Microsoft habitually announces billion dollar bets that aren't really, but Xbox Live really is one. That's not to say the stated billions are correct of course, but if this one flops it'll still cost Redmond a pretty penny. In the event of failure Microsoft would be left clutching four datacentres, a sophisticated broadband voice, data and messaging network waiting for clients that aren't coming, and - bizarrely - some kind of online Disneyesque experience.
And it's risky because - as was not the case in the pre-XP hype period - Microsoft is trying to carve its way into and dominate an entirely new market that it doesn't already own. As The Register has been known to observe in the past, Microsoft is actually not very good at this kind of stuff, so don't get your hopes up (or do, depending on your inclinations).
The script for Xbox Live is approximately as follows. It will roll out around Q3 of this year in the form of a $49.95 starter kit that contains Xbox Communicator, a game and a year's sub to Xbox Live. Prices outside of the US haven't been disclosed yet, although after the bloody nose Xbox collected in Europe this spring, presumably we're not going to be too greedy this time. Prices for continuing subscription don't appear to have been set at all yet, but it'd be a surprise if the target wasn't something like $9.95 a month.
The important bit isn't the money as such, but what you get for it. Microsoft will have a clutch of games ready for the big push, headlined by Star Wars Galaxies and online versions of current Xbox games, including Halo. Lucasfilm is also developing the Star Wars title for Sony, however, so this probably isn't the one that's going to sell the network on its own.
Microsoft does however need Xbox Live to drive Xbox sales. Even if current sales levels can be sustained over the next few months it's doubtful that there will be more than ten million Xbox units out there by the time of the Xbox Live launch. Sony sold 30 million PS2s in the first year, which means Microsoft has a mountain to climb. Games sell consoles, developers target the consoles they're likely to get the most sales from, therefore the prize goes to whoever has the most units out there, and anyone who wants the prizes will have to spend heavily to get the units.
The economics of online gaming may change that to an extent, in that a successful network could produce a healthy rental income of approximately $10 per member per month. But again, games will sell networks, and Microsoft will need to spend to get the self-feeding cycle going. We wouldn't be at all surprised if the kit was bundled with Xbox for free in Q4.
The key difference between Xbox Live and Sony's version is that Microsoft's is controlled/closed/paid for, while Sony is going for a looser approach, which for the moment seems to consist of selling the adaptor, enabling online gaming then standing back to see what happens. In some senses this means that Microsoft could view Sony as not competing at all, but the difference does leave scope for Redmond to suffer an embarrassing self-inflicted defeat. If Sony's initial experience is good, it will undoubtedly put more muscle behind online gaming, and will have left itself sufficient room to undercut Microsoft or just blitz it out of the business with a free service.
That would require some investment on the server side, but one does kind of wonder why the blazes one needs four whole datacentres with more capacity than microsoft.com to run an online gaming network. MS senior VP Robert Bach gave some hostages to fortune here to John Markoff, in a piece published in the NYT yesterday, and the release itself offers some more clues.
Bach "said the company was planning a service that he compared to Disneyland for its safe, wholesome environment - in contrast to the 'Coney Island' he said that the open Internet can sometimes become. 'Compare Coney Island to Disneyland,' he said. 'When you're at Disneyland, there's no trash, no violence and you never see security. That's what we have in mind.'"
Actually, The Register has seen security, looking chillingly like the feared French CRS riot police, at Disneyland Paris, but they might have been with the RER, so we'll let that pass. Bach is actually telling us about another big, dangerous bet Microsoft is making; the company is estimating that parents will be the people who actually decide which networks are appropriate and who therefore gets the money. This would seem to us to be a big blooper, because although teens and above can like Disyneyland, they generally like it because of the great rides, not because it's wholesome. And what kind of games do teens plus like? Exactly - Bach would do better pitching this network as Coney Island without getting mugged, but that might interfere with Microsoft's attempts to present itself as the safe, wholesome Disyneyland of software. Sony, we would estimate, has more sense and fewer scruples.
Aside from crunching power on the virtual Disyneyland, the datacentres will be dealing with other stuff, some familiar, some not so. There will be Gamertag, a unique online ID for each member that can be used across the entire network. Note that this is a unique ID that's being pushed as a positive feature, which may be something of a first. There will also be a buddies list, which is again familiar, and voice communication, which "enables voice interaction with teammates and opponents."
That's going to soak up a good bit of datacentre, and has massive potential for embarrassment for Redmond. Which it seems to have thought about, if only a little. Again speaking to the NYT Xbox general manager J Allard (why so bashful, J? Doesn't stand for Java, does it?) said it would include a voice masking feature that would conceal identities and ages to deter adult expoitation of children online. Which it might, but what about foul language and general abuse? Sure you can monitor for abusers and kick them before the parents go ballistic, but considering how good online services (Microsoft included) aren't at doing this already, one doubts this will happen, and one can see the Disney experience crumbling.
The central difficulty as we see it is that kids like doing horrible things online, talking dirty, playing unsuitable games and worse, that online services protect themselves by denying responsibility, and that parents accidentally protect themselves by not having any clear understanding of what their kids are up to in the first place. This system kind of works, just check your son's palms for hair every now and again, and the Internet facilitates it. Attempts by services to control and sanitise the experience too much are doomed to failure, because the potential customers won't come to the old 'parallel, controlled and secure Internet' gag. Microsoft still has time not to try this one again, but if it does, it won't work. Again. ®