Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, May 14, 1995 TAG: 9505120010
SECTION: BUSINESS PAGE: F-1 EDITION: METRO
SOURCE: JIM CARLTON THE WALL STREET JOURNAL
DATELINE: LENGTH: Medium
Whoops.
Lincoln is expected to announce within days that the advanced game player will be as much as half a year late, missing the crucial 1995 Christmas sales season. The delay couldn't have come at a more pivotal time for Nintendo and the entire video-game industry, whose products sometimes generate hits and revenues that dwarf those of Hollywood's movie studios.
Nintendo and archrival Sega of America Inc., the U.S. unit of Sega Enterprises Ltd., together control nearly the entire $4 billion industry in the United States. For all of this decade, they have been battling it out, going from what is now seen as crude, eight-bit technology - bits are a rough measure of computing power - to what soon will be widespread 32-bit and 64-bit games with lush colors, stereo sound effects and lightning-fast graphics.
To date, most of the market has been in game cartridges that pop into a player and are displayed on a standard television set. However, the video-game market lately has stagnated, and Nintendo, Sega, powerful new entrant Sony Corp. and others hope to galvanize their mostly teen-age and younger and mostly male customers with hot new game players offering big advances in realistic 3-D animation.
But because of the technological changes, none of these new devices will run the millions of games that youngsters already own - meaning the two giants essentially must start over in their battle for market and mind share.
``It's a high-stakes game they play,'' observes Scott Marden, chief executive officer of a software unit of Philips Electronics NV of the Netherlands.
Nintendo is taking two big gambles. First, it is betting that delaying the Ultra 64 until next year won't cost it dearly, as happened when Nintendo failed to match Sega's introduction of a new 16-bit machine, the Genesis, in 1989. That gaffe, and others, led to the loss of half of Nintendo's market share in a swift three years. Sega plans to start selling its equivalent of the Ultra 64, the Saturn, in U.S. stores on Sept. 2, and Sony will introduce its PlayStation around the same time.
Second, Nintendo has made what could be either a brilliant move or a devastatingly bad call: It has decided to stick with game cartridges while its competitors move their video games to machines that will use CD-ROM drives. CD-ROM disks can hold vastly more video, graphics and sound than cartridges, but Nintendo is betting that with a revamped and revved-up cartridge player, it can deliver a cheaper, but phenomenally faster, game system. Boasting 3-D software and microchips that theoretically can match the power of a supercomputer, the Ultra 64 is expected to retail for about $250.
``Nintendo will be seen as either visionary or an idiot,'' Lincoln says.
Lincoln himself has at times been seen both ways. A longtime senior vice president of the company, he took over as chairman of Nintendo of America, of Redmond, Wash., in February 1994. Hiroshi Yamauchi, head of the Kyoto-based parent company, had concluded that his son-in-law, Minuro Arakawa, wasn't aggressive enough in running the important subsidiary.
Lincoln, 55, is fun-loving and avuncular. He has a frenetic, combative way of dealing with competitors and even suppliers, demonstrating a flair for popping off and, occasionally, for composing insulting poetry.
His major accomplishments include shamelessly copying Sega's successful television campaign featuring grungy, screaming teen-agers, plus coming up with the megahit Donkey Kong Country game in time for the 1994 holiday shopping season. Donkey Kong Country is expected to eventually generate retail sales of more than $400 million. Many video games are lucky to gross $100 million.
Since Lincoln took over, Nintendo's share of the 16-bit game market in this country has jumped to 57 percent from 39 percent a year ago, according to NPD Group Inc., a market-tracking firm.
In the process, he has constantly kept Sega off balance. When Sega came out with a game called Night Trap, depicting a scantily clad woman under attack, Lincoln lambasted it in hearings on Capitol Hill. Sega had to pull it. When Tom Kalinske, president of Sega of America, complained about the tactics, Lincoln sent him this ode over business news wires: ``Dear Tom, Roses are red, violets are blue, so you had a bad day, boo hoo hoo hoo. All my best, Howard.''
by CNB