Monday, September 17, 2001		On Hardware

War in gaming platforms
Yuka Obayashi

JAPANESE game maker Sega Corp said it aimed to become the number one game software maker in the world on the back of its future line-up of titles for leading consoles.

Chief Operating Officer Tetsu Kayama told Reuters in an interview that Sega aimed to raise its share of the US and Japanese markets to 15 per in the 2003-04 business year from around 5 percent now. The company is also targeting a 12 per cent share of the European market, up from 3 per cent. "Our goal is to become the world's largest game software provider," Kayama said.

Sega, known for its "Sonic The Hedgehog" game character, aims to sell 35 million units of game software globally in 2003-04 - 15 million in the USA, 10 million in Japan and 10 million in Europe.

Sega abandoned production of its Dreamcast console earlier this year and shifted focus to its healthier software business, developing games for other platforms such as Sony Corp's PlayStation 2 and Nintendo Co Ltd's Game Boy Advance.

Kayama said the company's April-September earnings are on track to meet its forecast.

In May, Sega forecast an operating profit of 300 million yen ($2.48 million) for April-September, against a loss of 28 billion yen for the same period last year.

"It's not only amusement equipment sales, our overall business has been solid so far this business year," Kayama said. He declined to give specific figures.

Kayama also said Sega's restructuring plan, mapped out in April, was progressing smoothly.

Under the plan, Sega aims to return to profit in the 2001-02 business year and to raise return on equity to more than 15 per cent in 2003-04.

Shares in Sega closed up 0.75 per cent at 2,010 yen, outperforming the key Nikkei average, which fell 1.25 per cent. They have risen nearly 20 per cent since January 31 when Sega announced it would stop making the Dreamcast console.

Goldman Sachs last week raised its rating on Sega to "market outperformer" from "market performer".

It said that Sega's current business was operating above expectations, partly due to upbeat sales of its arcade game machines boosted by "Virtua Fighter 4", the latest version of the long-running hit game.

The global game console market is bracing for a major battle with the arrival of Nintendo's GameCube in Japan and the November debut of Microsoft Corp's Xbox system in the USA

Kayama said sales of the new generation of game consoles were likely to peak at around 23 million units in Japan.

"Given the momentum of the front-runner PlayStation 2, with its shipment already topping six million in Japan, Sony is likely to take a majority share here in the console war," Kayama said.

Sega, which has already released one title for the hand-held Game Boy Advance, is set to launch a title for GameCube on the day the new console hits the shelves.

"The largest number of our development projects are for PlayStation 2, but we will offer games for other machines by carefully choosing suitable line-ups for each console to match their core customer bases and needs," Kayama said. Microsoft hopes that its Xbox, which has a built-in hard drive and Internet connection, will have an edge over PlayStation 2, whose users need to buy a hard disk and external modem.

"Given the built-in online capability, we can start developing online games for the Xbox. But it is difficult to do so for PlayStation 2 since we don't know how many PlayStation users will buy accessories to link it to the network," Kayama said.

Sega said earlier this year that it would collaborate with Sony in developing online games.

"We are talking closely with Sony on a strategy to boost the number of online users among PlayStation 2 holders. We can't say where we stand on that right now...it's top

About 5,00,000 GameCube units, priced at 25,000 yen ($ 209.30) each, are set to hit Japanese shelves. Nintendo aims to ship four million units globally by March 31.

Large Japanese retailers such as supermarket chain operators Ito-Yokado Co Ltd and Daiei Inc, toy speciality chain Toys "R" Us-Japan, and convenience store chain Lawson Inc began taking advance orders for GameCube last month and they said orders have been fairly good.

"Around 80 per cent of our 180 stores have sold out their first batch of GameCube," an Ito-Yokado spokesman said.

Tokyo-Mitsubishi's Morimoto said: "We hear the advance orders have been piling up. GameCube is likely to do well in the 128-bit game console battle, taking up around 35 percent of market share, against around 20 percent for the predecessor, Nintendo64."

Providing fresh support to Nintendo, Japanese software maker Capcom Co Ltd said on Thursday that it would provide the new titles of its megahit BioHazard series exclusively to GameCube. The series had been made mainly for Sony's PlayStation.

"The news is very positive for Nintendo. BioHazard's core fans are the generation in their '20s and thirties and this could broaden Nintendo's user base," said Takiko Mori, analyst at UBS Warburg.