Playing with the Big Boys

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DONALD MACINTYRE TokyoFor Japanese videogame maker Sega Enterprises, an awful lot hangs on the views of tough customers like 12-year-old Yasuhiro Adachi. The sixth grader from Yamagata City in northern Japan sometimes rises at 3 a.m. for a few rounds on his Sony PlayStation while mom and dad are still asleep. After that, he may run Mario through his paces on a Nintendo64. A true devotee, Yasuhiro also saves money to buy second-hand games to trade among his friends. So what does he think about the new Dreamcast game machine Sega rolled out last week? He's not impressed. I don't need it if it's like PlayStation and Nintendo64, says the tall, bespectacled youngster. Nobody's talking about it at school at all.Sega had better hope the schoolyard talk comes around. The company was the world's top seller of videogames in the early '90s but slipped to No. 3 as Nintendo and Sony jumped in with smarter, faster games. Now, Sega is fighting back with Dreamcast. It has seized the technological high ground with a machine offering more speed and better graphics than anything else on the market--for now. Sega expects to ship half-a-million units by Christmas. Its hard-driving president, Shoichiro Irimajiri, has vowed to recapture half the global game-machine market within four years. We'll not only fight with Sony and Nintendo, he says, we'll blow them out of the water.Sega badly needs a hit--it lost money last year and its finances are wobbly. Earlier this year an attempted merger with Bandai fell apart after the smaller toymaker decided it could do better on its own. Sega couldn't attract enough developers to make games for SegaSaturn, Dreamcast's predecessor. This time Sega says it has signed up more than 300 developers and promises to have 27 titles on sale by March. Sega software geeks are working around the clock to finish Sonic Adventure, a turbo-charged, 3-D version of Sonic the Hedgehog, the company's first big seller. While Sega is not likely to become a major threat to Sony any time soon, it could quickly get back in the game if Dreamcast takes off. If the new platform flops, Sega is in trouble. It's treading water right now, says Hironobu Sawake, game industry analyst at ABN AMRO. Sega has to sell Dreamcast.PAGE 1  |  
To help assist its comeback, Sega has skillfully played on its underdog image in a series of television ads that began running this summer. In one, a schoolboy says to his friend: Sega is really uncool, isn't it? The other replies: Yeah, PlayStation is much more fun. Overhearing the conversation, Sega senior executive Hidekazu Yukawa gets so upset on-screen that he goes out and ties one on. On the way home, he gets into a scuffle with a street tough, who gives him a black eye. In the final frame, he's seen collapsed in the doorway of his home. The caption reads: Come on, get up, Mr. Yukawa. Japanese executives don't normally plug their own products on TV, much less poke fun at them. But the self-deprecating humor has proven popular, and Yukawa has become something of a celebrity. Last week, he released a CD on which he sings a love song about--what else?--Dreamcast.An even bigger star at Sega right now is Irimajiri, the force behind the company's new strategy. He jumped to Sega from Honda, where he built engines for Formula One racing cars. Irimajiri says he hates to lose, and he is pushing employees hard. He has applied some of his racing smarts to Dreamcast: it features a speedy, Hitachi-built central processing unit, a 3-D chip developed by NEC and, in a first for the industry, the Windows CE operating system from Microsoft. At a recent demo, Sonic the Hedgehog zooms along a roller-coaster-like highway, races up the sides of tall buildings and gets trapped in the vortex of a realistic tornado. Gushes Sega game designer Yuji Naka: I don't think this will be beaten for several years.Given the pace of change in the industry, that may be overly optimistic. Sony is getting ready to roll out the next generation of PlayStation (it's mum about the details), and Nintendo is on the march as well. While this may be good news for kids like Yasuhiro Adachi, his mother is less than thrilled. We've spent thousands of dollars on games since he was five, says Noriko Adachi. How long will this go on? Bad news, Mrs. Adachi. This is probably just the beginning.  |  2