The software giant scooped up Kansas-based NetGames USA for an undisclosed amount. NetGames USA develops software for scoring and bringing players together online, as well as software for online sales of PC games.
NetGames properties will be integrated into Microsoft's Zone.com online gaming site. In addition, NetGames employees will work with Microsoft to develop technology for its Xbox game console, which is set for release in 2001.
Last month, Microsoft acquired gaming company Bungie Software Products. Bungie and NetGames give Microsoft access to new game titles and developers for the Xbox, areas that Microsoft needs to bolster if it wants to compete with established game companies like Sega, Nintendo and Sony.
Microsoft has moved to beef up its gaming business as Sony and Sega have elbowed in on its turf by modifying game consoles to include Internet access and features normally associated with PCs, an area that Microsoft has historically dominated.
The gaming market is expected to grow exponentially over the next few years. Internet appliances, including TV set-top boxes, handheld computers and gaming consoles, are expected to increase from 11 million units shipped in 1999 to 89 million units in 2004, according to International Data Corp. Revenues will increase from $2.4 billion last year to $17.8 billion in 2004, IDC predicts.
"With NetGames' technologies, Zone.com will offer a level of online integration for games that no one has ever seen before," Dean Hachamovitch, product manager for Microsoft, said in a statement. "It shows Microsoft's dedication to innovating and improving online gaming."