting they will and have launched a new

"Xbox Live" global online gaming network for the company's Xbox game

machine. Microsoft's online gaming network is more far-reaching than those of

the Sony and Nintendo. Company data centers in Tokyo, London, and at Microsoft

headquarters in Redmond, Washington will handle the traffic from millions of

users.

The $49 subscription will come with the "Xbox Communicator," a

voice headset the company said will allow players to have real-time

conversations while playing games. The Xbox continues to represent a win-win

situation for Microsoft and consumer alike. Its advanced capabilities are highly

appreciated by game players, while for Microsoft the loss-making Xbox console

represents a way to capture a piece of the fast-growing market for digital

entertainment outside the personal computer.

Microsoft plans to invest $2 billion on the Xbox over the next five years,

according to Robbie Bach, the chief Xbox officer at Microsoft. Sony is also

planning to release a PlayStation2 adapter in August that will let players

connect to the Internet via dial-up or broadband access. And Nintendo will

launch a similar adapters in the fall to allow its GameCube to go online.

Neither company plans to charge monthly access fees and are not operating their

own network, instead leaving that to game publishers.

As usual, Microsoft's approach is controversial and one of the industry's

leading game makers, Electronic Arts has vowed not offer games for "Xbox

Live" because of concerns about Microsoft's model of centralizing all

online play through its own service, rather than letting each publisher operate

its own network.

Both Microsoft and Sony last week announced they have lowered the price of

their game players from $299 to $199. Sales of video game hardware and software

topped $9 billion in the United States in 2001 and this year sales are expected

to break through the $10 billion barrier for the first time.