Console woes

People queue for the Sega Dreamcast launch

Video game makers are having a hard time, with two of the big three Japanese firms hit by increased competition.

Japan's third biggest game maker Sega reported its third annual loss in a row, despite a jump of more than 20% in sales.

Hopes that its fortunes could be turned around by the launch of its console, the Sega Dreamcast, appear to have been dashed.

Sony's Playstation2 has been a big hit in Japan

Sega posted a current loss of 44bn yen compared with a loss of 7.2bn yen in the previous year.

It posted an operating loss of 40.35bn yen, compared with a 2bn yen profit in the previous year.

Sega president Shoichiro Irimajiri is now expected to step down as a result of the poor results, with chairman Isao Ohkawa expected to take his place.

Sega lost money again despite a 21.5% jump in revenue, boosted by the overseas launch of its Dreamcast video game machine, the world's first 128-bit game player.

Sega has been hit by intensifying competition at home from Sony's popular PlayStation.

For year to 31 March

Sega shipped 1.1m consoles in Japan

Sony shipped 2.14m PlayStation units and 1.41m PlayStation2 units.

Sony launched the latest version of the console, the 128-bit PlayStation2, in March.

The rivalry is expected to continue as Sony plans to release PlayStation2 in the United States and Europe on 26 October.

Sega's losses were roughly in line with analysts' forecasts following a profit warning in February.

The news was released after the Tokyo market had closed.

Sega shares have fallen 49% so far this year.

Yen hits Nintendo profits

Japan's leading video game maker, Nintendo, also saw a sharp fall of 34.7% in profits last year as the negative impact of the stronger yen more than offset robust sales from its its popular Pokemon game software.

Consolidated net profit fell to 56.1bn yen ($520.8m) in the year to 31 March, against 85.8bn yen a year earlier.

Its performance was hit by a rise in the yen against the dollar that cut the yen-based value of its overseas sales and assets.

The result was below analysts' estimates of about 60bn yen, but earnings are expected to rebound sharply in the current year.

Nintendo forecast a 46.3% jump in group net profit to 82bn yen with sales rising 1.8% to 540bn yen, citing expected strong sales of its hand-held game machine Game Boy, including its next-generation Game Boy Advance.

It plans to release Game Boy Advance later this year.

Nintendo also plans to release its new 128-bit home video game machine Dolphin - which will replace its Nintendo64 - late this year in Japan to fight back against PlayStation2.

Shares in Nintendo closed on Friday at 15,550 yen, down 3.72%, dragged down by overall weakness in the Tokyo stock market.