Kaz Hirai: Getting Games Online

Position: President and Chief Operating Officer, Sony Computer Entertainment America

Contribution: Spearheading Sony's efforts to popularize online console-based gaming in North America

Challenge: Proving that Sony's business model for online gaming works better than that of archrival Microsoft

On Aug. 27, Sony Computer Entertainment America unveiled a special network adapter that lets PlayStation 2 users play games online. That morning, Kaz Hirai, the company's president and COO, plugged his console into the Web and played Madden NFL 2003. He soon logged out. Hirai, 41, says he's a poor football player and a sore loser -- and he was afraid of being creamed by other gamers.

By the time he left, the game's virtual lobby, where users can talk football and challenge each other, was packed. The initial shipment of 250,000 adapters, which allow gamers to connect to the Web through dial-up or broadband connections, was sold out within days. For Hirai, it was a small but meaningful triumph.

An 18-year Sony veteran who has been credited with popularizing video games in North America, Hirai is embarking on perhaps the biggest conquest of his career. His goal: To put game consoles at the center of family entertainment. He figures that since PlayStation is strategically positioned in the middle of the family or living room, it should eventually be used for downloading and viewing of movies, photos, and music from the Net.


 That's not a pipe dream: Sony already has an installed base of 11 million PlayStation 2s in North America alone and 33 million worldwide. Globally, PlayStation 2 has nearly 10 times as many users as rival consoles Xbox from Microsoft and GameCube from Nintendo.

Online gaming "is just the beginning" of live entertainment on the Web, Hirai says. And so far, it looks like Sony will pass with flying colors. Sony's studies indicate that 93% of PlayStation 2 owners would like to connect their consoles to the Internet. And while only 4.8% of all households have an Internet-enabled gaming console today, nearly 19% will have the devices hooked up to the Web by 2005, according to market consultancy GartnerG2.

Sony could grab a hefty chunk of that, thanks to its current lead, the flexibility its adapters offer users, and its strategy of working with game developers. While Xbox features a built-in broadband capability, Sony sells its adapters separately, but the $39.99 gadgets also work with dial-up connections as well as high-speed access.


  More important, Sony doesn't jockey for control over gamers: It allows game developers to keep their direct relationship with players. By contrast, Microsoft hopes to use its online-subscription service, slated to debut this fall, to become the middleman between the gamers and the game makers. Sony's approach better suits many developers, who like the direct relationship as well as the flexibility to charge a lump sum or a monthly subscription fee for their titles.

Still, most PlayStation users have never tried online gaming, and getting them to do that could take a while. All gaming companies' efforts in the online arena today are merely "experimental," and it remains to be seen what the most successful approach will be, says Shelley Olhava, a gaming analyst at tech consultancy IDC.

However, Hirai, who has immersed himself in PlayStation chat rooms to gauge users' reaction to the adapter, believes Sony has the answer. "So far, [our online-gaming effort] has been a home-run success," Hirai says. He thinks he can keep the momentum going -- as long as he steers clear of virtual football.

By Olga Kharif in Portland, Ore.

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