FRAMINGHAM (07/17/2000) - It's the battle for delivering new types of paid content to consumers. On one side of the ring: PCs, WebTV, inexpensive Web-surfing appliances and many companies trying to decide how and when television and the Internet will "converge." On the other side: Sony, and a machine ostensibly built to play games.
Sony Corp. is poised to do an end run around every other company trying to figure out which Internet device - after PCs - a majority of consumers will embrace in their homes. Sony plans to do all this with the US$299 PlayStation 2 (PS2), which debuts in the U.S. this fall.
Don't let the purple highlights fool you: Besides playing DVD games, the PS2 is also a Net-capable multimedia device that can surf the Web, send e-mail and play DVD movies. More important, analysts say, it will be the first home-based multimedia and Internet-capable device since the PC to sell millions of units.
Those units, attached to consumers' televisions, will give Sony a standard platform for selling content. The company will be able to offer, for broadband downloading, movies to rent, new games or music for MP3 players. It will also be able to sell PS2 owners subscriptions for Internet access or online gaming.
Forty percent of U.S. households already own a gaming system. Last year in the U.S., the industry generated more than $7 billion. As more consumers buy Internet-capable gaming consoles, the potential for services revenue increases.
Tokyo-based Sega Enterprises Ltd. already has a subscription-based online multiplayer gaming zone for its next-generation Dreamcast console.
Sony has also announced an electronic distribution network via broadband for the PS2. Next year, consoles from Kyoto, Japan-based Nintendo Co. and Microsoft Corp. will hit the market. Some analysts predict that console makers might distribute machines for free, if consumers sign up for multiyear Internet service provider contracts.
Sony says it will offer an Ethernet adapter card for the PS2. Next year, it will also begin distributing electronic content via a secure, encrypted network. Users will be able to download games to a peripheral PS2 hard drive.
Presumably, users could also order content such as streaming movies.
Unlike in today's PC operating system market, there is no one dominant next-generation game console maker. Many experts pick Sony as the likely winner, but that presupposes that customers will embrace the hardware and that game makers will develop the choicest titles for PS2.
While PS2 will hit shelves this fall, the broadband technology and peripherals won't make much headway until next year. Even then, experts say, determining the winner will mean waiting for game developers to learn how to wring every last polygon out of the hardware and software.
"Generally, game consoles have a five-year life span, and two to three years in, developers really get an idea of what the hardware can do," says Billy Pidgeon, an analyst at Jupiter Communications Inc. in San Francisco.
Until then, expect the competition to keep heating up.
Sony PlayStation 2
CPU Core: 128-bit RISC
Clock Frequency: 300 MHz
DVD-ROM: Plays games, DVD movies, CDs
Ports: Universal Serial Bus (2), i.Link (IE1394, a.k.a. FireWire), Type III PC Card slotIn comparison, today's top-end PCs can have 512MB of RAM with 866-MHz chips inside. But because game consoles are designed to play games, and not run overblown operating systems, their games often have better resolutions and crash less often. "The PC is being used for entertainment purposes, but it's accidental and not very good, because it's designed for so many other purposes," says David Cole, president of game-analyst firm DFC Intelligence in San Diego.