Battle joined in the war of the consoles

The imminent launch of Sony's PlayStation has already sparked a war of words between the Japanese giant and leading video-games companies Sega and Nintendo.

The video-games market was worth pounds 500m in the UK last year. Being number one rather than two or three can make a multi-million-pound difference to the bottom line.

As a result, both the leading CD-based games-makers, Sony and Sega, are hyping their systems as the best that money can buy. "Sega is the market leader in the UK and we will remain so," says Sega's director of UK marketing, Noel Dardis. "I'm not saying PlayStation won't take a chunk of our market, but we will remain the leader."

Mr Dardis points to the versatility of the Sega Saturn console: it can run audio CDs and can be upgraded to show photo CDs. PlayStation, by contrast, is a games console only. Saturn has already sold upward of 15,000 units since its launch last month, according to Sega.

Not surprisingly, the managing director of Sony Computer Entertainment in the UK, Ray Maguire, dismisses any criticism. "PlayStation is most emphatically superior to all its competitors," he says. Given Sony's prominence in both consumer electronics and entertainment, Mr Maguire is sure customers will flock to buy the machine when it is officially launched late next month. The company has set itself a target of 175,000 units in the next six months, along with 500,000 games CDs.

Console sales are invariably an indication of future software sales. The industry expects to be able to shift an average of three games for every console bought.

Both Sega and Sony are apparently unperturbed by Nintendo's plans to launch its Ultra 64 next year. This cartridge-based system is likely to be more expensive to produce than the CD consoles and the launch has already been postponed twice. Some industry analysts even suggest Nintendo might scrap the product altogether - something the company denies.

The battle may come down to price. Saturn retails at pounds 399, pounds 100 more than PlayStation. But Sega's Mr Dardis says the Saturn package includes a game worth pounds 50. Despite persistent rumours, Sega says it does not intend to lower its prices.

Games for both formats cost about pounds 50 each. For that, consumers get high-quality graphics and sound - vastly better than the 8-bit and 16- bit console games that launched the video-game craze.

Both Sega and Sony have been promoting their products heavily in the UK. Sony is putting up pounds 20m to sell the PlayStation, involving a complex advertising campaign ranging from television to trade shows to magazine inserts.

Both manufacturers are targeting older customers, those interested more in quality and range than in the garish, violent games that attract boys of between eight and 14 and that dominated sales of games cartridges in the early 1990s.

Both Sega and Sony have had a rocky ride of late. Sega saw the bottom fall out of the games market when its main rivals announced their new- generation consoles a year before they were due to come to market. Sony, for its part, could do with a hit to complement its profitable but mature line of consumer-electronics products.

Sony's Japan-based managing director, Shin Takagi - a key mover behind the development of the PlayStation - will also be keen to compensate for this year's decline in profits. This has mainly been due to the rise in the value of the yen against the dollar, which has depressed earnings in America. Analysts at Yamaichi Securities predict first-quarter earnings to drop to 10bn, compared with 31bn in the same period last year.

A worldwide boom in PlayStation sales would be a welcome fillip to the bottom line. It would also launch Sony into a brand-new business - and one that might benefit from the company's huge library of films and music, which could be used to develop new games.

The battle lines have been drawn, and this Christmas will be the first true test. Sony is convinced that its reputation as a service-oriented seller of high-quality products can transfer to a new sector. Sega, for its part, has no intention of relinquishing its number-one position in the UK games market. This will be no kid's game.

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