Under the agreement, AOL and Sony will work together to combine AOL Internet features such as instant messaging, chat and e-mail with the PlayStation 2. Sony will provide the network adapter for PlayStation 2 that will let consumers access AOL Internet features and play Net-enabled games.
The two companies also will work together on interactive game projects including incorporating high-speed technologies and the development of a Netscape browser in the PlayStation 2 console. Additional hardware including a hard-disk drive, liquid-crystal display (LCD), keyboard and mouse will be offered to help customers access the new features. The new products are slated for release by the end of the year.
AOL is delivering on a promise made about a year ago in its plans to move aggressively toward gaming consoles and wireless devices. AOL and rival Microsoft have both been eyeing interactive gaming and working to position themselves as the dominant brand.
AOL has an existing relationship with video game producer Electronic Arts' EA.com, which has become the preferred online gaming provider on its Web sites.
Microsoft is also busy this week, turning up the buzz for its upcoming Xbox game console. The software maker is set to announce the Xbox's price and sale date--the last two major pieces of information to emerge about the device. Analysts expect Microsoft to match Sony's $300 price tag for PlayStation 2.
Tuesday's agreement marks another battle front between Microsoft and AOL. Both companies have been trying to gain a foothold in consumers' living rooms, anticipating a melding between high-tech and home-entertainment products.
Whether or not gamers are looking for online bells and whistles in their consoles remains to be seen.
"It's what happens on the ground with the individual people that makes the difference," said Josh Bernoff, principal analyst at Forrester Research. "The little elements of the consumer experience (are) what's going to make the difference, rather than the vast alliance between AOL and Sony."
Besides game consoles, both companies have been selling interactive TV systems. AOLTV and Microsoft's UltimateTV are intended to bring Internet features to the television screen. UltimateTV also includes a digital recorder, along with satellite service DirecTV and Microsoft's own WebTV. AOLTV has a deal with TiVo to introduce its own digital-recording features in upcoming versions.
Although both companies have planted their flags, consumer have yet to gravitate toward interactive television. AOL has not released figures for how many units it has sold. UltimateTV, which launched in March, is expensive, costing nearly $450 for the hardware and subscription fees.