Just a few days ago, Electronic Arts announced its plans to bring Madden NFL 2003 online. Not to be outdone by the announcement, Sega has countered Electronic Arts' plans with news that Sega will be shipping 10 online games for all three platforms within this year. We had a chance to speak with Charles Bellfield, vice president of strategic planning and corporate affairs at Sega, to get Sega's take on EA's online strategy, online gaming in general, and how Sega has come along as a third-party developer.
GameSpot: Seems like E3 is starting a little early this year.
Charles Bellfield: I think everyone here likes to keep you on your toes. We don't want you to get bored [laughter]. But it's definitely been an interesting week. Nintendo's announced their plans and that Phantasy Star Online will be the first online game for the GameCube. Then we had the Sony price cut and the Microsoft price cut as well as the release from EA [about it's online game].
GS: Yeah, it's been crazy.
CB: Well let's try to add more to that [laughter]. We have 10 online titles for this year for the PS2, Xbox, and GameCube. Eight we've given specific names to; two we're holding back because we don't want to reveal absolutely everything yet. Sega will be shipping our 16th title even before EA ships their first online title for a console--we're building upon our franchises and two years of expertise of delivering online console games for Dreamcast and now PS2, Xbox, and GameCube. EA doesn't have that expertise. Also, our football game will be the first online game for the Xbox and one of the first online games for the PS2, and both versions of the game will be shipping in August.
We've also built an infrastructure to support online PS2 gaming with over 100 servers nationwide--an infrastructure that you need in order to deliver online games to consumers, and that's something we've built over two years and have had running for that period of time. If you want to talk about online games and you have the right vision for it, [EA] gives you nothing, so you need to look towards our office at the company that has the real experience with online gaming.
GS: Why is Sega so much more focused on online gaming than anyone else? Obviously because of SegaNet the company has prior experience with online gaming, but does Sega see online as the future of console gaming?
CB: No, I think the online side of the Dreamcast was a great additional gameplay experience. It doesn't replace offline games. Without question, online can bring a new level of gaming that doesn't exist in an offline world, but it supplements your traditional business model; it doesn't replace it. Obviously, if you can build a business model that lets you provide great online content and make a profit on it, you're able to expand elements of gameplay beyond what other people are doing. This is what everyone, particularly EA, is missing on the consoles--that online features give an additional experience that offline can't deliver. We have over 400,000 subscribers signed up for Phantasy Star Online for the Dreamcast to date on a global basis. You can't deny the consumer's desire to play games and to evolve their gameplay experience in an online world is there.
There are so many console companies crawling around, trying to find some kind of strategy, but we've been up and running for the past two years. It's confusing when a company like EA issues such a bold press release, when all they're talking about is one game on one platform. Again, we'll have 10 online games on all three platforms. We're able to take advantage of what each company is offering, and the most important thing is that we're providing content regardless of the platform you have. We're not favoring one consumer over another--we're delivering content to all gamers. It's quite obvious that EA is trying to tell consumers that there aren't options out there.
GS: Out of the three platforms, which do you think is the most adequately prepared to take on online gaming?
CB: Well you can see with the Dreamcast games that even with narrowband you can deliver great gameplay and have a great experience either through SegaNet or your own ISP. Narrowband gives an opportunity to connect those who don't have access to broadband, but broadband gives a better media-rich-type environment that can deliver a more compelling experience for gamers, such as a voice-over feature that lets you chat with your friends in a lobby. But we're saying, why limit yourself just to one technology when both network infrastructures can deliver gameplay. What I think you'll see is we will custom-make our games depending on the network you're on, whether you're on broadband or narrowband. But to the consumer, you will still have a great experience as you did with Dreamcast in a narrowband world as well as a broadband world.
GS: Is Sega planning on shipping its own keyboard for Phantasy Star Online Episode I & II?
CB: There will be a third-party keyboard released for the GameCube, but as you know, Phantasy Star Online is also coming to the Xbox. We will be supporting all of the features of the Xbox within that game as well.
GS: So people will be able to talk to each other using the voice support?
CB: Yes, and though we haven't announced the feature set for Phantasy Star Online for the Xbox, what I can say is that we'll be supporting all of the features of Xbox Live. Also, on the PS2, we will match anything EA is doing in an online world, and we fully expect to surpass them in terms of online features they'll have for Madden. NFL 2K3 will surpass anything Madden does...we've done it. This will be the third iteration of our football game online, whereas EA has yet to deliver anything for the consoles.
