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Battle for No. 2
By DAVE GUSSOW
But despite its legendary tenacity, Microsoft may find winning against popular, entrenched competitors difficult, especially for a company used to dominating its markets. Microsoft's first game machine, Xbox, went on the market Thursday. Nintendo's latest offering, GameCube, went on sale Sunday. It's the start of a long-awaited video game showdown, but all they're playing for this holiday season is to be No. 2. Sony's PlayStation 2 has been the top-selling game console, and it will sell more units than the new models offered by its competitors this holiday season. And Microsoft will outsell Nintendo in the short term, mainly because it expects to have more consoles available, according to experts. For video game enthusiasts of various ages, the excitement will come from the latest batch of games. Will Microsoft's Halo and Munch's Oddysee blow away competing titles thanks to awesome graphics and blazing speed? Can Nintendo get its loyal audience of kids to upgrade to GameCube for Luigi's Mansion and Super Smash Bros. Melee while hooking in some adults with rougher offerings such as Resident Evil? For those watching the multibillion-dollar business of video games, though, the real action-adventure stems from Microsoft's bold entry into the video game market in the unaccustomed role of underdog. "Part of their challenge is morphing the Microsoft brand from one meaning Bill Gates and operating systems to a fun, friendly entertainment device in the living room," said P.J. McNealy, senior analyst with market research company Gartner G2. Microsoft has invested heavily in the Xbox, not only in creating the machine and wooing game developers but also in marketing. It says it will spend up to $500-million over 18 months to pitch it. The world's largest software company has its work cut out for it. Sony has sold about 80-million PlayStation 1 and 2 models worldwide, and Nintendo enjoys a loyal following for its popular game titles. "Nintendo is targeting a much younger audience," McNealy said. "Microsoft is targeting Sony's audience, the hard-core gamer, 18 to 34 years old. Microsoft is trying to gain a foothold in 2002." The consoles are expected to be hot sellers for the holidays, with shortages likely. Microsoft promised to have 1.5-million units of its $299 Xbox available by the end of the year, though some have doubts that number can be reached. Nintendo said about 1.1-million units of its $199 GameCube are expected. Both companies need to avoid the problems that plagued Sony last year with the debut of the $299.99 PlayStation 2. The company delivered only about half the promised consoles for the holidays, which drove up prices on online auction sites and frustrated consumers. (PlayStation should have an adequate supply to meet consumer demand this year.) And initial game titles were generally panned by game reviewers. The real battle, though, isn't this holiday season. It's for next year and beyond, as more games become available and gamers have time to compare the competition. Also, it will be months before Microsoft launches the online gaming that it views as a major attraction for Xbox (and as a major revenue source). "Microsoft is going to bring out the Internet, and they feel they are positioned best for the Internet war to come," said Andy McNamara, editor-in-chief of Game Informer magazine (www.gameinformer.com) in Minneapolis. "What they really need on the whole is to supply triple-A titles that will bring out the masses to the Xbox." While Xbox and GameCube were released within days of each other, they are very different. Like the PlayStation 2, the Xbox includes a DVD player (although you have to buy a separate remote control to watch DVD movies on it) and the capability to connect it to the Internet, TVs and stereos. More than any previous game box, Xbox also has the inner workings of a personal computer, including a built-in hard drive to store game progress and other data. On the other hand, Nintendo's GameCube is purely a game machine, with no DVD player, no built-in Internet capabilities and modest storage capacity, a snap-on accessory that has to be purchased separately. Game Informer's staff of game enthusiasts had varied assessments, but overall liked both machines. Xbox's power intrigued some of the staff, though most withheld a verdict until they get to play more of the games that will be offered for it. But the reviewers zapped Xbox for its clunky controller. They also liked Nintendo, particularly the games offered for testing, even as they noted its more modest ambitions. The Xbox expects 15 to 20 titles to be available for the holidays, and the GameCube expects five to seven. Both pale compared with about 100 games for PlayStation 2. "It all comes down to delivering a good experience," magazine editor McNamara said. "Nintendo has delivered those over the years, with Zelda and Mario. Xbox has to do the same. It has to create the titles that become their own entirety and create their own world." In fact, McNamara thinks Nintendo is content to keep turning out its hugely popular game titles and not worry about becoming No. 1 in console sales. "Nintendo's going to do what Nintendo's going to do, and that is make money," McNamara, 30, said. One of the areas where Microsoft is trying to upstage Nintendo is with a parental control feature on the Xbox, which will allow parents to block games by their ratings. "It's an attempt by them to be able to get the marketing position as the family-friendly box," Gartner's McNealy said. "That's traditionally the role that Nintendo owns. That's something they'll exploit this holiday season." It also may be a necessary step because Xbox features realistic graphics and "things like the violence levels could be much more graphically portrayed," McNealy said. While Microsoft is just starting in the game field, no one is underestimating its deep pockets and ability to compete for years. Microsoft will sell the consoles for a loss -- reportedly it's as much as $100 for each machine sold -- and expects to make its profit on game sales, as the other companies do. "They're in this for the long haul," McNealy said. "There is a bigger theme here of consumer electronics battling for people's living rooms and eyeballs. They want to determine the way people spend their time." -- Information from Times wires was used in this report. Dave Gussow can be reached at gussow@sptimes.com or (727) 445-4228.
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