It's all in the game

More than toys, new video-game systems play movies and surf the Web. Will they beat out the PC as the do-it-all device?

In the past five years, innovation in the video-game industry has moved at the pace of a hungry Pac Man. Today's games feature 3-D graphics, lightning-quick play-action, and music like a techno-party dance track.

Still, amid this creative renaissance, the stereotypical video-game user remains the same: the teenage male.

But that could change.

If electronic giants like Sony and Microsoft have their way, the video-game console will not only be used by teenage gamers, but would soon become the center of family entertainment - a multipurpose megabox with which people can play DVD movies and browse the Web, as well as operate major home appliances like the dishwasher or garage door.

The idea of consolidating disparate electronic devices into one machine is often called "convergence." It has been a buzzword in the electronics industry and among savvier consumers since engineers realized machines could use digital technology to store more information with less space.

For most of the past decade, technology experts have speculated which machine - PCs, televisions, cable boxes, among others - would score best with consumers as an entertainment center. The debate has recently heated up, though, with studies showing people look to their PCs to perform the nitty-gritty of word processing and spreadsheets, but not for pure entertainment.

Enter the video-game console, which operates the games themselves, plays DVDs, and, more important, will be in 44 million homes by 2003.

"Sales of personal computers are growing modestly," says Bob Alexander, president of Alexander & Associates, a technology consulting firm. "But when these game machines come in, they go from zero to 40 million households in a few years. They attract much more interest across a cross section of Americans."

Suddenly in the lead on convergence

"If you go back five years and look at all those conferences at PC shows nobody was talking about video games being part of convergence," says Douglas Lowenstein, president of the Interactive Digital Software Association. "Now, what most people agree is the first potential convergence device is coming from the video-game industry."

Japan's Sony sounded the industry's battle cry last spring when it announced the new version of its wildly popular PlayStation game console would play DVDs and, soon after, include a broadband Internet hookup.

Experts agree the PlayStation 2, set for release in the US later this month at $299, will take the gaming experience to a new level. But Sony intends the PS2, and its progeny, to sell more than just video games.

Kazuo Hirai, head of Sony's computer division, says PS2 is "not the future of video-game entertainment, [but] the future of entertainment, period."

"Sony clearly sees PlayStation playing a convergence role, and at the center of home entertainment," says Marjorie Costello, editor of CE Online News, an electronics-industry online newsletter. "It's what they call part of their vision of e-Sony."

A victory in the convergence war would mean a boom in game sales, which already account for one-third of Sony's profits. It might also help Sony corner the market on various electronic goods - like music speakers or video cameras - by making the PS2 solely compatible with Sony products.

More important, perhaps, a central console could connect with home appliances as well. Companies like the Morrisville, N.C.-based Home Director Inc., now offers to wire people's homes with Internet connections in every room and, in the future, every appliance.

Mark Schmidt, Home Director's vice president of marketing, says the video-game console might become the place where families of the future monitor everything from their refrigerators to their air conditioning.

"There's a very real opportunity to ... link video gaming into a home network," Mr. Schmidt says. He offers the example of refrigerators sending information to homeowners, telling them they need service or are low on ice.

The "intelligent home" of the future, then, could give Sony or a different company another product boon - direct compatibility with home appliances.

Microsoft chases the new market

The prospect of media and home-appliance dominance has at least one competitor, Microsoft, pouring millions into developing a video-game business of its own. The computer-software behemoth's X-Box video-game console, replete with DVD and Internet access, is set to debut next year. It's Microsoft's second venture into convergence, after its WebTV enterprise only drew sparse interest.

"Microsoft wants to get into the living room," says Ms. Costello. "They've given up on the idea that people need a PC in the living room and they're afraid that Sony will have incredible control of networking...."

The great unknown for both companies is whether consumers, particularly parents, want a video-game machine at the center of family activities.

Paul Pollock, a dedicated gamer from South Boston, is planning to put his first X-Box at the center of his living room. "It'll sit right in the middle in front of a nice piece of [window] glass," he says. "I like having all the media things in one."

But not all video-game companies think buyers will respond like Mr. Pollock. Nintendo, whose focus remains cartoonish character games like Pokemon and Mario Brothers, argues that most game players just want one machine with one function.

"Nintendo believes the success of the video-game industry is that games get people excited," says Costello. "They don't think PlayStation 2 [as an expanded-purpose machine] will generate fun with game enthusiasts."

And Sega, whose Dreamcast is the only console that now offers Internet gaming, hasn't announced any plans to follow in Sony's footsteps, either.

"It depends on what people feel comfortable using," says Mr. Lowenstein. "I know people who have tried using the Internet access on their cellphones and stopped using it because they just didn't like it. The same may be true for e-mailing on a video-game system."

Deanna Loud, from Winthrop, Mass., owns a PlayStation and plans to upgrade to the PS2 this month. She says she'll use it to watch movies and play music, but she's not ready to abandon all her old-media machines.

"I'll most likely e-mail on my computer until there's a good write up about e-mailing on [the PS2]," she says. "I don't want it to crash on me."

For consumers like Ms. Loud, though, the bottom line of all the competition is more choices. Reports from Japan, where the PS2 premiered earlier this year, showed a 40 percent jump in DVD movie and music rentals immediately after its release.

Other players may prefer a more traditional game box. Either way, analysts say new products will lower prices. "The pattern in the industry is that these come out at a fairly steep price and drop down to around $100 after a period of years," says Paul DiSenso, senior consultant at SRIC, a technology consulting firm in Menlo Park, Calif.

Other factors are certain to affect gaming's growth. Manufacturers have come under fire for marketing violent games. "One of the great misunderstandings is that this industry is dominated by violence," says Lowenstein. "But those games are a relatively small part of its sales."

Sony quickly sold each of the 1 million units of PS2 set for its first shipment Oct. 26, and, though the 1 million has since been cut in half because of technical problems, there is little doubt sales of the PS2 will soar during the holidays.

(c) Copyright 2000. The Christian Science Publishing Society

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