Liberty Buys into Sony's Online Games

SAN FRANCISCO (08/21/2000) - AT&T Corp. subsidiary Liberty Digital Inc. will purchase a 50 percent stake in Sony Corp. Pictures Entertainment's Game Show Network in the hopes of developing interactive TV offerings based on shows such as Wheel of Fortune and Jeopardy!

Liberty, which also has stakes in digital-video-recorder companies TiVo (TIVO) and Replay, will pay US$225 million in cash and $50 million in stock to co-create a 24-hour TV network that enables viewers to play games from home via digital set-top boxes.

"Games represent one of the great potential applications of the digital set-top box," said Lee Masters, president and CEO of Liberty Digital, in a prepared statement. "It has always been one of the primary categories in which we intended to focus our interactive television initiatives."

Games - parlor and lottery-type games, in particular - have proven to be one of the strongest audience drivers both on the Net and off. Game-related content has been the key driver behind several sites, including sweepstakes portal iWon and games and lottery-based iWin; Both are among some of the most-visited properties on the Internet.

It seems natural for Sony to tap into its successful cable-broadcast properties to take a stab at interactive TV. And the move to create interactive content based on game shows is not without precedent. Sony has had moderate success translating Wheel of Fortune and Jeopardy! to its fledgling Web site, TheStation.com. It also has dabbled in interactive programming through a deal with Microsoft Corp.'s WebTV.

But the new network's ambitions are far greater. The Game Show Network draws about 29 million viewers, and it hopes to grow to about 50 million during the next few years.

One key issue the companies will need to grapple with, however, is the complexities of offering competitive, cash-prize-based games to a national audience in different time zones and with a variety of research resources at home. Unlike carefully screened live contestants on TV game shows, players at home have the advantage of calling upon friends and families, not to mention the family encyclopedia.

Until now, the Game Show Network, which lets cable viewers play games along with the show by phoning in answers, has rewarded winners with small prizes.

But the Internet has dramatically raised the bar on the games-for-prizes category. IWon, a subsidiary of CBS (now Viacom), regularly doles out prizes ranging from $10,000 to $1 million.

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