GS: Going back to Phantasy Star Online Episode I & II, is Sega planning to use a pay-to-play system?
CB: Yes, there will be a subscription service for PSO Episode I & II. It'll be similar to the Dreamcast subscription system. Of course, that may change--it may be free. We just haven't announced any details yet. At the end of the day, there will be nothing hugely different from what we've already done.
GS: What sort of new features can we expect to see in the online aspect of Sega's sports games?
CB: All of the features that you've seen in our games to date, such as versus rankings and downloadable stats, will be in the games. Since we haven't announced all the details, we can't give any specifics, but assume that everything you've seen to date [in terms of online features supported by each of the consoles] will be supported.
GS: Will people be able to play cross-platform games?
CB: Xbox Live is a closed network--that's the way they built that infrastructure--but there's nothing preventing GameCube or PS2 consumers from doing it if they're in a game that shares a common server, so there's nothing I know of yet to stop that from happening.
GS: What sort of numbers are you expecting that would make online gaming a success? Are you expecting a slow buildup of adopters?
CB: It's very much a slow buildup and will continue to be so. We don't see online revenue replacing the traditional packaged business, but it's an important feature. As far as numbers go, you'd have to ask the analysts, who are supposed to be the experts in this field [laughter]. But we're not looking at revenue from our sports games at this point.
GS: Why do you think other companies are slow to embrace online console gaming?
CB: Remember the introduction of 3D into video games? How long did it take the whole development community to switch successfully over to 3D? That took at least five years--new technology takes time to evolve in this industry. We were the first company to develop a 3D architecture and in the Saturn. Sony was able to follow that quickly with PlayStation, and then developers had to learn quickly how to make the transition. Look at development companies in the early '90s, in the 2D world, and see how many of them are surviving today. So it's those who didn't adapt and change--those are the companies that are no longer surviving. Of course, Capcom still does a particularly good job with its 2D fighters [laughter], but that's an exception to the rule. It takes time for new technology to find a home in any industry, and I think online gameplay is taking just as long as 3D.
GS: Do you foresee Sega helping other companies in getting their games online?
CB: Well let me take you back past the introduction of 3D. Who was the first company to develop real-time simulation games in a time when most arcade games were just side scrollers? Games like Space Harrier, Hang-On, Outrun--those first games that used sprites to simulate a three-dimensional element. Then we [popularized] 3D with Virtua Fighter and Virtua Racing. Sega Rally and Last Bronx were the first online dial-up games for the Saturn, then we did the first online game for Dreamcast with Chu Chu Rocket and NFL 2K1. We had the first voice-recognition game ever with Seaman, the first game where you could talk to other players with Alien Front Online--the list of innovations by Sega continues.
We innovate and we allow others to follow, but I think what we have to do in the future is innovate and to do it profitably so that we can expand the business. The creativity you see in Sega's studios is what's driven this industry so much over the years. That's the strength of this company.
GS: What is the relationship between Sega and Nintendo? The two companies were rivals for so long.
CB: The relationship between Sega and Nintendo is extremely close. Look at the success of Sonic Adventure 2 and the announcement made by Nagoshi and Miyamoto about F-Zero. These two companies are working together in both offline and online worlds. The synergy between Sega and Nintendo is huge; the culture of both companies is [similar]. We strongly believe in the strength of internally developed franchises, and we believe in content and characters created from the ground up. The developers are the heart of this company. As one of the business guys, I'm on the periphery of Sega. It's the Mizuguchis, the Yu Suzukis, the Nagoshis, the Greg Thomases--it's those guys that are basically running this company, and it's my job to better utilize their talent, make it into money, and reinvest it back into the studios. That's similar to the culture within Nintendo. As for Sony, we give Sony something they desperately need, and that's great content from US developers and Japanese developers.
When you look at Sony, it's only had 11 percent market share of its own platform with Sony first-party games. At the end of Q1, Sega is now the number three independent publisher on the PS2; we're the number one independent publisher on GameCube, and we're the number five on the Xbox. In 2001, we were the fifth largest video game publisher with a 4 percent market share. At the end of Q1 2002, we are now the third largest independent video game publisher with an 8 percent market share. We've doubled our market share from Q1 2001 to Q1 2002. And to quote a lot of people, you ain't seen nothing yet, and next week you'll see a lot more.
GS: Thanks for your time, Charles.