VIDEO GAMES ARE BACK / RAGS TO RICHES TO RAGS INDUSTRY MAKES ANOTHER ATTEMPT TO HIT GOLD

The Journal Record Date: December 4, 1986

SAN FRANCISCO - Don't look now, but here comes Pac-Man.

Again.

Video games, the entertainment craze blamed for everything from sore thumbs to the decline of the nation's youth, are making a comeback.

Three companies will be selling home video game machines this Christmas. Retailers that have not sold machines for two years are stocking up again. And television will soon reverberate once more to the zapping and beeping sounds of commercials about invading aliens and missile warfare. ``The fun is back,'' Atari says in the first television commercials it has made in two years.

``It's like back to the future,'' said JamesH. Levy, president of Activision, a video game cartridge company that went from rags to riches to rags. No one expects video games to be the fad they were in 1981 and 1982. Manufacturers estimate that 2 million game machines will be sold in the Unitedsold in the United States this year, far less than the more than 8 million sold when the fad was at its peak in 1982. Some 10 million to 15 million cartridges will be sold, compared with 75 million back in 1983.

Still, manufacturers and retailers hope that improved technology and a new audience will make video games, which are played by plugging them into television sets, a steady steady business. ``We have kids that are just coming of age who were not around for the first time,'' said Ronald Judy, vice president of marketing for Nintendo of America, which sells game machines.

For those with poor memories of that period, a brief reminder is in order. Atari Inc., a pipsqueak of a company a few years earlier, rose to $2billion in revenues. Hollywood studios, toy companies and all manner of entrepreneurs rushed to produce game cartridges with names like Demon Attack, Eggomania, Space Vultures and Revenge of theBeefsteak Tomatoes. There were even some X-rated games. For a fleeting moment, game designers became the new new rock stars. But by the end of 1982, the market dried up quickly as consumers were lured to more versatile home computers or simply became bored. Atari shrank to a skeleton and was sold. Most of the other companies left the business. Retailers took a bath as millions of cartridgesremained on their shelves. Atari dumped truckloads of unsold cartridges into a landfill in New Mexico.

The comeback involves one battle-scarred old-timer - Atari - and two Japanese companies that were only peripherally involved in the first round. This is ironic because video games had been the only consumer electronics product that the Japanese did not dominate, although they did make some of the most popular software, such as Pac-Man, Donkey Kong and Space Invaders. Now, by persistence and timing, the timing, the Japanese may come to control the video game market after all.

The market for home video video games developed later in Japan than in the United States, and is still fairly strong.Japanese manufacturers are therefore able to make a run at the American market, whereas most American concerns have left the business. Leading the way is Nintendo, the Japanese company that developed Donkey Kong and which is by far the video game leader in Japan. The company, which has its American headquarters in Redmond, Wash., sold about 90,000 machines in a test-marketing last Christmas in New York City. It did another test in Los Angeles starting in February. Now it is going nationwide.

Also entering the market is Sega Enterprises Ltd., an arcade video game company once owned by Gulf and Western Industries and now affiliated with the Computer Services Co., a Japanese software concern. Both companies boast Japanese-made machines with slick technology. Game cartridges now can have far more electronic memory, and thus far many more levels of play before the game repeats itself. Strategy games are possible in addition to shoot-em-up games. Sega, with American headquarters in San Jose, Calif., is negotiating with Parker Brothers to sell an electronic Monopoly game.

The accessories are also more advanced. Nintendo has a robot that reacts to what is on the screen. Both companies are selling guns for shooting at the screen in addition to the traditional controllers. Prices might be a deterrent to the success of this comeback. Nintendo's game set has a list price of $180, including the guns and robots. The basic machine and joy sticks alone sell for $100. Sega's system sells for $120 in the basic model and $150 with the gun. Both are likely to be heavily discounted by retailers. Game cartridges will sell for $20 to $35.

Pursuing a low-price strategy is the Atari Corp., which has continued to sell its 2600 machine, the original video game machine. The 2600, of which more than 20 million have been sold, does not offer the same quality as the Japanese machines, but it costs only $40. Atari, based in Sunnyvale, Calif., also plans to sell a new, more powerful machine, the 7800, which was introduced several years ago but never brought to market. The 7800, which will sell for about $80, will play cartridges designed for the 2600

GETTING ZAPPED AND PLASTIC FOOD

The Boston Globe Date: November 27, 1988

Zzzzap! The word is Nintendo.

In case you've been in Outer Mongolia for the past couple of years, Nintendo is one of those video game systems with which kids make fools of their doddering parents, zapping invaders from outer space with joy sticks. The good news is it's said to be good for developing hand-eye coordination.

Nintendo sold 4.1 million sets in the United States last year, and it's still the most popular item in the toy stores. Other companies are hot on the video trail, including Sega, which markets the Sega Master System for about $100, a setup that gives kids a chance to navigate helicopter attack ships and take on a fearsome Ninja warrior.Nintendo starts with four basic systems, ranging from $80 to $140. Additional tapes cost from $20 to $45, and besides star-wars games include things such as Bases Loaded, a popular item this year after the late surge by the Red Sox.

