Correspondents in New York | August 24, 2007

MICROSOFT is giving customers free retrofits to a wireless racing wheel with its Xbox 360 video game

system after hearing of malfunctions in a wheel component.

The company said it was informed of about 50 incidents worldwide of a malfunction in the Xbox 360 Wireless
Racing Wheel, in which a component in the wheel chassis may overheat and release smoke when the AC/DC power supply is used.

More than 230,000 of the wheels are in the field, a spokeswoman for Microsoft said.

There have been no reported incidences of fire, injury or damage resulting from the component failure,
Microsoft said. adding that customers should stop using the AC/DC power supply for the wheel until they get their retrofits.

The company said it was notifying relevant regulatory agencies such as the US Consumer Product Safety
Commission.

The spokeswoman said the retrofitting would not be material to Microsoft's earnings.

For the quarter ended June 30, Microsoft took a $US1.06 billion charge to fix problems with its Xbox 360
game console, after an "unacceptable" number of repairs, and to offer a new extended warranty to customers.

Scott Hillis in San Francisco | August 24, 2007

CREEPY, underwater shooter game BioShock which refused to sink when publishers balked at its

high development costs has turned into a success story, getting glowing reviews and top sales.

"Honestly, we couldn't get a lot of publishers to sign up to spend millions of dollars to do a game," creative
director for BioShock Ken Levine said.

It took a well-timed public relations move to give the game a chance.

"We sold a story to the press essentially that we were having trouble selling the game to a publisher. That
story got so much traffic that the next day BioShock was the best idea in the world for everybody," Mr Levine said.

It worked. Mr Levine's Irrational Games was bought by game publisher Take-Two Interactive Software in
2006, a publisher known for not backing away from controversy.

Take-Two, which makes the hit Grand Theft Auto franchise but has fallen on hard times lately amid accounting
scandals and a delay in the latest GTA installment, has benefited from taking a gamble.

Take-Two stock jumped 10 per cent on Tuesday when BioShock was released as glowing reviews poured in
and the game topped sales charts at retailers like Amazon.com.

The game is part first-person shooter, horror flick, and morality tale. Players explore a failed underwater utopia
torn apart by clashes over a DNA-altering substance that bestows health and superpowers.

Players have to collect the substance in order to gain more abilities and advance through the game.

The catch is that the only sources are "Little Sisters," small girls who are guarded by "Big Daddies," lumbering
fellows in deep-sea diving suits whose skin-crawling bellows sound like angry whales.

Matt Moore in Frankfurt | August 24, 2007

SONY has taken another step to lure customers to its PlayStation3, saying it would sell a device to let

users record live television that can be stored on the game console or transferred to the PlayStation

Portable for later viewing.

The combined television tuner and personal video recorder, dubbed PlayTV, is aimed at helping Sony boost
sales of its high-end gaming console as well as its portable gaming unit. Sales are due to start in Spain,
Germany, France, Italy and Britain in early 2008.

Sony announced the new product at the Games Convention in Leipzig, Germany.

Using the Digital Video Broadcasting – terrestrial format, the PlayTV integrates into the PlayStation 3 console

and lets users record individual episodes or entire series to its hard drive.

Sony said the device's twin TV tuners were high-definition-ready and able to view, record and play back in that

format. Recorded video can be sent wirelessly from the console to a PSP.

For all its advances, Sony's PS3 has faced formidable competition from rivals like Nintendo's Wii and Microsoft's

Xbox 360.

Sony had sold 4.3 million PS3 consoles as of June, compared with 11.6 million Xbox 360s and about 8 million Wiis.

The company did not say how much PlayTV would cost or when it would be available elsewhere in Europe, Asia

or the Americas.

Jonathan Arber and Jonathan Coham, analysts at Ovum, a London-based research firm, said PlayTV was the

"next logical step" for Sony in competing with the Xbox 360, but said Sony still has to overcome the console's

price and bring out more games.

Correspondents in London | August 23, 2007

BRITAIN'S BT Group and Sony have unveiled software that will allow gamers with PlayStation Portables

to make video and voice calls.

The partners said the Go!Messenger wireless software for Sony's PlayStation Portable (PSP) handheld game player

was set for commercial launch in January 2008.

Sony and BT said the software allowed PSP gamers to keep in touch by connecting to any broadband wireless

internet point at home or out and about using VoIP internet telephony.

"By offering a variety of communications options to help stay in touch with other gamers, Go!Messenger truly

brings the entertainment potential of PSP to life," head of mobility and convergence at BT Steve Andrews said.

As Sony's lead wireless partner, BT said it would initially promote the software, which was developed in its research

centre, in the UK, France, Germany, Spain and Italy before extending its reach to over 100 countries, Middle East

and Africa.

It also plans to allow regional wireless internet providers and manufacturers to buy the service wholesale and sell

it on under other brands.

