Pace Micro Technology–The Americas revealed in January that it would be integrating the Sega games platform into its digital personal video recorder (PVR) home gateway (set-top boxes), providing consumers on-demand access to hundreds of console-quality games with 3D graphics, digital-quality sound and full-motion video. Consumers will now be able to play games online with anyone in the U.S., while at the same time, using the latest PVR technology to "timeshift" TV.

Pace's hard disk drive (HDD), currently 40 gigabytes, can hold as many as 60 Sega titles or 10 to 20 videos, says Andrew Wallace, Pace's senior vice president of worldwide marketing.

That hard drive would also store Sega games, giving operators the option to make downloaded titles available to subscribers under pay-per-play or pay-for-time scenarios.

Pace introduced set-top boxes with integrated HDD last year, building on the PVR concept to provide network operators radical new services and new ways of generating revenue, and to change the way consumers use television.

Ironically, Sega announced in January that it would cease production of the Dreamcast box and focus on licensing the technology and its library of games to makers of competing consoles, personal digital assistants and personal computers. Sega also slashed console prices to $99 to expedite sales of its Dreamcast inventory.

Pace didn't reveal the estimated cost of the new set-top boxes but said the cost to add Sega "would not be that high."

Sega had a previous relationship with MSOs with the now-defunct Sega Channel.