Titans clash at video game confab

Kaz Hirai, president and CEO at Sony Computer Entertainment America, displays a network adaptor that will allow online connectivity for Sony's PlayStation 2 during a press conference at the Electronic Entertainment Expo in Los Angeles. PHOTO: AP

The biggest conference in video game history started officially yesterday, but even before the doors open the main characters are locked in a battle that will decide the future of electronic entertainment.

This clash of titans between Microsoft, Sony and Nintendo at the Electronic Entertainment Exposition (E3) may seem to be just about trivial gaming consoles designed for adolescent males with too much time on their hands.

But it is already overshadowing the scantily-clad "booth babes" who will promote over 1,000 new games and gadgets amid a cacophony of sound that will convert the cavernous Los Angeles Convention Center into one giant gaming arcade for three days.

Electronic is the world's fastest growing entertainment industry and its perpetual growth is in marked contrast to the sorry state of the rest of the high tech economy. Last year it had worldwide revenues of US$29 billion.

Most importantly it is seen by all competitors as the surest way to gain control of the most valuable property in the leisure world: the digital living room of the 21st century consumer.

This vision of a connected lifestyle, where our TVs, movies, games, information and communications come through an advanced living room computer, is behind the huge effort made by Microsoft to close the gap with industry leader Sony over the last two years.

So far the signs are not overly encouraging for the software giant from Seattle. Sony's Playstation 2 has sold 30 million units worldwide, compared to just 3.5 million for Microsoft's technically superior XBox.

Nintendo's Gamecube, which arrived later on the market, has sold almost 5 million units.

In the run up to the conference a vicious price war erupted when both Sony and Microsoft dropped the price of their consoles by about a third, bringing down the US price from US$299 to US$199. Nintendo followed by dropping prices this week.

With Microsoft already said to be losing US$75 on every machine it sells, the lower prices represent bad news -- except for the fact that the company has US$30 billion in cash to play with.

On Monday it underlined its ambitions to become an industry player whatever the cost when it revealed that it was investing a further US$2 billion over the next five years to set up an online gaming system that would allow XBox players to compete over the Internet with other gamers in real time anywhere in the world.

With giant data centers in Seattle, London and Tokyo, the new online gaming service will launch in North America, Europe and Japan in October. Fans will pay US$49.95 for a year's subscription that will include a Communicator headset that will allow players to chat to each other -- turning the XBox into a high tech communication system.

"Online technology is the next revolution in video games," said Jim Allard, Microsoft's general manager of the Xbox. "It will fundamentally transform gaming into a new form of social entertainment."

Sony to roll out a less proprietary online service later this year, and appears unfazed by the challenge from the world's richest company.

"They are not even in the same league," said Kaz Hirai, the president of Sony Computer Entertainment of America.