Nintendo pins future on cutting-edge system

REDMOND, Wash. -- Nintendo Co. is counting on sales of its new, cutting-edge game player to help it recapture the top spot in the $11 billion-a-year video-game market.

Trouble is, the company that became synonymous with video games in the 1980s has such a master stroke in its latest invention that it could well beat itself at its own game.

Nintendo unveiled its Nintendo64 player and companion Super Mario 64 game in the U.S. earlier this month.

The game, starring Mario the plumber, wowed usually cynical reporters and analysts with its feel of an animated movie rather than a choppy cartoon -- a look created by the Silicon Graphics Inc. technology that also revved up Twister and Jurassic Park.

Viewers at the E3 trade show called the game a masterpiece and its legendary creator, Shigeru Miyamoto, a genius.

Still, it took the Japanese company more than two years, virtually unlimited resources and a top-shelf software development team to create the new product.

Nintendo depends on outside software companies for about two- thirds of its games. Those companies won't have the time or money to match Nintendo's feat. And it's the popularity of the software titles that spurs sales of the game consoles.

"Super Mario 64 is probably the greatest video game of all time," said Neil West, editor-in-chief of Next Generation, a video game magazine that tracks the technology. "But, there is no way that third parties can be expected to bring the same resources to the table. Even Nintendo will have a hard time matching its own game."

Nintendo shares have taken a beating for twice delaying the Nintendo64 debut, first saying software developers needed more time to create the games, then citing a chip shortage. The company also took heat for defiantly standing by its decision to make the game on a cartridge instead of the more popular and, for software developers, more profitable CD-ROM.

Nintendo is so confident that gamers will want the Nintendo64 that it has no plans to match recent price cuts from rival Sony Corp. PlayStation and Sega Enterprises Saturn machines, said Nintendo of America Inc. Chairman Howard Lincoln.

"It's no different than Chevrolets and Cadillacs," said Lincoln during the E3 show. "If you've got a $5,000 Chevrolet and somebody is coming in with a Cadillac, you better get your price down to what it's really worth. What they did was a tacit admission that their Chevrolet is overpriced."

Veteran Sega and newcomer Sony have been selling their 32-bit game players for the past 18 months.

Both companies, led by Sony, cut the price of their machines in the U.S. earlier this month by $50 to $199.

Nintendo will begin selling its 64-bit machine on June 23 in Japan and Sept. 30 in the U.S. for about $250.

A bit is a unit of computer processing power. The more bits, the more powerful the machine.

Nintendo64's software titles also are more expensive, at about $70 compared to about $50 for Sony and Sega games.

The company expects demand for the Nintendo64 to exceed supply this holiday season, making price cuts a moot point at first. Still, the company is spending $54 million on advertising and marketing aimed at boys aged eight to 14 -- the most it's spent on any product introduction in it's history -- to spur demand.

Nintendo plans to ship 500,000 consoles in Japan by the end of June and another 500,000 units to U.S. stores by Christmas.

"The gamble we're taking is that the entertainment experience that comes out of that creativity, even though it may cost more, will be compelling enough that people will want to pay that money," Lincoln said.

More competition is on the horizon.

Matsushita Electric Industrial Co. is working on making a video game console based on M2 technology -- another sophisticated computer process that will rival Nintendo64's three-dimension perspective and fast-action play.

Matsushita paid $100 million for 3DO Co.'s M2 technology last October. It later formed a company called Panasonic Wondertainment Inc. in Tokyo to create the software games for the new system. M2 consoles are expected to be available later this year in Japan and in 1997 in the U.S., said Bill Gardner, vice president of Panasonic Interactive Media Co. in Santa Clara, California.

The Japanese electronics company also is considering building an M2 add-on device to the Panasonic 3DO Real machine, a 32-bit console that made its debut in October 1993 and never caught on.

"We will have an opportunity to see what everyone else is doing and correct their mistakes," Gardner said.

Likewise, Microsoft Corp. is championing the personal computer with its Windows 95 operating system, which makes developing video games for the PC easier than in the past.

The world's largest personal computer software maker also has begun to create PC video games of its own.

Personal computers are taking a larger share of video game players' dollars as more consumers buy multimedia computers with CD- ROM drives.

Nintendo is counting on Nintendo64 to help it capture 42 percent of the video-game market as of March 1997, compared with 31 percent for Sega and 24 percent for Sony. Nintendo and Sega each held about 40 percent of the market last year.

Some eight games will be available when Nintendo64 goes on sale and another eight to 10 games from third-party developers will go on sale by Christmas.

For Nintendo, a few blockbuster games are all it needs.

"This is just like the movie business," Lincoln said. "Everybody thinks they can make good movies, but there are only so many Spielbergs. That's reality."

Copyright 1996
Provided by ProQuest Information and Learning Company. All rights Reserved.