• The New York Times, Wednesday, October 18, 2006 11:30 AM

Sony is expected to detail its online service Thursday for the upcoming PS3 at a media event in San Francisco. Unlike Microsoft's, this service is expected to be free, although the PS3 carries a much higher price tag: $400.

Microsoft's Xbox 360 has been around for nearly a year. All the while, the video-game arm of the software giant has been touting its Xbox Live Web product, which for $50 a year allows Xbox and Xbox 360 owners to compete with each other over the Web. A free version of Xbox Live is open to all, but it's limited to movie trailers and game upgrades.

Sony is building one network to allow multiplayer gaming and another to allow commerce, like the purchase of music and game downloads. A big difference between Microsoft and Sony's networks is that Sony will allow game companies to host multiplayer contests and tournaments on their own servers, not just on a central server, as in Microsoft's network.

That means advertisers won't be locked into using Sony's online ad system, as they would with Microsoft, when negotiating in-game ad deals, which are expected to become a revenue source for both companies. "It's huge," says Giancarlo Varanini, editor of the Official U.S. PlayStation magazine. "They're basically changing their entire outlook with online with the PS3."

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