The Growing Importance of Online Gaming for Nextgen Consoles

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Video Game Wars Moving Online [New York Times]

Summary: The PlayStation 2 continues to be the best selling game console even following the release of Microsoft's Xbox 360 last year. Sony won the last round for console market share with about 60%, while Microsoft and Nintendo each had a 20% share. Both the PS2 and Xbox 360 have on-line communities totaling an estimated 3 million users each. Microsoft has invested hundreds-of-millions of dollars in its Xbox 360 network, and charges game players an annual usage fee of $50. Sony plans to offer its on-line gaming services free of charge in a more "open" format, with further details expected at a media event tomorrow. Nintendo will offer on-line features, but is emphasizing them less than it is its new Wii console's unique controller, expected to attract a broader audience to gaming. The key question is how important on-line gaming is for consumers, and if a console's on-line network can be influential enough to sway consumers. Sony may have the upper hand if it allows for free multi-player on-line gaming while offering a separate e-commerce site that will be fee-based, and thus generate revenue.
Related links: Sony Spin Factor • Who Will Profit From the Gaming Console Wars? • Sony PS3 Shortage Inevitable This Christmas • PlayStation 3 Mania: Stores Already Sold-Out of Pre-Orders • Seeking Alpha's Game Consoles Sector
Potentially impacted stocks and ETFs: Microsoft (MSFT), Nintendo (NTDOY.PK), Sony (SNE), Activision (ATVI), Electronic Arts (ERTS), Take Two (TTWO), THQ (THQI), BLDRS Asia 50 ADR ETF (ADRA), iShares Goldman Sachs Technology Index ETF (IGM), iShares Goldman Sachs Software Index ETF (IGV)

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Comments

[Tom B:]

"Both the PS2 and Xbox 360 have on-line communities totaling an estimated 3 million users each."

You mean on-line forums/ support/hints, or do they actually play games on-line? If so, what are they playing?

2006 Oct 18 10:13 AM