Sony Ready to Sell Modem for PS2 Console
Sony Corp. took its next strategic step in the U.S. video game market, saying it will launch online services for its market-leading PlayStation 2 game console in August.
Sony said it will sell a network adapter for $39.99 beginning that month, allowing for both low- and high-speed Internet connections. But in a conference call to discuss the announcement, the company could not say how many adapters would be available at launch.
To support that launch and encourage development for the new capabilities, Sony also said it will offer financial support to third-party publishers for the marketing and development of online-enabled titles.
The company declined to say how large the fund would be.
Analysts had expected Sony to launch the online service, a longtime goal since the $299 PS2 was unveiled in November 2000.
Sony said it will begin testing the system with a group of about 1,000 players this month.
The PS2 has an installed base in the United States of more than 8million units, and it dominated sales charts during the last holiday season, in the face of competition from other advanced console products.
Analysts have said the game industry is at the early end of an unprecedented five-year growth cycle.
But at least one analyst is skeptical about the new online offering’s prospects.
“Peripherals and add-ons do not do well in this industry,” said Mike Wallace, an analyst at UBS Warburg.
“No one’s going to spend a lot of money [on this], first of all because it’s not apparent how any of the third parties are going to make any money on this, and second of all, there’s no installed base,” he said.
Wallace was referring to major third-party game publishers, such as Electronic Arts Inc. and Activision Inc.
As opposed to other online gaming offerings, the Sony system will not be pay-for-play; users will pay only the initial cost of the game, plus standard Internet access charges.
One analyst thinks the relatively low price of the adapter will be enough to make it successful.
“I would expect a high attach rate....At that type of price point, it’s obviously priced to move,” said Jeetil Patel, an analyst at Deutsche Banc Alex. Brown.
Sony spokeswoman Molly Smith said that the slate of launch titles for the network adapter has not yet been fully developed, but that at least one title would be the company’s “SOCOM,” a game centered on Navy Seals.
Kaz Hirai, Sony Computer Entertainment of America’s president and chief operating officer, told Reuters Television the company would announce more lineup details at the Electronic Entertainment Expo in May.
“We look to have a dozen titles or so at least for launch,” Hirai said.
The adapter will have ports for both a dial-up modem and a broadband connection. It will attach to the back of the console over its main expansion bay via two included screws.
Microsoft Corp. launched its Xbox console in November with a built-in Ethernet port, and the software giant has said it will roll out online services this year.
The adapter bundle will come with a start-up disk pre-configured for a number of major Internet service providers, including EarthLink Inc. and SBC Communications Inc., though Sony said any ISP can be used with the service.
The only console online gaming service currently offered in the United States is one for Sega Corp.’s now-discontinued Dreamcast.
The Dreamcast had a dial-up modem built in, but a broadband adapter was unsuccessful.
With Sony’s announcement, the only major console in the U.S. market without any online options is Nintendo Co.’s GameCube. The $199 GameCube, released in November, has no built-in access ports, and Nintendo has said little about its online plans.
Although last week’s announcement revolved around online gaming, Sony hinted at the network adapter’s potential in a statement.
“Use of the [adapter] allows consumers simultaneous access and connection to multiple devices in the home through [PS2],” it said.
Smith said that although nothing is definite, the adapter eventually will allow people to stream MP3 music files from their computers through the PS2 while simultaneously connected to an online game.
She described the roll-out of such services as a two-step process.
“Phase 2 is kind of going to be a realization of what our overall vision is,” she said. “It’s more of an e-distribution kind of system.”
Although the second phase is not expected this year, Smith said more details about its launch plans and components would be announced over the next few months.
Separately, Sony made a $199 Linux add-on kit for PS2 available for pre-order. The kit will let people use the PS2 as a computer running the Linux open-source operating system.
The kit ships with a keyboard and hard drive, although the hard drive will not work with PS2 games.
Smith said a 40-gigabyte gaming hard drive probably would be part of Phase 2.
In a conference call, the company also briefly addressed pricing. “What I can say right now is we’re very confident of the pricing we have on the [PS2] console and have no plans to reduce the pricing at this time.” Hirai said.
