Kate Bulkley, Media Analyst.

Sony joins in with interactive TV games

By Kate Bulkley

Financial Times

August 23 2002

Although under-promoted compared with the on-screen clarion calls for digital TV viewers to go interactive, the services behind the red button have the capacity to be “nice little earners” in their own right, and this is starting to attract some big players. The most recent of these is Sony, which has just launched the games service GoPlayTV.

Not only is GoPlayTV the Japanese electronics giant’s first significant foray into the interactive TV games space, but the service is also ramping up the competition for other interactive games providers in the UK. By offering lots of prizes to players (571 are to be given away in August) and a technical back-end that allows precise profiling of users, the service hopes to attract a loyal and frequent player base. “GoPlayTV isn’t going to be minting money, but for not-too-large an investment it doesn’t require too many people playing to earn a decent return,” says Yair Landau, president of Sony Pictures Digital Entertainment (SPDE).

Services such as on-screen league tables of winners generated every 15 minutes, and the capability to know which set-top box has played which game, are ground-breaking functions, says GoPlayTV’s developer, the part-Sony-owned GOiNTERACTtv. “We call it rich media,” says Neil Cashman, chief technology officer of GOiNTERACTtv. “Our technology ensures that consumers get unique games every time they play.”

And getting the punters to play again and again is the basis of the business model. One puzzle of either Jeopardy! or Wheel of Fortune costs 50p, but so far (the service has been live since July 19) most gamers have chosen a £1 option that offers two puzzles and allows the player to post their scores and enter the prize competitions.

Sony won’t say exactly how much it has spent to develop and launch GoPlayTV on the Sky platform, but Landau claims “it is a lot less” than it invested in developing a massive multi-player online game like Everquest. According to industry observers, the costs for transponder space, agreements with Sky for use of its set-top boxes and a listing on the interactive electronic programme guide alone adds up to nearly £500,000 a year. Add to that the cost of developing the games, about £300,000, plus ongoing management fees, estimated by observers to be another couple of hundred thousand pounds a year, and the total investment figure is about £1m. This is chicken feed compared with the cost of launching a niche TV channel or producing a movie, and the payback for Sony could be as quick as 18 months. “If we get a fraction of Sky’s UK households playing a couple of times a month, we’re profitable,” says Landau.

Sony isn’t the first company to see the potential for interactive gaming. The interactive area of the digital landscape has had some bad press over the years with the huge mis-steps, for example, by Sky’s now-defunct Open… service. What Open… proved was that so-called t-commerce, like grocery shopping on your TV, was not a killer application. But the success of the interactive games service Playjam, which attracts up to 500,000 viewers a day to play simple arcade-style games, has proved that there is an appetite for certain interactive applications. Media publisher Screen Digest agrees, predicting that UK consumer spending on interactive TV games will more than double from £50.7m in 2002 to £132m in 2006.

Just six weeks after launch, GoPlayTV is meeting all of Sony’s expectations, says Ron Geller, senior vice-president of SPDE Europe. “We believe that GoPlayTV can be a kind of annuity where you can count on the money coming in every month,” he says. After on-again, off-again talks with Challenge, the Flextech-owned games channel, about launching an enhanced TV version of Wheel of Fortune, Geller says that Sony decided that what was “right for the company was to build something, not simply license something”. The idea is that GoPlayTV becomes an umbrella brand for a whole host of interactive games and becomes an asset in its own right. “This isn’t some brand new idea,” says Geller. “It’s not called the Viacom music channel. It’s called MTV.”

GoPlayTV is also part of a big push by Landau’s SPDE unit to create new digital distribution methods for all its studio and TV content. “The mission of my whole division is the better integration of hardware and content,” says Landau, who was named the head of SPDE when it was set up in spring 2000. He oversees Sony’s online businesses, like the persistent universe game Everquest, as well as Sony’s digital imaging unit, its SoapCity online digest for addicts of soap operas such as The Young and the Restless and Days of Our Lives, and a nascent wireless business that is putting Spiderman graphics and Men in Black II ring tones on wireless devices, the first of which are Sony Ericsson mobile phone handsets. “In the UK, the interesting thing for us is broadband to the PlayStation,” says Landau. “We could do a digital download service to your PlayStation if you had broadband and a hard drive. We may experiment with content there.”

Landau’s clout and views on digital distribution are shortly expected to be elevated inside Sony with the official announcement (it’s been widely leaked) of his promotion to become one of three Sony Pictures co-presidents. “The digital future and convergence of hardware and software are kind of the essence of the future of Sony as a whole,” says Landau. “I’m working at the operating level. You know I am not Bob Pittman [the former chief operating officer of AOL-Time Warner] or Jean-Marie Messier [the former chief executive officer of Vivendi Universal]. I’m not wandering around making big proclamations about the convergent future. I practice convergence on a case by case basis, like with GoPlayTV.”

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