Sony, AOL Team Up to Broaden PS2
Sony Corp. is teaming up with America Online in a bid to turn PlayStation 2 consoles into all-in-one entertainment systems that allow consumers to watch movies, play games and surf the Web from their living room sofas.
For AOL, a subsidiary of AOL Time Warner Inc., the PS2 represents a way to offer its service to a broader audience through its AOL Anywhere strategy, which seeks to put AOL on everything from cell phones to two-way pagers.
The deal also lays the foundation for Sony to eventually deliver not just video games but also movies and music to consumers through the Internet, making the console more than just a game machine.
“This will usher in a whole new generation of content,” said Kazuo Hirai, president and chief operating officer of Sony Computer Entertainment of America, a subsidiary of Sony, the world’s largest consumer electronics company. This winter, Sony plans to sell networking adapters, hard disk drives, keyboards and even liquid crystal display monitors to help launch the PS2 into cyberspace.
“We’ve always said that this is the center of the home entertainment system,” Hirai said.
What consumers will see, however, and how much they will pay are details that have yet to be worked out. Initially, users will be able to chat, e-mail and send instant messages while playing their games. One such game, “Tribes 2,” will let up to 64 people play together online.
Console manufacturers have talked about connecting their boxes to the Internet, but few have actually done so. Microsoft Corp., which plans to launch its Xbox console with a built-in high-speed ethernet adapter, is poised to link its machine to the Web. Nintendo Co.’s upcoming Gamecube will have a port that can accommodate a modem.
For all three companies, bringing the Internet to millions of game consoles opens a window for selling digital entertainment, from additional game levels to MP3 songs. To make that work, however, consumers must have a place to store these files. That’s why the Xbox will come with an 8-gigabyte hard drive. Sony plans to come out with a hard drive for the PS2 this winter with a minimum of 20 gigabytes. Each gigabyte can hold more than 15 hours of compressed music. A typical movie takes up 5 gigabytes.
“This will help build out Sony’s entertainment strategy for the U.S. market,” said P.J. McNealy, senior analyst with the Gartner Group Inc. in San Jose. “With things such as instant messaging, it makes buying the hard drive and modem more compelling.”
For AOL, the partnership brings a chance to sell its service to millions of PS2 owners in the United States. AOL already has introduced its products on cell phones, pagers, Internet appliances and television sets in an effort to soften its reliance on users of personal computers.
The Dulles, Va., Internet service provider has 29 million U.S. subscribers. As of March 31, Sony had shipped 3 million PS2 consoles in the U.S.
Sony Corp.’s shares fell $3.52 on Monday to close at $77.08 and AOL Time Warner’s stock lost 4 cents to settle at $51.60, both on the New York Stock Exchange.
