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Sega's Mark Hatley: "Dreamcast will launch an internet revolution"
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The BBC's Clarence Mitchell: "It is the most advanced games console on the market"
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The BBC's Mark Fisher reports: "It's all out warfare"
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Thursday, 14 October, 1999, 10:57 GMT 11:57 UK
Sega's console dream
Sega Dreamcast
Sega is betting everything on the Dreamcast
The launch of Sega's Dreamcast is the opening round in a massive campaign by all games console makers designed to boost sales for the crucial Christmas season.

Sega's entire future depends on the success of its new machine, which features 128-bit technology and a free connection to the Internet.

Its speedy performance and smoother graphics have impressed industry observers. Sega says its processor is ten times faster than its rivals

Sega has developed 40 games which will be ready by Christmas, including a new version of its hugely successful Sonic the Hedgehog.

Dreamcast has been a huge success in the United States, where 500,000 machines were sold in the first four weeks of its launch.

Donkey Kong
Sega faces a tough fight from games like Nintendo's Donkey Kong
Sega is aiming for eight million users worldwide.

It has spent $500m developing the new console - not bad for a company that lost $378m last year.

The reason is that the Dreamcast will be make-or-break for Sega, which has seen its market share plummet to around 1% after the failure of its Saturn console in 1995.

Betting on the Internet

A crucial selling point for the Dreamcast in the UK is that it provides free Internet access through BT's dedicated network across Europe.

Users will be able to plug the Dreamcast straight into a telephone socket and be connected to the "Dreamarena" home page. They will be able to send e-mail, take part in a chat room, or surf the Internet on their TV screens. But with limited storage capacity, they will not be able to print or download large files.

Playstation games
Sony has a huge selection of games for the Playstation
Sega believes that Internet gaming, where players will play each other across the Internet, is the future of video gaming.

It is also hoping to sell products on its website, and will even get some revenue from the local telephone charges.

Sega says buying a Dreamcast is the cheapest way to connect to the Internet.

In Japan, Sega has announced a deal with Nomura to sell shares online - a development which could come to Europe.

Sony fights back

But Sony, whose PlayStation is the market leader, is fighting back this Christmas with a 20m marketing campaign and the launch of eight new games.

PlayStation, which has 75% of the UK market, already offers more than 1,000 games for its customers. PlayStation has cut its list price to just 79.99, compared to 299 when it was launched four years ago. Some retailers are selling it for as low as 62.99.

It plans to sell another one million PlayStations in the UK by this Christmas, taking total sales to 5.5m.

But it will be the launch of PlayStation2, next March in Japan and next autumn in the UK, that will really turn on the pressure.

It will also have improved 128-bit graphics, with its "emotion engine" showing individual facial expressions.

It will play DVD video discs as well as games CD-Roms, and it will have a PCMCA slot for Internet access.

Sony, however, does not believe that Internet gaming will really develop until the broadband cable market - supplying much faster Internet connections - develops further. It says it plans to launch its Internet gaming service in 2001.

The PlayStation2 will also play all existing games - something that other new games consoles cannot do.

And with nearly 60m current PlayStation users, that may give it a crucial advantage in the race for the new generation of games machines.

"What's really difficult is that Sony is so dominant and will continue to be so," said Richard Spoher of CGI Magazine.

Nintendo counts on Pokemon

Meanwhile, Nintendo is counting on the craze for Pokemon, the Japanese pocket monster characters, to see it through the Christmas selling season.

pokeman
Nintendo is relying on Pokemon this Christmas
The Pokemon interactive computer game, which was launched in the UK on the weekend of 1 October, has already sold 25,000 copies, making it Nintendo's all time best seller.

But Pokemon is played on the Gameboy, which primarily appeals to the 8 -12 year old market, as opposed to the 15-24 year olds who are the focus of game console makers.

Nevertheless, Nintendo says it will sell 500,000 N64 consoles in the UK this year, many sales stimulated by the release new games like Donkey Kong this Christmas.

Nintendo is also gearing up for battle royal next Christmas with the simultaneous world launch of its Dolphin game system. Like PlayStation2, it will have a built-in DVD player, Internet capability and 128-bit technology.

Video games are now big business, earning more revenue that the motion picture industry.

But with so many new systems coming on the market next year, Dreamcast will have only a narrow window of opportunity to make its mark.

No wonder Sonic the Hedgehog is looking worried.

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See also:

29 Sep 99 | The Company File
Sega users to play stock markets
13 Sep 99 | The Company File
Sony's new weapon: Playstation 2
30 Sep 99 | The Economy
Christmas monster invasion
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