Microsoft buys stake in games company

Microsoft has expanded its presence in the entertainment arena by taking a stake in game software startup Digital Anvil. Its investment in the company could total $100m in the next few years

Microsoft has expanded its presence in the entertainment arena by taking a stake in game software startup Digital Anvil.

The deal calls for Microsoft to hold a minority stake in the company, as well as to fund development of specific game titles, according to Digital Anvil officials. The value of the stake was not revealed.

As part of the pact Digital Anvil products will be distributed by Microsoft worldwide, officials said. The product boxes will display the Digital Anvil name, but have a Microsoft look and feel, they said.

Though financial details of the agreement were not released, the two-year product cycles required to develop cutting-edge games means Microsoft's investment will be significant, analysts say.

For the next few years, the investment could reach US$75 million to $100m, taking into account a budget that includes three or four titles a year as well as overhead, according to Dan Lavin, an analyst with Dataquest.

The investment is part of Microsoft's overall strategy to become a bigger player in multimedia products, Lavin says.

"They want to get a significant portion of the serious games-user market; they're looking around for market opportunities since their traditional [office-oriented] software markets are slowing."

Microsoft has already agreed to fund several titles, the first two of which are due out in the third quarter 1998.

Digital Anvil, based in Austin, Texas, is assembling an experienced staff, according to company officials. Founder and CEO Chris Roberts helped develop such well known games as Wing Commander for Origin Systems, a subsidiary of Electronic Arts. Roberts is bringing other Electronic Arts staffers with him.

The company, which is also signing up film director Robert Rodriguez as a producer, aims to focus on games that have the three-dimensional look and feel of movies, and plans to offer action-story and action-strategy games in its first two releases, according to officials.

More informational can be obtained at http://www.microsoft.com/corpinfo/.

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