New game consoles blow away PCs

For the first time, video-game machines are expected to decisively trump the performance of general-purpose PCs. As game developers and publishers ponder where to allocate their scarce resources, the power shift could cause a software stampede.

The transition begins a week from Thursday with the planned U.S. launch of Sega Enterprise Ltd.'s Dreamcast console, the first of a new generation of game systems that handle 128 bits of computer data at a time, compared with 32 or 64 bits with previous machines. The more bits, the more realistic the games can be. The two market leaders, Sony and Nintendo Co., have scheduled their own 128-bit systems for fall 2000.

Of all the machines, it is the forthcoming Sony system that has drawn the most oohs and aahs from programmers and artists who have seen prototypes. That system, informally labeled PlayStation 2, has special-purpose circuitry that is expected to allow much more lifelike image quality.

Reality check
The prototype programs Sony has shown look little like the cartoons or Lego-block characters of current games. Animated people look almost human, with hair blowing in the breeze or their faces vividly reflected in pools of water. When trees sway in the wind, the leaves move about individually, much like in movies.

"The Sony system is going to be so sweet," says Brett Sperry, president of Electronic Arts Inc.'s Westwood Studios division, creator of the popular "Command & Conquer" series of games. "It's now the coolest thing around for programmers."

Adds Bobby Kotick, CEO of Activision Inc. in Santa Monica, Calif., "The Sony console is getting the attention of our PC developers, even the hard-core ones."

Long before the public votes with its wallet on a new game machine, the game developers have to place their bets. With costs rising 30% to 40% for the new generation of games, and development time frames stretching beyond 18 months, the choice of hardware platform is often a make-or-break gamble. Analysts believe that Sega will do well for six months to a year, but No. 1 Sony and No. 2 Nintendo are expected to eventually hold their market positions in the 128-bit field.

Sony announced its machine in March and began distributing prototype systems to developers this month. It will disclose its key game publishing partners Sept. 17.

200-times faster
Ken Kutaragi, chief executive officer of Sony Computer Entertainment Inc. in Tokyo, predicted that the machine's performance would top the fastest PCs. He estimated the machine will have 200 times the graphics power of Sony's original PlayStation, and 10 times the power of Sega's machine.

"For the first time, the high-end PC developers have a real choice about where to put their resources," says Phil Harrison, vice president of research and third-party developer support at Sony's U.S. unit.

To be sure, the versatile PC isn't going to die, and it often doesn't even compete with game consoles, says Kevin Bachus, a software executive at Microsoft Corp. Online gaming is driving the PC market into innovative areas where the consoles have yet to go, says Jason Rubinstein, games "evangelist" at Intel Corp.

"We're painfully aware we have to make the PC better," Rubinstein said at a recent game conference. "But we have a lot of initiatives in place that tell us it's going to be the premiere platform for digital entertainment."

The PC traditionally appeals to older game players, who like strategy games, and to women, who prefer the greater variety of PC titles beyond violent action games. And the PC is getting a shot in the arm from a burst of new sales this year to people who are taking advantage of "free PC" offers. For those reasons, some people think the PC will have enough momentum to retain huge numbers of loyal gamers.

"The impression that the PlayStation 2 will be light years ahead of the PC is really incorrect," says John Carmack, the top programmer at "Quake" developer Id Software Inc. in Mesquite, Texas. "We're going to continue with the PC because it will move ahead of the consoles and it gives us complete freedom to make the kind of games we want."

Declining revenue share
But console games, which offer a more social experience than PCs, are gaining share. PC entertainment titles made up 34% of the $6.2 billion in revenue for the game industry in 1998, down from 40% of the market in 1997, according to NPD Group in Port Washington, N.Y.

With all the uncertainty, game publishers are hedging their bets. Interplay Entertainment Inc., Irvine, Calif., says it will make a few Dreamcast titles but it will stay focused on the PC market for about 70% of its revenue. The company contends that PC software tends to grow steadily, where video games are subject to phases of boom and bust.

"For us, the PC is a safe bet," says Brian Fargo, Interplay's chief executive. "That said, it's a very difficult time to figure out where development should be."

Before the PC, Sony must first contend with Sega. That company expects to have 16 games ready Sept. 9, including the long-awaited "Sonic Adventure" title. Peter Moore, vice president of marketing of Sega of America, says Sega is on plan to ship 1.5 million Dreamcast units by March. Once it meets that goal, he says, game developers will have the confidence to commit further resources to Sega. As many as 100 titles are expected by next year, including a game dubbed "Shenmue," which has a budget of $30 million and is the latest project of Sega's star developer, Yu Suzuki.

Stiff competition
Sega's demos show that the Dreamcast is no slouch on cinematic effects, including dazzling sunsets and cherry blossoms blowing in the breeze. Charles Bellfield, a Sega spokesman, also argues that the new design of Sony's machine may make it a challenge to program.

Yet Sega's rivals have built bigger followings among developers. More than 650 games have been released for the PlayStation in the U.S. The Nintendo 64 has 165 titles, with 45 more expected this year; the company is hoping to exploit a few blockbusters, including the forthcoming "Donkey Kong 64."

Electronic Arts, the largest independent game publisher, has yet to support Sega and is instead working on numerous PlayStation 2 titles.

The most ambitious Sony supporter is SquareSoft Corp., a Japanese company that owns the popular Final Fantasy role-playing games. The company spent $30 million on its Final Fantasy VIII title, which will make its debut on the original PlayStation the same day as the Dreamcast launch. Tomoyuki Takechi, CEO of SquareSoft, predicts his company will spend $40 million on a Final Fantasy title for the PlayStation 2.

Against such bets, the $2 million to $5 million budgets of big PC games look puny.

"We see George Lucas and 'Star Wars' as our competition," says Takechi.