Video Game History: Lookin’ Good, Despite The Graphics

vghOnce upon a time, disco ruled the airwaves, Rocky packed unmatched movie theater punch, and the Atari Corporation dominated the family room. The year was 1976 and Atari had just released the Atari 2600 home video game console, a four-bit system that promised to bring the arcade experience to the home. Riding the strength of hit titles such as Asteroids and Space Invaders, Atari dominated the video game market, moving millions of 2600 units in its heady heyday.

In 1996, one finds a vastly different video game console landscape. Atari is gone, having merged with disk drive manufacturer JTS Corporation in July 1996, and today’s video game console manufacturers enjoy technological advances that far surpass the Atari machines of the 1970s and including, with some exceptions, the use of CD-ROM as a game publishing medium. Moreover, many of todays companies are beginning to move beyond the standalone console to surf the wave of the World Wide Web.

Today, video game consoles manufactured by Nintendo Company Ltd., Sega Enterprises Ltd., and Sony Corporation dominate an interactive entertainment market that is valued at more than $12 billion worldwide. According to the Interactive Digital Software Association, the interactive entertainment/edutainment software industry alone will generate approximately $7.7 billion in sales in 1996, including an estimated $4.4 billion in retail sales and $3.3 billion in indirect sales. Moreover, this interactive entertainment industry of today employs more than 90,000 people, with a growth rate of 26 percent annually.



There’s never a shortage of hype about the “next generation” in video game systems. Every manufacturer who enters the video game marketplace promises game systems that are faster, better, and cheaper than today’s consoles — offering dramatic special effects and greater realism and interactivity. It’s a constant, cut-throat format war. But where does the hype leave off and reality begin? The reality is that the video game console market has matured to the point where three companies — Nintendo, Sega, and Sony — vie for market share in the under-$200 console business and all with their sights set on cyberspace.

Nintendo CA, the Non-CD

On September 29, 1996, Nintendo Corporation of America Inc. made its leap from 16-bit technology to 64-bit technology, with the U.S. launch of the Nintendo 64 home video game system. Within three days after the U.S. launch, Nintendo reported its entire 350,000-unit shipment of players sold out at retail stores. Nintendo A represents a dramatic improvement over the 16-bit Super NES both in graphic resolution and processing power: the Nintendo 64 system features a 64-bit reduced instruction set computer (RISCI) CPU with a clock speed of 93.75MHz; 32-bit RGBA pixel color frame buffer support; 21-bit color video output; and a co-processor that includes a sound and graphics processor and a pixel drawing processor.

In terms of broadening its efforts beyond the console, Nintendo is rarely the first to do anything. The company’s philosophy is to let others blaze the trail. “We’ll come down and pave it later,” says Nintendo software engineering manager Jim Merrick. However, while Nintendo has done some development work in the area of online applications, its core business is gaming. We don’t want to do a Web browser unless it improves the gaming experience. We want to stick to what we know,” Merrick says.

Sega, First to CD, Links to Saturn

Of the three dominant console manufacturers, Sega has expanded the furthest beyond its core video game market. In addition to releasing its next-generation, CD-ROM-based Saturn console, the company also has released a Saturn-based Internet browser package called NetLink. Further, the company continues to support the Sega Channel and is making plans to develop interactive entertainment theme parks.

On the console side, the 32-bit Saturn features two SH2 32-bit RISC processors which provide the main processing engine for the Saturn; two graphics processors derived from Sega’s advanced arcade systems – VDP1 and VDP2 (Video Digital Processor); and the Sega Custom Sound Processor (SCSP) from Yamaha, which includes a 128-step digital signal processor (DSP) and provides up to 32 voices and CD-quality audio.

While Sega has thrown most of its support behind its Sega Saturn console, the company still remains committed to the more than 18 million owners of the Genesis cartridge-based system in the United States, having released more than 12 new titles for the system in 1996. However, the majority of games being developed by Sega and its third-party developers will also be published for the Sega Saturn. Sega reports that as of September 1996, the installed base of Saturn units is around 900,000. The company projects this figure to rise to around 1.5 million by the end of 1996.

As for moving beyond the console, for Sega, it all begins with the arcade experience. The company’s base business is to create compelling content for the arcade, then move this content onto the console and subsequently into other entertainment channels. For example, the company recently entered into a strategic partnership with Dreamworks SKG to form a location-based entertainment company called Gameworks. In December 1994, Sega, in a joint venture with Time Warner and TCI, launched the Sega Channel, a nationwide subscription-based cable network which offers Sega Genesis owners access to video games for play and preview. Sega Channel subscribers use a special cartridge adapter that fits into the Genesis machine to download video games directly onto CD-ROM. The game remains active on the machine until it is shut off.

