New technology fans video war - 16-bit video games

Discount Store News, Nov 4, 1991 by Pete Hisey

New Technology Fans Video War

The first shots were fired more than two years ago, but this fall, the two armies finally engaged. Over the last few months, Sega and Nintendo have duked it out on national television as each attempts to dominate the booming 16-bit video game market.

On the night of Sept. 19, each ran a series of ads on at least two networks, head to head. Sega's campaign included an ad called Hey Guy, which actually illustrated the two competing 16-bit systems side by side. NEC, maker of the TurboGraph-X system, has also jumped into the advertising wars, and has the least expensive system on the market, priced at $99.

Regardless of which manufacturer wins the battle for market share, the 16-bit revolution has jumpstarted a category that clearly was losing momentum. The immediate beneficiaries of this new technology are a range of retailers, from toy discounters like Toys "R" Us and Child World, to consumer electronic chains like Best Buy, to full-line discount stores like Target and Kmart.

According to Sega president and ceo Tom Kalinske, the company's aggressive advertising had shown some effects long before the recent ads appeared. Sales in June, he said, rose 250% over the year before and were up over 500% in both July and August, compared to the previous year.

"I'm not sure who the overall winner will be," said Ron Tuchman, executive vp of Child World. "But right now, they're both winners."

Both Sega and Nintendo are airlifting units into the United States to keep up with skyrocketing demand. Expectations before introduction were that hard-core gamers would jump on the Super NES, with the casual users simply making do with 8-bit. However, it seems that while game maniacs are jumping on 16-bit systems from the three major competitors (Sega, Nintendo and NEC), new users are also flooding the market. They are drawn by a new approach to gaming that highlights entertainment, not just hand-eye coordination.

Simply put, 16-bit games are not just better looking, they're more fun to play, more interesting in their storylines, and easier for a relative neophyte to understand.

Sega licensee Tengen, which produces RBI Baseball, Ms. Pacman, Pitfighter and several others for the Genesis system, is consciously aiming at increasing the game player universe, with titles designed to appeal to various demographic groups, according to vice president Ted Hoff.

"With all the added features, like booster power, extra characters and levels, 3-D depth perception, better audio and graphics, and additional play options, 16-bit has enormous appeal to every age group," he said. Pitfighter, the company's latest release, is the first cartridge (NEC's compact disc games staked out the turf) to include digitized actors in character roles. Hoff feels the jump Sega has on Nintendo technologically with games like Pitfighter will spell eventual victory for Sega.

Sega, obviously, feels the same. "Demand is well ahead of supply," Sega's Kalinske said. "We'll sell all we can manufacture this year, which is about 1.5 million units by year-end, for a total installed base of 2.7 million units. That will give us 60% to 65% of the market, and our CD will ship in June," giving Sega another jump on Nintendo. The company expects retailers to sell some 6.7 million Sega and third party games by year-end.

But don't count Nintendo out. The company is possibly the most effective marketer in the world, item by item, and its handling of the new Super NES has been masterful. Though some parents have complained that their investments in 8-bit have been made obsolete, that has not affected demand for Super NES, which retailers say is blowing off shelves nationwide, creating the possibility of a shortage by the holidays.

"We're under allocation, and the Super NES has been selling really well," said Jill Hamburger, buyer for the Minneapolis-based Best Buy electronics chain. "There could be a shortage of software as well; already, some of the games that were supposed to be out have been pushed into next year. If they come out in January, that won't be a problem, because the first quarter is usually pretty good for software. But if they come out much later than that, it could hurt sales."

Hamburger added that there was an initial rush for Nintendo 16-bit software because gamers thought initial game supplies would run out quickly, but ratios have dropped back to about normal as of mid-October. Best Buy doesn't stock Sega, mainly in the interest of managing the game business a little easier, but Hamburger said that if Sega drops the price of its portable Game Gear, as is rumored, she might have to reexamine the category.

Hamburger also noted that Nintendo is expanding its demographics noticeably, adding puzzle-oriented games that seem to appeal to women more than men, as well as software aimed at preschoolers.

According to Sega's Kalinske, software specialty stores like Babbage's are reaping the major benefits of the 16-bit explosion, because they invested in the technology earliest, but discounters are coming on strong.