AT&T Spending $5(m) on Video Games

[Paul Robinson <TDARCOS@MCIMAIL.COM>]

Summary from {Washington Post}, Page D8, July 29:

In "Game for a Multimedia Opportunity" Cindy Skryzcki describes AT&T's
purchase on July 28 for US $5 million of a 20% stake in the Sierra
Network, a computer system that allows users to play games against
each other; the description was that the network resembles "an
electronic amusement park."  The photograph above the article shows a
fuzzy image of several buildings in a park setting, apparently taken
off of a computer screen.

As part of the deal, the network has been renamed ImagiNation Network
Inc, and AT&T, which has the right to obtain a controlling interest,
said it would spend at least another $3 million to develop more
programming for the system.  The article says this is part of AT&T's
strategy "to be a major player in an emerging industry called
multimedia, where computers, communications technology, consumer
electronics and entertainment converge."  AT&T is involved with other
game related companies including 3DO, Sega and PF Magic.  Sierra's
interest is what AT&T can provide: the phone network which can allow
much better interactive entertainment; the other two things needed are
the programming and the delivery into the home.  "AT&T is now working
on all three."  The other reason for its owner to be interested is the
$12 million it has spent on the system and was still losing money.

AT&T has gotten involved in a number of ventures, including video
phones, personal communicators (which merge a fax machine, cellular
phone and E-Mail), video-on-demand and interactive shopping.  AT&T has
done a "major management reorganization" and was surveying its
employees "to find out if there was a market for interactive
programming using regular phone lines."  AT&T is also working on a
special modem to send voice and data simultaneously.  (Isn't that what
ISDN is supposed to do?)  But apparently AT&T doesn't want too much
read into this move; an AT&T vice president said it is not "AT&T's
definitive move in interactive networks" but AT&T is talking to
Hollywood about some things that could be done.

The owner of the system is a small California Company called Sierra
On-Line Inc., which made US $43 million in revenue last year.  Another
20% of the system was also sold for US $5 million to General Atlantic
Partners, a New York investment firm.  Sierra has also signed an
agreement with Prodigy to allow its two million subscribers access to
Sierra's games.


SIDEBAR:
Here are some of AT&T's 1993 investments in interactive
multimedia:

Jan  7: Joins with other companies to form 3DO to create
        interactive Compact Discs;
Jun  1: Creates Video Server as a means to provide video on
        demand;
Jun  2: Joins with Viacom to announce plans for two-way cable
        to allow services such as video on demand;
Jun  3: Joins with Sega to make video games accessible via 
        phone lines;
Jul 28: Buys 20% of the Sierra Network.


Analysis of the situation:

A few years ago some other company did the same thing, e.g. allow
people to connect to a system and access video games and the
equivalent.  The company went bankrupt because people couldn't see
paying a monthly fee for access to video games when you can purchase
them once.  Access to other people might be more valuable, I'm not
sure.

I don't know if this sort of thing is capable of being done on a
paying basis.  I do know that if it is, it has to be low enough in
cost to encourage people to use it, yet not so low that the operators
can't make a profit on it.


Paul Robinson - TDARCOS@MCIMAIL.COM

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