Tech Talk—Multi-Player Online Games Drive Start-Up

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You’ve heard of the console wars. Get ready for the server wars. As the online gaming industry slowly picks up steam, Sony Corp., Electronic Arts and Microsoft Corp. will have a lead as providers of servers and games that pave the way for what the industry calls massively multi-player gaming.

But those giants should make way for the latest entrant: Calabasas-based Rebel Arts.

The five-man start-up announced last week its intention to provide a high-tech software platform for multi-player online gaming.

No one in Los Angeles is saying “massively multi-player gaming” as much as the company’s chief executive and co-founder Paul Villadolid. The former senior vice president of Walt Disney Television hooked up with Larry Hess, a widely respected software engineer, formerly with special effects house Digital Domain.

Their technology, dubbed Versatile Accelerated Server Technology (VAST), is designed to handle more than 100,000 simultaneous users and more than 2 million transactions per second. The founders want it to become the standard server platform for multi-player online gaming.

To pull it off, Rebel Arts teamed up with AMD and Linux NetworX to develop VAST. Linux NetworX is a networking company specializing in linking multiple computers on the Linux operating system to provide the capacity of a much larger supercomputer. AMD makes integrated circuits for the personal and networked computer.

Until now, the cost of building out and maintaining the server necessary to support a massively multi-player game has been a huge stumbling block for most game publishers, according to Villadolid.

Costly or not, online gaming is gaining momentum. With the ongoing revenue stream that their subscription models generate, online games are a potential gold mine. Sony’s “Everquest,” Electronic Arts’ “Ultima” and Microsoft’s “Asheron’s Call” together have more than 1 million subscribers. That number could spike when new consoles with Internet access hit shelves this fall.

“To date, nobody is approaching the server platform the way we are,” Villadolid said. “They’re trapped in very expensive and inefficient platforms.”

Rebel Arts is betting that movie studios will take an interest in VAST. “With movie studios all looking to develop strategies to converge their content with interactive content on the Internet, massively multi-player games will very likely be the answers to the studios’ prayers,” Villadolid said. “These subscription-based games have the potential to sign up millions of subscribers for games based on popular film titles.”

Of course, to wage a server war, the Rebel Arts team needs capital, and the company is seeking a modest first round of $3 million.”


ArtistDirect’s Losses Lessen

ArtistDirect Inc. saw a decline in its e-commerce revenue last quarter, but ongoing cost-cutting measures have helped it bring down overall losses, the online music company announced last week.

ArtistDirect joins a slew of other dot-coms that have told similar tales in their earnings reports in recent weeks.

Seven long paragraphs into its earnings release, the Los Angeles company reported a net loss of $11 million ($3.07 per diluted share) for the second quarter ended June 30, compared with a net loss of $14 million ($3.07) for the like year-earlier quarter. Its second quarter revenues were $2.9 million, down 15 percent from the previous quarter and down 48 percent from like year-earlier quarter.

In particular, ArtistDirect’s e-commerce division took a hit, falling 29 percent, while media revenue rose 43 percent to $1.1 million.

Despite the losses, ArtistDirect reported $69.8 million in cash and short-term investments.

That’s a fraction of newly appointed chief executive Ted Field’s fabled personal wealth, but enough perhaps to fulfill Field’s dream of building a new record label and online business at ArtistDirect.

A recent 10-for-one reverse stock split saved the company from a Nasdaq delisting. The company’s stock was trading at around $6.30 per share last week.


Tricked-out in South L.A.

Good news for the techies and entrepreneurs of South Los Angeles. The Magic Johnson Foundation and Hewlett Packard Co. have teamed up to stock a room at the Ujima Village Housing Development with PCs, laptops, printers, scanners and digital cameras enough gadgetry and connectivity to spawn an idea or two and, hopefully, help bridge the digital divide.

The program, called the Magic Johnson and HP Inventor Center, was funded by Hewlett Packard Philanthropy and the Hewlett Packard Multi-Cultural Marketing Program.

Staff reporter Hans Ibold can be reached at [email protected] or at (323) 549-5225 ext. 230.

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