Mario goes back to war

The Nintendo 64 video game console raises the stakes in a market worth pounds 600m in Britain alone. Andy Oldfield reports

You might have thought - hoped even - that Nintendo's "cute" plumber and global gaming megastar, Mario, was history. If so, brace yourself.

After the battle for market share in the United States over Christmas, the next instalment of video-game wars has hit the UK with the launch of the Nintendo 64 games console and the latest incarnation of Nintendo's flagship game, Super Mario 64, which promises a brighter, faster and more graphically rich 3D Super Mario than ever before.

Cynics might not think that represents too much of a challenge, but the eager consumers of video games have little time for cynicism, and even their cynical parents will end up as front-line troops in the console wars as they find their wallets rapidly emptying.

The market is a lucrative one for companies that get it right. In Britain alone it is worth pounds 600m and is expected to grow by anything from 15 per cent to 25 per cent this year as Nintendo's 64-bit machine vies for supremacy with the older, established 32-bit machines, the Sony PlayStation and Sega Saturn.

The fight for supremacy is a familiar story. The cyclical market for video games has always been driven by a mix of technological innovation and rival machines which enjoy near cult status among devoted games players, to whom brand loyalty is almost as important as technical specifications. In the early Eighties, when home computers took off, it was the Sinclair Spectrum and Commodore 64. With the development of 16-bit computing, Commodore's Amiga and the Atari ST helped to polarise opinion on which was the essential and coolest machine for serious games players. Magazine publishers have made and lost fortunes trying to pander to such prejudices.

When IBM-compatible PCs started to emerge as the dominant personal computer in the early Nineties, the market for cheaper dedicated games consoles grew, with Nintendo's SNES and Sega's MegaDrive making the early running and selling 1.3 million consoles between them by the end of 1992. Various manufacturers tried to cash in on the boom, but Atari's Jaguar, the Amiga CD32, Philips' CD-i and the 3DO all failed to win consumers away from Sega and Nintendo, despite offering technological and/or price advantages.

In 1994, worldwide demand for consoles fell by nearly 20 per cent, although sales of software grew by 1 per cent as consumers waited for the next generation to develop. In the transition to 32-bit consoles, Sony managed to stake a claim with its PlayStation, now claiming 80 per cent of the CD-based console market in Britain, while Nintendo lost ground by concentrating on developing its 64-bit system, which was supposed to be released in 1995 but which has not appeared on UK retailers' shelves until this week.

One of the main selling points about consoles has always been that they are cheap when compared with a PC. This is still true, even though the hardware is impressive. The Nintendo, with its 64-bit central processor running at 93.75 MHz plus dedicated sound and graphic chips, is supposed to be able to outshine any other console or even a Pentium PC with 3D graphics acceleration. For a 10th of the price of a top-of-the-range Pentium MMX-based multimedia PC, you can get a console system that out-performs it as a gaming machine. That may be all it can do, but lack of versatility is not necessarily a bad thing for most dedicated gamers. Games-playing is all they want to do, and consoles make it easy.

With existing technology beginning to show its age, Nintendo hopes to achieve boom sales. The stakes are high, though. Microsoft's reaction to the 1996 release of Nintendo's new console in Japan and the United States was to budget $9m to be spent in Europe last year on promoting Windows 95 as a games-playing platform and viable alternative to dedicated consoles.

It is easy to see why Microsoft felt the need to keep its profile raised. Last year Nintendo sold 250,000 N64s on its launch day in June in Japan, and while reports of subsequent poor sales lead to panic-selling of Nintendo shares, over the year 2.25 million Nintendo 64s were sold in Japan as the company fought to claw its way back into dominance of the market-place with its delayed new machine.

In the United States, between the Nintendo 64's launch on 29 September and the end of the year, demand outstripped supply as 1.75 million of the consoles were sold. Some shrewd early buyers cashed in by selling the machines they had bought for $200 at prices of up to $1,000. In the same period, Sony shifted 1.46 million PlayStations and Sega weighed in with 1.6 million sales - a figure that exceeded most expectations for the oldest 32-bit system. Software for all these machines amounted to 60 per cent of all computer entertainment software.

Nintendo did not achieve this by accident, or because its product sells itself. A games magazine, commenting on the launch of the Sega Saturn in 1995, underlined the reality of who buys the machines when it said: "If you've got the money or gullible parents, get the latest console." It is something Nintendo has borne in mind. In the United States, for every $200 machine sold at least $100 was spent via television, print and co-marketing campaigns with the likes of Nickelodeon, Kelloggs and Blockbuster Video on advertising aimed at reaching the parent or relative likely to buy the system for their children or relative's children.

That strategy is probably the key to the likely success or the failure of the N64 in making up for its late arrival and winning converts from Sega and Sony. And with increased production aimed at achieving worldwide sales of 6.1 million machines by the end of this month, recommended prices in Japan and the US are already being cut by a third to put pressure on its rivals.

Nintendo's success is not a foregone conclusion, though. Sony and Sega have enjoyed a relative lack of competition while selling their own systems and establishing large user bases. They have also had time to develop their software titles.

Vitally for Sony and Sega, their games can be sold more cheaply. Rather than using a CD-Rom player, Nintendo is relying on a more expensive cartridge format. Games in the region of pounds 60-pounds 70 are likely to be the norm. That is something Sony is already taking advantage of in the UK. From Friday it is releasing classic PlayStation titles under the Platinum Range logo at pounds 19.99 instead of the usual pounds 35-pounds 40.

It is not a short-term move, either. Sony is looking at expanding that range of titles to about 30 by Christmas. Plans also are under way to boost production of new titles.

Sega, having worked out details of a $4.2bn merger with Bandai, the company behind Power Rangers, is also in good shape - despite falls in profits last year - to increase its sales of software. It has the rights to produce console versions of the most famous coin-operated arcade games. Sega is also geared up to sell its titles beyond the console market with an established presence in the PC market.

"This market is in a critical situation," Hiroshi Yamauchi, Nintendo's president, said last month. It is, but that is its usual state. With sales rising and downward pressure on prices, it is a market war that many will relish. It all looks encouraging from the point of view of games players, and even from the viewpoint of those resigned to buying one of the things (preferably discounted) just to make the the kids - or the dads - shut upn

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