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Monday, 20 December, 1999, 12:52 GMT
Christmas video games war

Sony Playstation Sony Playstation 2 will be launched in the UK next year

Christmas might be a time of peace and goodwill for many, but not in the world of video games.

It is the season when the battle for market share can obscure all fraternal thoughts towards your fellow man.

The present-buying season can account for nearly half the year's sales of video games.

But Christmas 1999 is only an opening skirmish in the battle for control of the video games market.

The real battle will take place next year when Sony launches Playstation 2 and Nintendo launches its Dolphin console. Both of these will compete for sales with Sega's recently launched Dreamcast.

New boy on the block will be Microsoft. The software giant is expected to launch a console late next year, code-named X-Box, coinciding with the release of the new Sony Playstation 2.

The season for sales

If proof was needed that video games were no longer the domain of teenage boys, Sony provided it last week.

Sega arcade Many say Dreamcast is make or break for Sega
So far, Sony has sold five million consoles in the UK. In other words, roughly one in four UK households has a Playstation.

Ronnie Dungan, editor of Computer Trade Weekly (CTW), explained the growth of the market.

"That has been driven by the quality of the game and the marketing, which has been aimed at an older age group," he said.

UK sales of hardware and software are expected to total 1.5bn this year, about 15% to 20% higher than last year.

Many of these sales will be made in the Christmas season.

The importance of the Christmas period is evidenced by the fact that while Lara Croft publisher Eidos posted a third-quarter loss, it is widely expected to post healthy full-year results thanks to its Christmas sales.

Many agree that the games market is becoming less seasonal, with publishers spreading games launches throughout the year.

Christmas began in October

The battle lines for the Christmas sales were drawn as far back as October, when Sega launched Dreamcast.

Many say the Dreamcast console is make-or-break for Sega, which saw its market share plummet to about 1% after the failure of its Saturn console in 1995.

Lara Croft Christmas sales of Lara Croft games will help Eidos
So far, Sega says this Christmas has been good to them.

In the past two months, Sega has sold 500,000 Dreamcast in Europe. There have been 150,000 online registrations, with 40% of customers using Dreamcast to connect to the internet.

Sales of Dreamcast hardware are six months ahead of schedule according to Sega's European boss Jean Francois Cecillon, who says he expects to reach his first year European sales target of one million units by Easter.

But CTW's Ronnie Dungan said:"The launch of Dreamcast was never going to be about Sega becoming a market leader. The launch was about Sega getting its foot back into the market."

"Next year is the most important. They have a nine-month period when they have only Playstation to compete with. The big thing is when Playstation 2 is launched," he said.

Sony stays at the top

Sony's Playstation remains the dominant video gaming console with about 60% of the market.

Worldwide, over 70 million Playstations have been shipped since the console was launched in December 1994 in Japan and the following year in Europe.

While typically sales of the old console fall prior to launch of a new console, in the case of Playstation, sales have remained strong.

This is attributed to keen marketing and falling prices.

"Playstation has sold more hardware units than any year so far," a spokesman for the European Leisure Software Publishers Association, said. " People still perceive Playstation to be a good product."

Pokemon drives Nintendo sales

Nintendo's success story for 1999 has been Pokemon, a game which has revitalised the sales of Gameboy.

Already, expectations of sales have doubled.

"It is selling by the bucket-load. We expected to sell a quarter of a million by Christmas. Now it looks like we are going to sell half a million in that time frame," a Nintendo spokesman said.

"It is not a one-off Christmas fad. It is the fastest-selling gameboy game in the UK. It is outselling any other game we have got this Christmas," he added.

Gameboy 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.

But such is the strength of demand for Pokemon that Nintendo believes it could entice players to buy the Nintendo 64 console. Pokemon Stadium - a version of the game to run on N64 - is to be launched in March.

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See also:
13 Sep 99 |  The Company File
Sony's new weapon: Playstation 2
05 Mar 99 |  The Company File
Video games giants declare war
12 Apr 99 |  The Company File
Rival snaps up Game
24 Nov 99 |  Business
Losses double at Eidos

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