Introduced on October 31, 1996 with a $199 list price, the NetLink is a 28.8 modem that fits into the cartridge slot of the Saturn. Included with the modem is CD-based HTML 2.0-compatible Web browser software developed specifically for the NTSC TV display standard. With the Saturn game controller and an on-screen keyboard, the user can browse the Web, receive email, and, eventually, participate in multiplayer, online gaming. The onscreen keyboard also incorporates predetermined grouped letters, such as “http://” and “.com, that can be accessed and activated using the Sega Saturn control pad a mouse, or a keyboard. Concentric Network Corporation will serve as Internet access provider for NetLink, offering one month of free service for new users; subsequent standard monthly charges will start at $19.95 for basic service. Sega plans to implement online gaming during the first quarter of 1997.

Sony PlayStation is CD

Sony Interactive Entertainment entered the video game console market in 1995 as a low-cost hardware manufacturer. In September 1995, the company launched its PlayStation video game console, the first 32-bit CD-ROM-based system to hit the streets. As of October 1996, the company reports that, in just one year in the video game hardware business, worldwide shipments of the PlayStation game console have topped 7.2 million units (3.5 million, Japan; 2.1 million, North America; and 1.6 million, Europe). Sony also reports that more than 15 of its first- and third-party titles have sold in excess of a quarter of a million units in North America.

As the installed base of PlayStation consoles continues to grow, Sony Computer Entertainment America (SCEA), which handles software publishing and marketing of PlayStation products in the United States, is exploring ways to broaden its audience reach. For example, in a venture with The Lightspan Partnership, SCEA plans to develop educational PlayStation software that it will sell to school systems — eventually allowing students to borrow a game console and software library for home study/play.

On the Internet front, while Sony acknowledges that online gaming is an important area that the company eventuauy plans to explore, sources within SCEA say that the company is happy with the way the PlayStation console is positioned and has no immediate plans to release any type of modem add-on device to the public. The same sources at Sony add that while the company may develop “some sort of online device” for the PlayStation down the road, these plans remain in research and development.


The decision for a video game console manufacturer to commit to a CD-based game console instead of staying with a cartridge-based system goes beyond the economics of the media. While cartridges traditionally are more expensive to manufacture than CDs, market strategy and style of game play also factor into the cartridge/CD decision.

While its competitors Sega and Sony have introduced CD-ROM-based game consoles, according to Nintendo’s Merrick, Nintendo has remained cartridge-based for two main reasons: economics and performance. Merrick says, “We’re very sensitive to the cost of the console. We could get an eight-speed CD-ROM mechanism in the unit, but in the under-$200 console market, it would be hard to pull that off.”

Merrick also maintains that because the Nintendo 64 system handles so much graphical data at a high data transfer rate (such as 3D geometry and texture information), the company wanted to have the faster access afforded by the cartridge. “That’s not to say we don’t want more storage at a lower cost,” he adds, while quickly pointing out that many of the CD-based console games don’t really use all 650MB of the CD-ROM. The bottom line for Nintendo, according to Merrick, is to appeal to its hard-core game playing market. “Full-motion video demos really well on a CD-ROM, but once you get into the software, as a gamer, you’re thinking `let’s get on with the game,'” says Merrick. He stresses that one of the upsides of the cartridge is the absence of any load time. “Once you pop the cartridge into the machine, you’re into the game.”

hdfdPresently, Nintendo is developing a new disk drive system that was first previewed in November 1996 in Japan. According to Merrick, “We are looking for a drive that features a much higher data transfer rate than CD mechanisms can offer at their current pricing.” As a result, Nintendo is exploring a disk drive mechanism similar to the high-density floppy drive found in a Syquest or Iomega zip drive. This type of drive would give the company a high transfer rate of about 980KB and a sub-150ms access time. If and when released, the new drive will fit into an expansion slot located underneath the Nintendo 64 player.

Sega’s heritage as an arcade business that ports its top arcade titles to the home console is the main reason that the company upgraded its cartridge-based Genesis machine to the CD-ROM-based Saturn. In order to transfer faithfully the size and scope of arcade games such as Virtua Fighter and Daytona, we really needed the storage capacity of the CD-ROM,” says Ted Hoff, vice president of sales and marketing at Sega. The company also wanted to provide Red Book audio and cinematic film-quality graphics.

Hoff believes that the only thing sacrificed with a CD-ROM is the “minimal” load factor, which, the company argues, is something that can be overcome through effective design. “We are finding more and more ways to mask the load factor,” Hoff says. Sega currently is exploring such techniques as running an animated “featurette” or playing an audio track during the loading process. As Hoff points out, “We are working out ways to overlay or leapfrog the loading time.”

Unlike Sega, Sony has no heritage in the video game console or arcade business. For Sony, the choice between introducing a cartridge or CD-based machine came down to graphics quality and cost. Spokespeople at Sony maintain that in order to arrive at a more “true” 3D environment, the enhanced memory storage afforded by a CD-based system is critical. Further, by going the CD route, Sony, like Sega, believes it has a video game console on the market that is more attractive to publishers. “They can manufacture the appropriate amount of software without taking a tremendous inventory risk associated with the cartridge business,” says Andrew House, vice president of marketing at SCEA.

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