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This week we focus on a complete analysis of the
infrastructure industry
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Subscription software services could reshape the industry 

William M Bulkeley  
Eugenia Kline, a flute teacher in Westfield, N.J., thinks it's better for her six-year old son to play computer games than watch TV. But she used to get frustrated when he'd demand new $40 games because he was bored. "To buy a CD-ROM seems like an incredible waste of money," she says.

Then a few months ago, her high-speed Internet-access provider, cable television provider Comcast Corp., started offering PlayNow, a $9.95-a-month subscription service which offers over 100 software programs that he can play online as long as he wants and then move on. "The flat monthly fee is wonderful," she says.

Kline is an early proponent of a movement that some analysts and software producers think may reshape the software industry and drive demand for high-speed Internet service. Walt Disney Co.'s Disney Interactive, a big publisher of software titles, plans to announce on Monday that it will offer a channel of Disney software over the same subscription service that offers PlayNow.

That service, available in onlysome local markets, is run by Into Networks Inc., a small, Cambridge, Mass., company. Disney, which has not yet decided on pricing, will offer about a dozen titles to start, including "A Bug's Life Action Game" and "Winnie-the-Pooh Kindergarten." Other titles, including "Princess Fashion Boutique" and "Magic Artist Studio", will be available on a pay-per-play basis.

With subscription software service beginning earlier this year in only a few markets, the number of customers is tiny so far. But Into, and another small software subscription company, Media Station Inc. of Ann Arbor, Mich., are competing to sign up more cable and high-speed digital subscriber line providers. Analysts predict that as broadband access increases, software subscription will take off as well.

"Renting software and using it online is a compelling reason to get broadband for a number of people," says Cynthia Brumfield, an analyst with market-researcher Broadband Intelligence Inc.

Users are not able to illegally copy the softwareprograms because the subscription services don't download entire programs. Instead, Into and Media Station rely on a kind of streaming technology much like streaming-audio companies such as Real Networks Inc. Subscribers download a small software player that interacts with a server run by the companies at the central office of the telephone company or cable provider. Even for interactive games with a lot of motion like Quake or Pinball, users play online the same way they would play with a disk in their CD-ROM drive.

A high-speed Internet connection is necessary because of the vast amount of data passed between the central office and the user's computer. Broadband is currently in only about 1.7 million homes, according to Yankee Group, a Boston market research firm. But it should reach 3.3 million by the end of the year and 16.6 million homes by 2004. Michael Goodman, an analyst with Yankee, says "software on demand is going to be one of the applications that helps drive broadband into the home," becauseusers can justify the cost of service by seeing that they avoid buying a number of CDs. He says many users will prefer to subscribe because they avoid the hassles of installing new software and having it fill up a hard drive.

Into says it's finding interest in lifestyle programs that help people redesign their homes or build a deck. It also plans to start providing office software for small businesses that might not want to provide a full suite for users who only occasionally build a presentation or use a spreadsheet.

MediaStation, which also has about 100 titles available, says it is in talks with a company that provides education software for schools about a deal that would put the same software on its SelectPlay service so that students and their parents can practice school-work at home.

For many subscribers, the biggest benefit is providing a variety of low-cost software for younger children. Russell Swapp, a lawyer from Andover, Mass., says he uses Into's PlayNow service with his children, nine andfour "instead of watching morning cartoon shows." What's more, he adds, "You can switch back and forth without taking CDs out of the drive, which is good because my four-year old's attention span is short."

-- The Wall Street Journal

Copyright © 2000 Indian Express Newspapers (Bombay) Ltd.

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