Playing Games with VOIPMatt Hines
BOSTON—The overriding theme among attendees of this week's VON Fall 2005 Conference was that compelling new communications applications will drive uptake of VOIP technologies, and some observers feel one form of those systems may already be live.
Or rather, xBox Live, that is, referring to the online gaming service operated by software giant Microsoft Corp. in support of its Xbox video game console.
For even as Forrester Research, of Cambridge, Mass., estimates that nearly 2.78 million U.S. households will utilize Internet telephony communications tools in 2005, Microsoft alone claims nearly as many users of the Live service, which includes VOIP (voice over IP) communications capabilities for chatting among its subscribers.
Companies ranging from telecommunications stalwarts such as AT&T Corp. to upstarts Vonage Holdings Corp. and Skype Technologies—which was recently purchased by online auctioneer eBay Inc.—are pushing hard to add users to their VOIP services.
But, despite those companies' focus on creating attractive calling plans to lure users from traditional phone services, firms such as Microsoft, Verizon Communications Inc. and Sony Corp., which already control gaming networks laced with VOIP, could be laying the foundation to compete in the space in the future.
Services such as Live, and Sony's PlayStation online gaming network, currently allow players to communicate with each other only within the boundaries of their own systems, but industry watchers said that's no guarantee those offerings won't add broader capabilities someday.
"It's tough to say what gaming consoles or services will offer in terms of communications capabilities, but there's no reason to think that additional [VOIP] platforms won't grow out of those systems," said Joe Laszlo, analyst with New York-based Jupiter Research.
"All the video game system manufacturers are looking at ways to expand their communications capabilities, so there's reason to believe that a console or gaming network could become a central hub for other forms of communications technologies, including VOIP."
The consensus opinion of people involved in the VOIP market appears to be that companies of all kinds, from telecommunications providers to less-obvious examples such as eBay, will increasingly look to add Internet-based voice services as an element of products they offer.
With legions of users already signed on, and tapping into their VOIP networks, some believe online gaming service providers could have a head start.
Even some of Microsoft's closest rivals concede that gaming networks such as Live could hold significant potential for spurring VOIP adoption.
Just as Microsoft is adding VOIP capabilities to its MSN instant messaging client, portal specialist Yahoo Inc. has integrated so-called click-to-talk services into its own IM application, as have competitors Google Inc. and America Online Inc.
"You look at how many people are already subscribing to Xbox Live, and you have to recognize that there's a lot of potential there," said Brad Garlinghouse, vice president of communications products at Yahoo.
"It's not the same thing as being a Skype or Vonage, but these people are using VOIP technology to communicate, so, you have to consider how they might try to take advantage of that."
While Microsoft representatives declined to comment on the potential to expand xBox Live's VOIP capabilities, executives at Verizon agreed that gaming applications could prove fertile ground for introducing new Internet telephony services.
Vijay Venkateswaran, director of product management and development at the carrier, said that the company's recently launched Verizon Game Services offering will provide opportunities for the firm and its partners to market new communications tools to users.
In addition, the executive said that Verizon's new FiOS fiber optic network, through which it will offer voice, data and cable television services, could serve as a platform for launching VOIP tools.
The company already offers consumer VOIP calling services via its VoiceWing service.
"In-game chat is one vehicle to create opportunities for new collaborative technologies, and we're actively telling our partners and customers, especially with the FiOS network, that the pipeline for creating new applications will be very multimedia rich," said Venkateswaran.
"We believe there are a lot of opportunities where content and applications can be blended with collaboration tools like VOIP, such as games, music and video."
According to Venkateswaran, Verizon will look to build its own next-generation communications tools and to provide infrastructure as an asset to other companies creating new applications, primarily via FiOS, and potentially through gaming applications on that network.
Market analysts contend that no matter what the delivery model, VOIP services are going to continue to take off with consumers.
IDC said it expects the VOIP market to explode to more than 27 million U.S. users by 2009.
Others see the worldwide market ballooning to more than 100 million users by the end of the decade.
Will Stofega, analyst with Framingham, Mass.-based IDC, said that gaming networks, and the clout of a player such as Microsoft, will force traditional telecommunications companies to accelerate their own VOIP plans and bring competitive offerings to market sooner.
While the analyst said it's far from a sure thing that the software giant will be able to convert its Xbox Live audience into Internet calling customers, he believes there is potential in converting some of its existing subscriber base.
"When Microsoft says they're going to aggregate VOIP and link it up with Xbox, and asks you if you want VOIP calling, and promises to make sure it works in real-time and with your existing Microsoft applications, that has to be scary as hell for other service providers," Stofega said.
"There are already other carriers out there trying to form alliances with the gaming community, and gaming does have the ability to initiate other people, especially younger consumers, to VOIP, without them ever knowing it."
Other industry experts observed that there will be many potential competitors to game network operators already dabbling in VOIP, but said that companies that can create and cross-market different types of services featuring Web-based calling technologies will ultimately draw the most interest.
Consumers will increasingly look at voice capabilities as an element of many online applications, according to Bruce McGregor, analyst with San Diego-based researchers Current Analysis.
"Right now what's happening is you have both a Vonage and an Xbox Live with 2 million-plus users, and you have cable companies and other traditional carriers launching VOIP to offer a full range of services, so there's going to be a lot of choice for the consumer over the next several years," said McGregor.
"Applications like gaming and instant messaging are going to create a lot more familiarity with VOIP, and that's going to help people understand the potential for new services as they're introduced."
Copyright © 2005 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in PC Magazine.