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Hasbro thinks digital while mapping future

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Even before the launch of Games.com, Hasbro's online games site, Hasbro's high-tech chief Tom Dusenberry is looking beyond the Internet to newer digital frontiers.

"Really, the grand vision is to create Hasbro Digital Entertainment," he said in a telephone interview from Games.com's and Hasbro Interactive's headquarters in Beverly, Mass.

"That creates an opportunity for us to have physical products and virtual products," he said. The "physical" products are anything that comes in a box, including video and computer games, and CD-ROM playsets.

The virtual products will consist of "taking our great games and putting them onto the World Wide Web, wireless telephones, broadband and cable, and interactive TV," he said.

For Pawtucket-based Hasbro, the number-two toy company, the move into new technologies is the latest step in the company's evolution into a broad-based family entertainment company, Dusenberry said.

"If you think about this great Rhode Island company, it's now got toys, games and a digital strategy," he said.

Dusenberry announced last week that Games.com will have its headquarters in Beverly, sharing space with Hasbro Interactive, the video and computer games division that Dusenberry helped create five years ago.

Although Hasbro said it would replace Dusenberry as head of Hasbro Interactive, he said he will keep that post while also running Games.com.

"I think it's one integrated business, as a digital business," Dusenberry said. "It made sense to have one person in charge."

Hasbro expects to employ 50 to 80 to start up Games.com. Slated to debut Sept. 19, Games.com is expected to have a full range of offerings by December.

The site was originally scheduled to begin next month, but staffing has taken longer than expected.

Hasbro had targeted $15 million in sales this year and $60 million next year from Games.com, although company officials said the delay will probably affect Games.com's revenues this year.

Games.com will feature multi-player games, tournaments, premium games, chat rooms and e-commerce.

A development team will be based in Alameda, Calif., Dusenberry said, "but the thrust of the business will be here in the Greater Boston area."

Dusenberry, who is about to turn 47, said the goal of the Internet games site is to "rearticulate the fun experience that our games have provided, taking full advantage of this new media."

While there are about 2,600 Internet sites with game offerings, few have the "might, clout and muscle of Hasbro, to go in and leverage ourselves with our classic brands, and try to leverage our market share," he said.

Most of Games.com's offerings will be multi-player games, giving players the option to play another player, or even hundreds of players at a time.

In a massive Risk game, for example, 500 players could play at once, making a move at set times, say from every five minutes to every 24 hours.

Games.com will be offered free, although it plans to add a "premium play" option for about $4.95 a month to serious games players who want more challenging games.

Dusenberry says the site will make money five ways: advertising, sponsorship, premium play, tournaments and e-commerce.

Experts say Internet gamers tend to spend a lot of time on-line, playing games, chatting with other players and discussing strategy.

That makes the sites attractive markets for advertisers, who put their ads on the game sites' chat rooms and bulletin boards.

By 2003, an estimated 60 million consumers are expected to be playing games online, according to Hasbro.

Other Internet game sites include Electronic Arts's; Lycos's Gamesville; and Gamers.com. Electronic Arts also plans to relaunch its own website, EA.com.

Despite their proliferation, the game sites -- including Microsoft's MSN Gaming Zone -- have had trouble turning a profit.

According to the Interactive Digital Software Association, only $500 million of the total $6.6 billion in U.S. video game sales last year came from online gaming.

"Online gaming is a reality," said Hayley Kissel, a toy industry analyst with Merrill Lynch Global Securities. "It's a platform that children are going to migrate toward. The question is what percent of total gaming is going to be done online."

So far, the growth of online gaming has been slow, and it's estimated to grow to only $1 billion over the next 5 years, Kissel said.

Part of the reason is the awkwardness of playing games on personal computers that require connections through modems. Also, games played on PCs often lack the vivid graphics of video games.

Video gamers are hoping that changes soon, as the big video game console system makers adapt their systems for online games playing.

Sega of America is slated to launch its SegaNet online gaming network Sept. 7, making Sega's Dreamcast video game console the first to offer multi-player games over the Internet, using a built-in 56-k modem.

SegaNet will charge $21.95 a month.

Next year, Microsoft Corp.'s X-Box and Nintendo Co. Ltd.'s Dolphin are expected to be capable of online games play.

Hasbro's Games.com site, which will feature up to 50 games, will begin by offering games aimed at 25- to 45-year-old adults, based on classic Parker Brothers and Milton Bradley games, such as Monopoly and Scrabble, and arcade games, including Pong.

Those will be followed by strategy games, a casino-based area, sports games, and if the market is ready, children's games, Dusenberry said.

The same path was followed by Hasbro Interactive, whose first-quarter sales slowed to $22 million this year, compared with $38 million a year ago.

"We clearly slumped," said Dusenberry, who cited a glut of computer and video games on the market.

The sales downturn, he said, was "based upon unfortunate market conditions and an appetite to grow quicker than the market was willing to accept."

Hasbro Interactive is forecasting 10 to 15 percent sales growth this year. It expects to produce about 30 new games -- about half of last year's number.

Looking to the future, Dusenberry is keen on wireless and interactive television-based gaming.

"The real growth in online gaming will come when people have cable modems or broadbands," Kissel said.

"We're very clearly focused on the wireless business, particularly in Europe and Japan," Dusenberry said. "The step after that, we see broadband and interactive TV as huge emerging opportunities.

"That's my job," he said, "to always be out there and helping Hasbro find those new opportunities."
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