BT and Sony, which has shipped 24 million PSPs globally since launching the device in December 2004, signed a

four-year deal in May.

BT is battling to transform itself from a hardware-based fixed-line telecoms provider into a software-based supplier

of telecoms and entertainment applications.

It has invested around £10 billion ($24.6 billion) into its so-called 21 Century Network telecoms infrastructure, which

provides quality voice and video calls at cheaper costs over the internet.

Correspondents in Leipzig | August 23, 2007

THE MARKET for video games is expected to expand by half over the next four years as it extends

beyond hardcore gamers, the chief executive of French video game publisher Ubisoft says.

Game makers say casual gamers are growing the market

"There are so many new customers to the business; this is going to grow the market tremendously. I expect the

market to grow by 50 per cent in the next four years," Ubisoft chief executive Yves Guillemot said.

"It's a very exciting time for all the developers and publishers," Mr Guillemot said.

Electronic Arts, the world's largest video game publisher, was similarly bullish about the prospects for more people to

play games on consoles, PCs, mobile phones or on the web.

"There are 150 million gamers worldwide, but 2 billion people are ready to play," EA's managing director for

Germany, Thomas Zeitner, told a news conference.

Driven by the runaway success of Nintendo's motion-controlled Wii console, so-called casual games that are targeted

at families, older players or women have become the industry's new buzzword.

Ubisoft, known for its realistic military games, announced a new title in its Games for Everyone range. Cranium Kabookii,

based on the award-winning board game Cranium, will be made for Nintendo's Wii console and is slated for a December

release.

Mr Guillemot said the company's casual games business was "extremely profitable" and helped to finance the initially

costly development of games for next-generation consoles – Sony's PlayStation3 and Microsoft's Xbox 360.

Developing a casual game costs anywhere between €1 million ($1.7 million) to €4 million depending on the number of

platforms with which it is compatible.

By comparison, a normal game developed for the Wii costs €5 million to €10 million, and one designed for use with the

PlayStation3 and Xbox 360 10 million to €20 million.

Chris Jenkins | August 22, 2007

RETAILER Video Ezy says the appointment of administrators to its set-top box supplier Mobilesoft has

come as a surprise, but won't derail its plans for electronic delivery.

Video Ezy says Steve Hogben has steered most of the development of its set top box

Video Ezy managing director Paul Uniacke said he had only received the news that administrators Jirsch Sutherland

had been appointed to developer Mobilesoft when informed by AustralianIT yesterday afternoon.

"It was news to us as well," he said.

Mobilesoft had been working with Video Ezy to develop a set-top box that would allow the playback of movies without

DVDs, and had recently been awarded a $4.5 million contract to supply 10,000 of the devices.

Mr Uniacke said Video Ezy had no issue with the technology developed by Mobilesoft or the way the partnership had

worked.

But he said that the terms of Video Ezy's contract allowed it to walk away if Mobilesoft was placed in the hands of

administrators. However, Video Ezy was not necessarily looking to exit the arrangement at this stage, although it could

use the situation to strengthen its position.

Stuart Kennedy | August 21, 2007

THE chances of an Australian developed driverless vehicle getting to compete against the world's best

cyber-vehicles began to slip during scrutineering when the vehicle accelerated away and immediately

veered hard right, straight off the road.

The heavily modified Toyota RAV4 was quickly brought to a halt before it could do any damage. "At least it showed

the emergency stop system worked," said NICTA project team leader Dr William Uther, who was with the crew that

travelled to the US with the car.

The problem was tracked to a glitch in the interface to the steering.

Developed by a team backed by the Australian Centre for Field Robotics at Sydney University, NICTA, the University

of California at Berkeley and the University of Technology, Sydney, the car was intended to make the start line of the

US Urban Grand Challenge, a contest for autonomous vehicles run by the US Defence Advance Research Projects Agency

with a $US2 million ($2.49 million) prize.

The aim of the DARPA challenge is to speed development of cars and trucks that safely drive themselves in real-world

traffic and the vehicles must obey traffic signs, road markings and the rules of the road on a 97km city-like course,

without human intervention.

Before the car could front up for the challenge it had to get past a DARPA site inspection, and unfortunately it didn't

make it this time.

Matt Moore in Frankfurt | August 21, 2007

A TWO-DAY outage that left millions of Skype users unable to use the internet phone service was caused

by an abnormally high number of restarts after people had downloaded a Windows security update.

The worldwide outage, which began on Thursday and ended on Saturday, left millions of Skype users unable to log

on to make phone calls or send instant messages.

Luxembourg-based Skype, part of online auction giant eBay, has more than 220 million users in total but typically

has 5 million to 6 million users online at any given time. In January, Skype reported that it had counted 9 million

users online at one time.

