NEWS - Wednesday, October 6, 2004

Xbox Live Takes Off In Asia

HONG KONG (Reuters) - One-in-seven Asian Xbox video gamers plays on the Internet just six months after the regional launch of Microsoft’s Xbox Live Internet software. About 15 percent of Xbox console owners in Asia subscribe to Xbox Live, compared with 12 percent worldwide, said Yolanda Chan, regional sales director for the Asia Pacific region. "We want to up (the penetration rate) to 22 percent by the end of the fiscal year" on June 30, 2005, she told Reuters in an interview at a Microsoft Corp Xbox Live event in Hong Kong. "That would be a phenomenal result." Chan said nearly 200,000 of Xbox Live’s more than 1 million worldwide users now come from Asia. The product’s fast growth in the region reflects the popularity of video gaming in Asia. Xbox Live competes with a similar service offered by Sony Corp.’s PlayStation console and with online games played over broadband-connected PCs. The rapid growth of online games -- which generated revenue of more than $700 million in Asia last year -- has spawned a generation of homegrown start-ups including China’s Shanda Networking Co. Ltd., South Korea’s Actoz Soft and Taiwan’s Chinese Gamer International Corp.. The boom has attracted U.S. heavyweight Electronic Arts Inc., the world’s largest video game publisher, which on Wednesday said it would set up its worldwide online game design headquarters in China with a staff of 500. LOOKING FOR REVENUE Xbox Live is now available in 24 countries worldwide, including South Korea, Taiwan, Singapore, Hong Kong, Japan, Australia and New Zealand. To foster Xbox’s growth in Asia-Pacific, Microsoft announced a development initiative on Wednesday, forming a partnership with the Hong Kong government to nurture local game development talent. The company has similar programs in Taiwan and South Korea. Part of Xbox Live’s rapid growth stems from the fact that the Internet capability requires only a console upgrade costing about $50, with no playing fees beyond the $20 or so players pay for each game. PC-based online game companies make most of their money from fees based on time spent playing. Chan said Microsoft had yet to formulate a strategy for its next generation of consoles, particularly the issue of whether or not to charge playing fees. She said the company had also yet to decide on a strategy for China, a market with huge potential but also one that many game publishers have avoided due to rampant piracy. Electronic Arts and others have been more positive about China’s potential for online games, since such games are often complicated and difficult to pirate. "We are constantly evaluating China and other markets, but have no decision yet," Chan said. "China has huge potential for gaming. They have 1.3 billion people and 200,000 Internet cafes. There’s a lot of potential out there."


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