YAHOO UNVEILS BROADBAND ON-DEMAND GAME SERVICE

Yahoo Games on Demand service was introduced Mon., offering subscribers ability to rent and play PC games from major publishers including Activision, Eidos Interactive, Infogrames, Take-Two Interactive. Streaming service was unveiled by Yahoo as Commerce Dept. issued report saying “demand for broadband is robust” but “supply currently exceeds demand (in all but the most rural markets).” Report said online gaming “promises to drive demand for broadband” over next 3 years, at least in part via introduction of broadband-based game consoles such as Microsoft’s Xbox.

Game service from Yahoo offers choice of 4 rental pricing options: Single title for 3 days at $4.95, 3 games for 30 days at $9.95, 5 games for 30 days at $12.95, 10 games for 30 days at $14.95. Service is being offered as part of company’s recently unveiled SBC Yahoo DSL service or via any broadband connection, it said. Yahoo Media, Entertainment, Information & Finance Vp David Mandelbrot said “Games on Demand is part of our companywide strategic initiative to deliver innovative broadband services to our users. With the strength of our Yahoo Games platform, which hosted more than 4 billion minutes of online gameplay and more than 8 million users in August, the addition of Yahoo Games on Demand allows us to develop deeper relationships with casual and devoted game players alike.” Yahoo Games & Entertainment Senior Dir. Daniel Hart said: “With more than 50 million people in the U.S. playing online games, we're seizing the opportunity to offer direct digital distribution to a ready audience.”

More than 40 PC games were made available at Yahoo service’s rollout, including new and catalog titles across broad range of genres. First titles included Civilization III, Deus Ex, 4X4 EVO, Star Trek Armada II, Serious Sam. Yahoo service also gave subscribers first chance to preview and play new action game Zapper from Infogrames. Gamers can play full PC version of title through service before its availability in stores nationwide, Yahoo said. Other titles expected to become available as part of service include Grand Theft Auto 2, Backyard Basketball, Tomb Raider Chronicles. Access and play on service requires broadband Internet connection and registration for Yahoo ID and Yahoo Wallet. Additional PC system requirements include Windows 95/98/ME/2000/XP, as well as Pentium 233 MHz, 64 MB RAM, 500 MB of hard drive space, Direct X, compatible SVGA video and sound cards. Users must also complete one-time download of Yahoo Game Launcher, powered by Exent Technologies. Launcher is tool that allows players to download only files necessary to begin game play while remaining required game elements download and stream in background, Yahoo said.

Commerce Dept.’s report -- Understanding Broadband Demand -- said obstacles to speedy broadband acceptance in U.S. included “concerns over cost; disappointment with the quality and types of content available, especially lack of movies, music and local information; inadequate customer support… and lack of confidence in the Internet due to security and privacy concerns.” Although 52.3% of U.S. households had some form of Web access at home as of Dec. 31, only 10.4% of them (11.2 million) subscribed to high-speed Internet access service, report said. U.S. broadband subscription growth trailed Canada (where 19.7% of households had it at year-end), Hong Kong (26%), S. Korea (51.7%), Sweden (13.4%), Taiwan (18.2%).

But growth of online gaming could help increase demand, report said. It cited Aug. research by analysis group Datamonitor forecasting online game market would grow to $2.9 billion in 2005 from $670 million in 2002. Report also said Nielsen NetRatings had found that online gaming sites attracted more than 28 million visitors in U.S. in April and said “new broadband-based gaming consoles such as the Xbox are certain to increase consumer demand for higher speeds.” Meanwhile, it said “at least one analyst points to online gaming as one of the greatest contributors to Korea’s broadband leadership. Even more compelling for consumers would be movies, music and games delivered online -- entertainment on demand or interactive media.” Although broadband adoption has been slow in N. America, U.S. has been strongest market for Xbox console during its one year of availability. Xbox is only next-generation console whose online gaming initiative -- upcoming Xbox Live -- is geared entirely toward broadband. But Japan currently is only Asian country in which Xbox is being sold by Microsoft and Japanese broadband household subscriber growth was only 5.8% as of Dec. 31, report said. Slow broadband growth in Japan could be further obstacle to Microsoft’s efforts to find success with Xbox there. At Tokyo Game Show Fri., Microsoft said it planned to offer Xbox Live there in mid-Jan. following Nov. 15 start in U.S. (CED Sept 23 p4). Microsoft said in July it planned to start marketing its console before year-end in Hong Kong, Korea, Mexico, New Zealand, Singapore, Taiwan (CED July 24 p4). But none of those is expected to be significant market for Xbox console sales.