GameDAILY BIZ: Verizon has always been known as a telecommunications company. Why are you now getting involved in the fiercely competitive video game industry?

Jason Henderson: Verizon's entry into games is in keeping with our strategy to provide more of the content-related services that our customers want. Verizon has 4.5 million broadband subscribers and about three quarters of them like to play games. Our goal is to provide more than just a high-speed connection, but to give our customers the content they want and at the same time attract new customers—that's our competitive advantage. We know our broadband customers and they know and trust Verizon.

BIZ: Who do you consider to be your target audience for Verizon Game Services, the casual crowd or hardcore gamers?

JH: Both. With 4.5 million customers we are like a city--made up of a cross-section of people. We are confident we can provide products and services to meet the broad range of services our customers want.

In the past we've mainly supported casual gamers. With good reason—casual games is about a 500 million dollar industry and many of our customers just want to get on and play a simple game for a few minutes. We have had downloadable and web-based casual games and will continue to provide them. Recognizing that there many kinds of gamers who already know us and trust us with providing them access, we decided the time was right to offer a broader variety of choices for our customers:

1. Verizon Game Network (VGN) is built for serious gamers, the guys you call hardcore. Serious gamers are found all along the spectrum, but we have a new fiber-optic broadband service called FiOS rolling out across the country, and it's a clear favorite for serious gamers. That stands to reason because serious gamers need faster ping rates and lower latency, and FiOS is your ticket—the first two levels are 5Mbps and 15Mbps. So since we have that access product that fits the needs of serious gamers, we realized there's a clear need to provide services for serious gamers to augment their games, which is why we partnered with Gamespot on VGN. VGN doesn't provide games—it provides a better environment in which to play games online. Better configured servers from Gamespot and a full array of Gamespot services.

2. Verizon Games on Demand: Unlimited is for the mainstream gamer that likes to play games but doesn't like to spend full price on this week's releases. Think of this as the games equivalent of Netflix, but without having to wait for the mail—some people go to the theater; some people wait for the DVD. And the fact is, when the library opens up you find you try more titles than you would if you were paying per ticket. In Verizon Games on Demand: Unlimited, you pay a flat fee and then you play all you want of any games in the library, and the library is growing every week. I've been blowing off steam playing Unreal Tournament 2004, then my daughter and I play My Little Pony. That's the future—content I want, right now. We even have popular casual games in the package like Diner Dash, which is extremely popular with female players right now.

3. Verizon Games on Demand: Family Place is everything in our library that's rated under teen. We devised this package to appeal to families who wanted to play more than kids games but took ratings very seriously, and were concerned that, for instance, they not expose their kids to Unreal Tournament. So Family Place has kids games—such as My Little Pony or Clifford titles—but also has things like casual, board, sports and strategy games that are rated for Everyone.

BIZ: Verizon Game Services seems to have been launched in tandem with the new FiOS (fiber optic) Internet service. Was this a deliberate tactic to use gamers to help spread adoption of FiOS?

JH: It's clear that FIOS has many unique benefits for gamers. Let's say you and I live on the same block and we have a cable line. You and I split the line and we cut the service in half. Then think about a whole neighborhood. FiOS doesn't have that problem—when you order 5Mbps down/2Mbps up, that's what you'll see. And we've priced that like dial-up; basically, you're looking at 35-$40 a month. Actually what impresses me is the next step up—15Mbps down/ 2 Mbps up at $45-$50 per month, faster than cable at a cable price. What can you do with that speed? The mind boggles at the opportunities for self-improvement, but the key thing to a lot of people is you absolutely mop the floor with the Battlefield 2 player who splitting his cable line with his neighbor. Do we want the world to know? Yes.

BIZ: Obviously your game services utilize a digital distribution method, so what kind of performance increase will gamers see using FiOS as opposed to traditional DSL lines?

JH: Speed! FiOS speeds start at 5Mbps, faster than household cable—which tops out at about 4Mbps—and faster than the fastest household DSL line from Verizon or SBC, which top out at 3Mbps. So, speed, and at a cable price. And we know that gamers will switch for speed.

BIZ: Verizon Game Services has partnered with CNET and also Exent; can you talk about how these relationships developed and elaborate on what they bring to the table for Verizon Game Services?

JH: I can't talk to the specifics of the individual agreements, but I will say we choose our partners by their track record and their level of service. Exent is the back-end to every major games digital distribution effort out there. And CNET owns Gamespot—when it comes to showing gamers we respect them, it's important to partner with a name they respect. Gamespot is such a name—everyone knows Gamespot is where you go for the latest news, demos, and FAQs. So when we wanted to provide server services, Gamespot was the perfect partner.

BIZ: Why should gamers choose Verizon Game Services over similar offerings like IGN's Direct2Drive and other digital distribution portals? What advantages does Verizon have over the competition?

JH: Digital distribution is clearly the direction of the future, but there are different models—there's the streaming idea, such as you find on games on demand, there's downloadable gaming, such as you find in Direct2Drive and RealArcade, which we provide. I think the benefit of Games on Demand for a lot of people is that Games on Demand offers full-sized games—you know, it's the same as if I got the Hitman 2 CD and put it in my computer—but I don't have to blow all my allowance on one title. Think of it this way: maybe I've heard I should really try Tactical Ops: Assault on Terror. I can download it for $19.95. But I probably can't do that every day. With Verizon Games on Demand, I can pay less and play that game, and then I can go play another, and then I can go try another. Grand Prix and Star Wars: Droidworks and My Little Pony. And Pac-Man and Tactical ops. We're really in the long tail now. Is there still a place for single-title downloads? Heck yes! But there are definite benefits to the idea of ongoing "snack" consumption of games.

BIZ: What kind of marketing initiatives does Verizon plan on taking to advertise its game services to the gaming community and the mainstream?

JH: Your question is well put, because they are two different audiences. The mainstream audience is another way of saying how do we talk to the broad cross-section of our customers. We do that by listening humbly and creating services that mirror what we learn that they would like. So for instance we work with Exent, who provide a modular set of games. But we take what we learn from our customers to craft the right packages. To get the word out we're going to be talking to very mainstream audiences, shedding light on what we already know—that lots of people play games and play different kinds, and our message is that whatever your game is, Verizon will try to serve that experience—whether it's in providing a good environment or providing the whole game, or both.

The gamer community—for them, it's important that we get out there and show that we take their needs seriously, we respect them, and we want to give them tools to play their games and get out of the way. Gamers are specialists, in a sense—they want to go buy the top games and then they want the best performance when they play it. So to get that message out we're planning a lot of games-industry specific activities like event sponsorships, etc. Things where it's clear that the gamer leads and we provide.

BIZ: Does Verizon have plans to somehow link its Verizon Wireless game offerings with its new Verizon Game Services?

JH: I can see a lot of possibilities beyond whether you can find the same title on two different platforms. What we should really be asking is, what are we in the unique position to provide that truly changes the way games are played? We can and should be visionaries. The experience of online gaming can explode into realms we've just never imagined when we create truly ubiquitous gaming. The whole question of games-for-wireless, games-for-PC is ultimately something that back-end developers should worry about. Ubiquitous gaming will happen, and the experience must be seamless. I can't wait to see what comes up.

BIZ: Anything else you'd like to add?

JH: I think what does my heart good is that Verizon is taking games really seriously. They know how big games is and they're determined to take a role, and that means they're not just chasing the market but embracing vision. And now is the time—whatever platform you play on, whatever you play, broadband access is becoming more important, not less. Games are where we need to be.

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