September 1, 2000 11:45 AM PDT

Sega to launch game network

Sega is set to launch its online gaming network Thursday, the company's attempt to interrupt the growing momentum for Sony and its PlayStation2 game console.

SegaNet will allow owners of Sega's Dreamcast game console to play against other Dreamcast owners online. The dedicated gaming network is the first of its kind and Sega's attempt to deflect attention from PlayStation2, which will go on sale in the United States in October.

PlayStation2 and Dreamcast, along with upcoming next-generation consoles from Nintendo and Microsoft, are vying for a share of an expected boom in sales of devices and appliances capable of accessing the Internet for limited purposes, like games or email.

Market researcher International Data Corp. predicts that this market will grow rapidly. Internet appliances, including TV set-top boxes, handheld computers and gaming consoles, are expected to increase from 11 million units shipped in 1999 to 89 million units in 2004, according to IDC. Revenue will grow from $2.4 billion last year to $17.8 billion in 2004, IDC predicts.

At the same time, the demand for full-scale Web surfing through the television is thought to be weak, at least until the widespread availability of broadband high-speed connections. In a survey released earlier this week, IDC found that half of the households surveyed with game consoles mainly would be interested in using the boxes to download new games.

Dreamcast does not offer high-speed connections yet, but the 56-kbps modem is sufficient to provide a high-speed experience, a Sega representative said. Because SegaNet is a dedicated network and most of the data is stored on the Dreamcast box itself, the narrowband connection is not a problem, she said.

"It's small packets of information traveling," the Sega representative said, adding that although players can access SegaNet through their own Internet service providers, directly accessing it through the Sega network provides a higher-speed and more competitive experience. "Because it's a dedicated network, you're not dealing with the vagaries of the Internet."

To entice existing Dreamcast owners to sign up, Sega is offering a $150 rebate to current owners who sign an 18-month service contract, at $21.95 per month. Sega is offering free Dreamcasts to new customers who subscribe and 50 free hours of SegaNet to all Dreamcast owners.

Earlier this week, Sega cut prices on the Dreamcast from $200 to $150.

All these moves are designed to blunt the expected huge sales of the PlayStation2 when it hits U.S. soil. Already a hit in Japan, the $300 console is expected to ship 3 million units by March 31. Some stores are charging $330 for preorders of the console.

Sony is planning its own broadband network to tie its devices to the Internet.

 

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