In an update to users on Skype's Heartbeat blog, employee Villu Arak said the disruption was not because of hackers

or any other malicious activity.

Instead, he said that the disruption "was triggered by a massive restart of our users' computers across the globe

within a very short timeframe as they re-booted after receiving a routine set of patches through Windows Update".

Microsoft released its monthly patches last Tuesday, and many computers are set to automatically download and

install them. Installation requires a computer restart.

Mahesh Sharma | August 21, 2007

VIDEO Ezy is planning to release an electronic movie rental box in time for Christmas in an attempt to

hold off online competition.

Movie rental stores are increasingly feeling the pinch as the internet provides new ways of viewing movies, and has

given rise to competitors such as Reeltime Media and Quickflix that use new video rental models.

Video Ezy has ordered 10,000 home media centres from data communications producer Mobilesoft, at a cost of

$4.5 million. The centres will underpin its electronic rental service. Customers will use the centres to play movies

they have downloaded on portable storage devices in a store.

"At some point this is the whole future of the business," chief information officer Steve Hogben said.

"We know Video Ezy is a very large business today, but if it didn't develop a new set of products it would not disappear

overnight, but there would come a point in a number of years where you could see that it would need something like

this to stay competitive."

About 100 e-boxes have been deployed since the end of last year as part of a trial, and while an official date hasn't been

decided for a national rollout, Mr Hogben said: "We're looking at the Christmas time frame, perhaps be just before or just

after."

Portable storage devices will be used to download files from in Video Ezy stores, and they can be watched on the media

centres.

The movies, about 1.5GB in size, take about 80 seconds to download, and customers pay for the amount of times they

watch a movie. They self-erase after 30 days.

The e-boxes range in price from about $200 for a basic system to $800 for one with features such as a DVD player,

large capacity and high-definition tuners.

Alex Veiga in Los Angeles | August 21, 2007

PARAMOUNT Pictures and DreamWorks Animation will offer next-generation DVDs in the HD DVD format and

drop support for Blu-ray, further complicating the race between the competing technologies.

Monday's announcement affects the upcoming DVD releases of the blockbusters Shrek the Third and Transformers,

along with movies distributed by Paramount Pictures, DreamWorks Pictures, Paramount Vantage, Nickelodeon Movies

and MTV Films.

Movies directed by Steven Spielberg, however, will continue to be released in both formats.

Paramount, which owns DreamWorks Pictures and handles home sales for the separate company DreamWorks

Animation, previously released movies in both Blu-ray and HD DVD.

"Part of our vision is to aggressively extend our movies beyond the theatre, and deliver the quality and features that

appeal to our audience," said Brad Grey, chairman and CEO of Paramount Pictures, a unit of Viacom.

"I believe HD DVD is not only the affordable high-quality choice for consumers, but also the smart choice for Paramount,"

he said.

The competition between Blu-ray and HD DVD has kept confused consumers from rushing to buy new DVD players until

they can determine which format will dominate the market.

Until recently, many consumers were able to defer the choice because players have been so expensive. But prices have

been slashed by about half – Sony's Blu-ray player now sells for $US499 ($622), and Toshiba's cheapest HD DVD player

sells for $US299, with both likely to include as many as five free movies as an incentive.

CEO of DreamWorks Animation Jeffrey Katzenberg said consumers seeking to switch to high-definition DVDs will be enticed

by the movies available for HD-DVD players. He added the lower price for the Toshiba devices will appeal to the family market.

"It's a game-changer, what they're doing, and it's why we decided to throw in with them," Mr Katzenberg said.

Lara Sinclair | August 20, 2007

PAY-TV sales company Multi Channel Network has cast doubt on the future of the digital video-recording platform

TiVo, which is backed by the Seven Network, telling advertisers the venture may never get off the ground.

MCN's Rob Leach says TiVO bombed in Britain

Rob Leach, head of MCN's interactive television division and formerly of British pay-TV company BSkyB, said TiVo had

"bombed" in Britain after proving to be "a difficult product to market" partly due to high set-top box costs.

The comments come after media buyers denied a report last week that 20 advertisers had paid $1 million to participate in

interactive advertising trials on the TiVo platform.

"No advertisers have put any money down for TiVo at all; that's what we're told by Seven," said a source at the Mitchell &

Partners media buying agency, which is one of Australia's biggest. "There's no offer out there as yet."

Mr Leach sought to allay concerns about ad-skipping during a digital advertising seminar held by media agency MindShare

earlier this month. He said the May announcement that TiVo would launch in Australia early next year raised more questions

than it answered.

"I'm unconvinced TiVo will launch in Australia, despite Channel Seven's announcement," Mr Leach said.

"(BSkyB) had a real policy of acquire or embrace. When TiVo came to Britain, Sky marketed TiVo, and — whether deliberately

or accidentally — it bombed, and TiVo is not sustained in Britain at all any more," he said.