SUPER MARIO'S DAZZLING COMEBACK

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Michael Kelbaugh, 31, had already put in a long day on a job that millions of teenage boys would kill for--play-testing video games for Nintendo in Seattle. But he and half a dozen colleagues were happy to stick around late one night two weeks ago until a certain piece of software arrived from corporate headquarters in Japan. When it finally showed up--packeted across the Pacific over a high-speed data line--they could hardly wait to dive in. "We were here until 2:30 a.m. playing it," said a groggy Kelbaugh the next morning. "I had to physically unplug it so we could finally get some sleep."

The video-game industry, which convenes this week in Los Angeles for the giant Electronic Entertainment Expo (E3), has been waiting nearly three years for this game. It stars a familiar character--a stumpy, mustachioed plumber named Mario--but it runs on a new machine so powerful, so blisteringly fast, so graphically rich that it could be single-handedly running out of lives.

The Nintendo 64--a game system that is scheduled to be unveiled in Los Angeles on Wednesday night, marketed in Japan in June and arrayed on U.S. store shelves in September--represents a multimillion-dollar gamble by the company that practically owned the hearts and minds of the video game-playing world for much of the 1980s--until they were stolen in 1991 by Sega and a speedy blue hedgehog named Sonic.

Three years ago, when Sega and Sony followed the lead of 3DO and began replacing the aging 16-bit game machines with 32-bit systems built around cd-rom drives, Nintendo charted its own course. Howard Lincoln, chairman of Nintendo of America, was convinced that his core audience--twitchy-fingered boys between eight years old and their first date--would be underwhelmed by the quality of games that can be delivered on cd-roms, silvery storage platters that have enormous capacity but are notoriously sluggish. Lincoln decided that his best chance to deliver game play so startling that his target market would feel they just had to have it was to concentrate on speed--sticking to fast (but expensive) silicon cartridges as his storage medium and leapfrogging ahead to the next-generation 64-bit processors. (The number of bits a chip can crunch is a rough measure of its power. The old Atari games ran on 8-bit machines; Sega Genesis and Super Nintendo are 16-bit systems.)

Teaming up with Jim Clark, then chairman of Silicon Graphics and now at Netscape, Lincoln devised a plan to stuff the graphics-rendering power of a $90,000 SGI Reality Engine--the machine that created the T. rex in Jurassic Park--into a $250 box. The result was a calculated delay. After missing its self-imposed deadline last summer, Nintendo played the spoiler last Christmas, cutting into sales of Sony and Sega's $300 32-bit machines by dangling the promise of a cheaper and even more powerful player this spring. Sales of new video-game systems, which had dropped from 27 million machines in 1992 to 10.5 million in '94, rose only slightly to 14.3 million last year.

Nintendo, meanwhile, pumped new life into the maturing 16-bit market by releasing Donkey Kong Country, a game originally designed for the new 64-bit system, in a version that played on the 16-bit Super NES. The game's eye-popping graphics were an instant sensation; DKC not only became the best-selling game of 1994 but also ratcheted up pressure on the teams designing games for the new machine. "When we released Donkey Kong Country, we raised the bar on ourselves," says Lincoln. "The launch games on Nintendo 64 had to be that much better."

They are. Hours after Super Mario 64 arrived in Seattle, TIME correspondent David S. Jackson took it and several other games for a test run. Playing Mario 64, he reports, is like jumping inside the movie Toy Story. The plot line, something about a princess and a bad guy named Bowser, is, as always, almost irrelevant. What matters is that the Silicon Graphics chip-fueled Nintendo 64 puts the fastest, smoothest game action yet attainable via joystick at the service of equally virtuoso motion. Mario runs, flies, swims, dodges and flips his way past a bewildering welter of walls, ramps, pools and abysses.

For once, the movement on the screen feels real. Nudge the stick forward, Mario walks: clump-clump-clump. Press it a bit more, he leans forward and trots: clop-clop-clop-clop. Push it all the way, he runs faster and faster, tiny legs pumping in unison with his body, his rising speeds a seamless gradation of motion.

What's more, he goes wherever you point him. The Nintendo 64 shatters the convention of two-dimensional horizontal scrolling video games. No more bouncing off guardrails or dissolving in fuzzy pixels on the edge of the screen. Wherever you want to go--forward, backward, left, right or anywhere in between--the scene follows you in dazzling 3D. If you want to climb a wall or dive into the moat, you can. (The water is gorgeously rendered, and it's worth the plunge just to hear the dreamy New Age sound track that accompanies underwater excursion.)

Nintendo's competitors, of course, are hardly disappearing. The Sony Playstation has acquired a fervent following, and in Los Angeles this week Sega will be trumpeting the arrival of a 32-bit version of Sonic the Hedgehog, a soaring game called Nights, and a Net Link telephone hookup that will allow Sega Saturn owners to use their systems as on ramps to the Information Highway.

That is something everybody is thinking about these days, from the PC makers to the folks championing the idea of a $500 "network computer." But when it comes to rapid deployment of high-powered computer technology, nobody has a better track record than the video-game companies. Nintendo won't say anything about its Internet plans right now except to wink and say, as Lincoln does, that it "will be making announcements in the near future." But it's not hard to imagine tens of millions of Americans a few years from now surfing the World Wide Web through their video-game players with Sonic and Mario at their side.