The figures speak speak for themselves: * At year-end 1986, just one year from launching its NES in the United States, Nintendo of America had sold 1.1 million units. * By the end of last year, Nintendo and its 36 licensees accounted for $1.7 billion of the $2.3 billion video game business in the United States. * And this year, home video game sales are expected to again surpass the $3 billion mark ($3.4 billion), with Nintendo and its licensees clutching $2.6 billion of that total. * Nintendo Entertainment Systems are now in more than 17 percent

Hand-held video game war rages at electronics show

Chicago Sun-Times; Jun 4, 1990

The hand-held video game wars are escalating, and the battle was hottest at McCormick Place this weekend.

Following the phenomenal success of Nintendo's $90 Game Boy last year, two competing home video game manufacturers showed up at the summer Consumer Electronics Show with their own hand-held video games.

Atari has LYNX, a color hand-held unit it introduced nationally in April for $179. It comes with extra wiring so kids can hook their machines together and play in the car, the playground - anywhere outside the house so their parents can have some TV time to themselves.

NEC has TurboExpress, another pricy, color, hand-held game (it will cost $200 to $250 when it hits store shelves in November) that can play the same game software that its home TurboGrafX uses. That's important because Game Boy and LYNX's game software won't fit in a home game.a home game. Yet TurboExpress has something more: an $80 option that allows you to convert itscolor liquid crystal display to a miniature portable TV set. "Kids are like adults. They're trading up, getting older, and they don't want to play video games just in front of the TV anymore," said Grant Schneider, spokesman for NEC.

Nintendo forecasts it will sell $1 billion in Game Boys this year. Much of the excitement at the Consumer Electronics Show has been in the video game section the last few yearsNintendo, which resuscitated the video game business in 1986 with the introduction of its Nintendo Entertainment System for the home, now has a lock on 80 percent of the $5.1 billion industry.But since the video game industry has gone from a $400 million business to a $5.1 billion industry in only the last four years, experts are waiting for a shakeout on the hardware and software sides of the business. For instance, this Christmas is expected to be do-or-die time for Nintendo's competitors boasting more powerful game systems. Sega's Genesis system and NEC's TurboGrafX, which boast screengraphics that are more arcadelike than Nintendo's, say their units are selling well, but they have a tremendous obstacle in Nintendo's established base. "We think Nintendo is a system for small kids, and when they want to trade up for better, more complex games, they're going to come to us," said AlNilson, Sega's marketing director. Nintendo itself concedes that it expects sales of its bedrock home system to be flat at 9 million units this year. It also acknowledges that a tremendous number of software game titles are out there for its aging machine and that prices have started to fall by as much as 50 percent to 60 percent on those games, which once went for $25 to $45 apiece. It's likely you'll find an early Mario Brothers game - which once sold for upwards of $40, for about $10 to $15 now, and other cheaper titles probably will join the ranks by Christmas. Yet Nintendo spokesman William White says the Japan-based company isn't preparing for the poorhouse: "Ninety-six percent of our systems are still in play, and 80 percent of our players say it's more fun than when they purchased it. . . . We're not finding them shifting to any other competitors, either." He says that Game Boy, which sold 1 million units in the five months after its debut in 1989, will sell 5 million units in 1990. Nintendo will have 70 game titles available for Game Boy this year, compared with 25 titles last year. Yet everyone, even Nintendo, has something to fear in the maturing video game markett of the 1990s, says Bob Gerson, senior editor of the electronics trade publication TWICE. "What this reminds me of is a few years ago where you had Atari in the lead with the old ColecoVision and Intellivision games," Gerson said. "It was still the Atari 2600 that did all the volume, and that never changed until all of them went down in the market collapse of the early 1980s."

SEGA vs. NINTENDO: THE REMATCH Sonic the Hedgehog challenges Super Mario in the 16-bit game world

The Boston Globe; Dec 8, 1992

Video game sales at the 1,300-store chain are up 20 to 30 percent over last year. Sega and Nintendo's successwith 16-bit systems, however, has been a task at which even the dutiful Mario might cringe. The companies sold a combined 3.7 million systems last year, and both companies claimed to own nearly two-thirds of the 16-bit market. But Nintendo was clearly disappointed with Super Nintendo's early results, based on its prior success. Of the 8-bit systems it has sold in the United States, 9 million traded in a single year -- 1989. And Nintendo had never cut prices to build market share of its older, 8-bit system. But Nintendo slashed Super Nintendo prices, just four months after introducing its machine -- and Sega, which had once sold Genesis for as much as $179.95., followed suit. In a story replayed many times in the history of electronics retailing, a fierce price war between two archrivals on competing hardware systems is an attempt to dominate a new technology format -- and, therefore, to dominate software, the real moneymaker. In this case, that software is game cartridges like Sega's Sonic 2, which sell for $55 apiece.