Microsoft’s Multi-Player Gaming Bet

WSJ writes:

The appeal of online play is that users can quickly find human competitors — whether they’re friends or strangers — without having to gather in someone’s living room. For instance, a user wanting to find a competitor in Electronic Arts Inc.’s Madden football game late at night easily can log on to Xbox Live and find a foe within seconds. Each player would coach a virtual team in the same game.

More than two million users of the original Xbox have subscribed to Xbox Live, or about 10% of the customer base. Adoption has been “much faster than expected,” said Aaron Greenberg, Microsoft’s group marketing manager for Xbox Live, who declined to say whether the service is profitable. With the Xbox 360, Microsoft hopes to persuade 50% of users to hook up to the Internet, he said.

Microsoft’s ability to convince more users to pay for the online service will play a key role in the Xbox’s profitability. While online gaming is growing in popularity U.S. revenue is expected to climb to $1.6 billion next year from $1.1 billion this year, according to Dallas research firm Park Associates — the concept remains unfamiliar to many users of console machines like the Xbox. And while many of the most popular PC games incorporate online play, such features are often included for free. An exception is multiplayer PC games designed for thousands of players, in which publishers typically charge a monthly subscription fee of about $15.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.