What's in a name? Plenty, Sony Corp. of America hopes.
The entertainment and electronics giant announced a new division yesterday that is intended to turn familiar television and film properties, such as "The Dating Game," into online cash cows.
The new division, Sony Online Entertainment Inc., will unify the online entertainment and distribution efforts of Sony Corp. of America and Sony Pictures Entertainment, which owns Columbia TriStar Interactive. The new division will not be responsible for marketing or promotion of Sony products or films online.
"What we see is the mainstream market expanding on the Internet," said Lisa Simpson, president of Sony Online Entertainment. "We hope to attract that audience and fill that strong and increasing demand."
Sony's no newbie to the business of online gaming. Their Web-based game site, The Station, has been around since March of last year, and claims to have attracted 25 million visits since its premiere.
The Station is built around two of the most familiar game shows on television: "Jeopardy" and "Wheel of Fortune." It also boasts a 3-D, pay-per-play tank game, Tanarus, as well as Out of Order, a word game developed in collaboration with independent entertainment software company BoxerJam.
The site also contains links to sites for such Sony properties as the TV soap opera "Days of Our Lives," and Sony's online music site, Siren.
"We were joking around the office that it's one of the top sites for a Web superfund cleanup," laughed Mark Hardie, a senior analyst in the entertainment and technology strategies group at Forrester Research. "They've just got too much at Sony.com. It's way too deep, too packed, with what is arguably a pretty weak navigation setup."
Nonetheless, The Station has attracted a wide audience. It already hosts the most-played online game, Jeopardy Online, according to MediaMetrix ratings.
"We've hit the Internet at an interesting time," said Simpson. "People had been primarily coming to the Net for news and information; but now people are going online seeking entertainment. We think we're very well-positioned to fill that demand."
For Sony, which recorded US$45 billion in worldwide sales during its last fiscal year, the new division represents a significant nod to the future of online entertainment at a time when all in the industry agree that the market is unproven.
"Everyone talks that gaming is the Killer App, but no one has yet found the right formula," said Gary Arlen, president of Arlen Communications, a Bethesda, Maryland, research company. Arlen said his company stopped covering all but a few of the major online entertainment ventures because the market was so crowded and largely unproven.
But that's today. Tomorrow? According to Forrester Research, the online games market will reach revenues of $866 million by 2000.
So far, Sony has done well. "Sony's set the bar high for the other players: Not only is Sony a brand, but more importantly the brands they're trying to sell are very familiar," said Arlen.
"Games are driven by brand, so if you have existing properties that people know, you're going to draw traffic," agreed Hardie. "Sony is building on the names that people know from television, and that's a sound strategy."
Another site that is building on a strategy of familiarity is Microsoft's Internet Gaming Zone, launched in October 1995. The Microsoft site is the exclusive Web host of recognized games by LucasArts and Hasbro, such as Scrabble and Pictionary.
The Internet Gaming Zone claims some 1 million registered users - roughly on par with The Station's own claims.
"Definitely the major player to watch is the Internet Gaming Zone," said Mark Mooradian, an analyst at Jupiter Communications. "But I think people are still vying for the category killer. Sony is up there as well."
Neither company will disclose revenues or whether they've seen a profit, and neither seems too concerned with market share.
"You could say we're competitors, but I don't really look at it that way," said Ed Fries, general manager of the games group at Microsoft. "It's such a new business, we're just all starting out putting up games, and to the extent that we can all be successful it will help legitimize this as a real market."
Sony's Simpson echoes the sentiment.
"To some extent you could say we are competing against AOL, Berzerk, etc.," said Simpson. "But we're also working with those folks."
Other players in the industry agree that a spirit of co-conspiracy pervades the online games market.
"To me it's not a market share battle, although it may become one down the road," said Chris Deyo, general manager of Berkeley Systems, which manages the online games site Berzerk.
"The more successful Sony is, the more successful the rest of us will be," said Deyo. "The biggest challenge is to attract people away from their television and back to their computer."
Simpson agrees that the boob tube is the most significant hurdle. "If we're looking to compete with anyone right now, it's the folks who have the most share: broadcast television," Simpson said.
And, with promises for the coming months of an online version of "The Dating Game," as well as multiplayer versions of "Wheel of Fortune" and "Jeopardy," Sony Online Entertainment hopes to lure the couch potatoes to the desk chair with brands so familiar, viewers may hardly notice they've switched to being players.
