Video Games Showdown: Will Sega Zap Nintendo? More Competitors Drawn into Hunt for a Piece of $15 Billion Market

By Mark Trumbull, writer of The Christian Science Monitor | The Christian Science Monitor, November 28, 1994 | Go to article overview

Video Games Showdown: Will Sega Zap Nintendo? More Competitors Drawn into Hunt for a Piece of $15 Billion Market


Mark Trumbull, writer of The Christian Science Monitor, The Christian Science Monitor


THE holiday video game release of Nintendo's "Donkey Kong Country" doesn't get the same media hype as "Star Trek Generations" from Paramount Pictures. But maybe it should.

At $15 billion, game revenues exceeded last year's cinema box office take. And in the next few weeks of holiday gift buying, gamemakers will make about two-thirds of their annual sales.

Still, there's a question mark hanging over this crucial sales period: Will Christmas customers go for current games and machines, or will they sit on the sidelines, waiting for a new generation of game hardware due out next year? The dominant industry players, Sega Enterprises Ltd. and Nintendo Company, plus a newcomer, Sony Corporation, are all planning to debut new machines in 1995.

Indeed, beyond the battle for holiday sales, the arrival of new technology and new players puts the electronic game industry at a critical juncture.

There are at least two high-stakes battles shaping up:

* A face-off between the big Japanese gamemakers. Nintendo and Sega together control almost the entire market. A few years ago Nintendo had a near monopoly. Today Sega has 54 percent of the market to Nintendo's roughly 46 percent. Now Sony plans to join the fray.

* A flanking move by new companies. The dominant industry strategy is to sell hardware designed specifically for games, priced at $100 and up. Nintendo, with its US subsidiary headquartered in Redmond, Wash., says 40 percent of American homes have at least one of its games. But nipping at the heels of Nintendo and Sega are games for personal computers and other versatile machines with fast-falling prices.

As the industry becomes more crowded, each competitor is doing its best not to get zapped from the playing field.

Nintendo. Its big holiday hit is Donkey Kong Country, an update of a popular 1981 arcade game. Dealers have already ordered 2.6 million copies of this game, which involves the adventures of an animated gorilla.

"Unfortunately it's only one hit," says analyst Walter Miao of Link Resources, a New York-based market research firm.

Analysts say Nintendo got complacent with its once 90-percent market share, but is finally pursuing alliances with companies such as computermaker Silicon Graphics Inc. …

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