Sega hopes for a Dreamcast of millions

Discount Store News, Jan 4, 1999 by Robert Scally

While popular video game platforms such as Sony PlayStation and Nintendo 64 are just hitting their peaks, the gaming industry is already planning for the future.

By this time next year, Sega's Dreamcast will be a reality in the United States Touted as the next generation in video game consoles, Dreamcast expects to reach. American soil for the first time next fall (It debuted Nov 27 in Japan).

Announced at last years Electronic. Entertainment Expo in Atlanta, Dreamcast is a collection of firsts for the video gaming industry. It's exterior is an unassuming white box with a controller that is backed by plenty of processing power and a modified version of Microsoft's Windows CE operating system. Its 128-bit Hitachi processor is four times faster than Intel's Pentium II for processing 3D graphics. Dreamcast's three million polygons-per-second graphics processing performance rivals that of high-end arcade game machines.

Dreamcast is also being positioned as a multi-player machine. It has a detachable modem for connecting to the Internet and the ability to connect to a personal computer thanks to the Windows CE that helps to run the device.

Another unique feature is Dreamcast's Visual Memory Unit, a small module with an LCD screen that hides within the unit's controller. The Visual Memory Unit can be used to save games or can be detached and used as a handheld portable game player.

The current Japanese price for the Dreamcast hardware is approximately 29,800 yen, about $250, a factor that has some industry observers wondering if the technology will be dramatically better than PlayStation and Nintendo 64 Both PlayStation and N64 originally cost $199, but are currently selling for $129.

Sega is hoping that Dreamcast will put the company back into a leadership position in the video gaming business after its Saturn next generation gaming console was blown off the market by Sony's PlayStation and Nintendo 64.

Sega dominated the video game business in 1995 when it held the No.1 market share position. Now Sega has a mere 6% of the games market, while Sony and Nintendo collectively control 85%.

Shoichiro Irimajiri, Sega's president, said in recent published reports that the breakeven point for Dreamcast, is probably 3 million units.

Hoping to avoid some of the missteps it took with Saturn, Sega is making sure that enough software will be available for the machine at launch and that plenty of promotional muscle is put behind Dreamcast's marketing.

Dreamcast's introduction will be significant not just for Sega. The current generation of game platforms still have considerable legs and will dominate the market for at least the next two years, said Doug Lowenstein, president of the Interactive Digital Software Association. But the real key for the game industry will be making the leap from the current to the next generation of games, Lowenstein said.

Lowenstein said he thinks that the industry will make a smoother transition to the next generation of game devices because it is more diverse in the kinds of software products it offers and has realized the value of serving it's existing installed base during the transition to protect their market.

A $100 million promotional marketing campaign already is being cranked up by Sega in anticipation of next fall's North American introduction.

At least 12 to 15 titles are expected to be available by the time the system launches in the United States.

Dreamcast's launch in North America will come at what could be an opportune time for Sega. Neither Sony nor Nintendo have plans for more powerful follow-up products to reach the market.

Sony will concentrate on addons and enhancement for its popular PlayStation, which has an installed base of about 20 million units. Still, Sony is said to be working on its next generation console unit that will be based on DVD technology.

Dreamcast many not compete directly with N64, some analysts have speculated. Nintendo 64 appeals to children and families while Sega's game products have been popular with game devotees who are 15 and older. But Nintendo is also thinking about the future.

"It's too early to introduce a new machine," reported Nintendo spokesman Yasuhiro Minagawa. "But I have to admit we're working on one."