I was never much of a video-game player, although I did have a brief infatuation with Missile Command. (It ended when a pal proceeded to stomp me every time we went head to head.) I must be one of the few: Video games are reckoned to be a $20 billion-a-year industry and revenues now outpace movie-ticket sales
Some 100 million game consoles have been sold in Japan, the United States and Europe. In Japan, 50 percent of households have one; in the U.S., the penetration ratio is 33 percent, and it’s 20 percent in Britain.
Those are impressive statistics. Yet if you’re a computer maker, you are — or at least ought to be — worried. The personal computer is a dinosaur, and no matter how many innovations Steve Jobs crams into the next iMac, the beast is wobbling. The big issue for the industry is what will replace the PC as the door to cyberspace.
How about game consoles? It may seem far-fetched, but check the specs: Sega’s Dreamcast features a 200-MHz chip, 128-bit CPU and churns out 3 million polygons per second. Sony’s PlayStation has a 128-bit CPU and a 300-MHz chip and is supposedly more powerful than a Pentium III computer. Their graphic capabilities equal those of the top workstations. New models, and some in the works, can play DVD movies, decode digital TV or let users surf the Web.
Not without reason, then, one market watcher thinks “the games console is the stealth platform.”
Hardware is only part of the picture, though. Well aware of the stakes, games makers are already marrying their products to the Net.
Take Sega. Its Dreamcast console comes with a modem, e-mail software and a Web browser. It has tied up with British Telecommunications and AT&T to let gamers take on opponents on the Net. The BT deal gives European users free Internet access (you still have to pay the phone charge); the terms of the AT&T arrangement are not yet clear.
Sega will set up a Web page — “The Arena” — where gamers can square off against each other. Broaden the concept a bit and you have a handy little portal. Sega says there are 1.4 million console users in Japan, and 420,000 use it to access the Net.
Those numbers have certainly influenced Nomura Securities’ thinking. Late last month, the Japanese securities house announced that Dreamcast users would be able to use the console to trade stocks online. Reportedly, another hookup with the Japan Racing Association is in the works. It will allow gamers to place bets on horses.
The company isn’t stopping there. According to press reports, Sega has developed specially modified consoles that will act as set-top boxes for cable TV subscribers. They’re being used in tests of a fiber-optic cable system being run through six Tokyo subway stations. If they work, why not expand the market?
Nintendo is right behind. The next generation of Game Boys is supposed to be able to hook up to the Net so that players can get e-mail, compete against distant pals and download new software. With 80 million Game Boys sold worldwide, that’s a handy captive market. (Just append this graph to Mark Thompson’s paean to the wireless world that appeared here last week.)
Nintendo has joined forces with Matsushita, the consumer electronics giant, to produce its next-generation console, reportedly called Dolphin. The new box will use a custom-built 400-MHz processor and a 200-MHz chip.
(This is the sort of tieup that keeps PC makers up at night: Games makers bring graphics expertise and a hard-core customer base; consumer-appliance manufacturers have mass production expertise, particularly in reliable, easy-to-use hardware.)
And Nintendo is planning more. Two U.S. companies have developed “an electronic clubhouse” for kids that accesses only specific addresses on the Internet. SharkWire Online creates its own sites designed for 7-14 year-olds, offering them e-mail, games and information. The sites are accessed through an analog line that runs from a Nintendo console.
Then there’s Sony. The consumer electronics giant is a leap ahead of the competition already, by virtue of its Vaio line of computers and PlayStation. It has the expertise in both PCs and games to make the marriage work.
Sony has realized that the future is digital. It has reorganized and pushed its Net-related businesses to the fore. Its portal, So-net, is one of Japan’s best.
There’s still more: Earlier this year, Sony was awarded a Type-I communications license, which will allow it to set up its own telecommunications infrastructure. The company plans to launch a fixed, wireless, local-loop access service that will bypass NTT and give customers a huge price break. The service is scheduled to start next July in six prefectures and will be extended to 21 more by December.
Sony is also in talks with Kansai Multimedia Service Co. to distribute games, music and movies via the Net. The Osaka-based ISP provides access through cable TV operators in the Kanto area. PlayStation2 users will be able to play software downloaded from the Net.
In other words, Sony is covering just about every link in the chain from end user to manufacturer: hardware, software, wire and Web site.
Finally, users of Bandai’s Wonderswan will be able to access the Net later this year. Plug in a specially made adapter, connect it to a cell phone and you’re surfing. The adapter will provide e-mail, a Web browser and a utility to download games. Reportedly, the unit will automatically disconnect after downloading and launch the new game so users won’t have to waste a minute before they can start playing.
Game consoles have one huge advantage in the fight to supplant the PC: An entire generation is growing up on them. Those devices will be diversifying and maturing in parallel with their users. Gamers will be comfortable with the hardware and won’t have to be persuaded to buy new versions.
Call it revenge of Pac Man — except that in the 21st-century version, the game makers are eating the computers.