May 13, 2004 8:33 AM PDT

Handheld games mature

LOS ANGELES--The battle for the living room is on hold. Sony and Nintendo are more interested in your hands right now.

New handheld game players from the two companies have been the buzz of the E3 game trade show here. Sony, for the first time, is showing working prototypes of its PlayStation Portable (PSP), a wide-screen handheld that combines games, music and movies. Nintendo, meanwhile, is promising a surprisingly heavy-horsepower device, the DS handheld.

Both companies, as well as game publishers, expect to expand the portable game market beyond the children and teenagers who comprise most of the market for Nintendo's dominant Game Boy Advance.

Heavy-duty computing power and corresponding price tags for the new devices will make parents less likely to entrust such high-end gadgets to little fingers. Instead, expect young men with disposable incomes to dominate early sales, a move likely to be reflected in games that emphasize shooting and sports action.

Andrew House, executive vice president at Sony Computer Entertainment America, asserts that the PSP will change the portable-game landscape.

"Sony's trademark is: 'We go into a new market to broaden the market and create new customers,'" he said. "The primary goal will be to do in the mobile space what we were able to do in consoles with the PlayStation."

Perrin Kaplan, vice president of marketing for Nintendo of America, sees a less seismic shift for the DS, which may carry the Game Boy tag, depending on whether Nintendo thinks that it will be an asset in attracting an older and pickier class of mobile gamers.

"I think this gives us a great opportunity to expand the market," she said, predicting that DS buyers will be slightly older than the typical Game Boy Advance owner.

Key differences
Key differences between the upcoming devices from Nintendo and Sony include nongame functionality. Sony is looking at the PSP as a vehicle for delivering movies, music and other forms of entertainment--preloaded on discs in Sony's new UMD format and downloaded from services such as Sony's new Connect music site.

"This is a gaming device first, but it also has the capability for other types of entertainment," House said. "I think that gives it great potential for real mass-market acceptance."

Nintendo hasn't announced any nongame functions for the DS. When and if they do arrive, Kaplan said, they'll clearly be ancillary functions, such as new video cartridges for display cartoons on the Game Boy Advance. Kaplan maintains that consumers prefer to carry multiple specialty gadgets rather than sacrifice functionality in a multipurpose device.

"We've yet to see a situation where doing multiple things in a so-so way is better than doing a few things exceptionally well," she said. "The hardware technoheads already have one or two of everything. They have no problem carrying around a dedicated game player, if it's the best way to play games."

Third-party publishers
Sony and Nintendo are also likely to have differing relations with outside game publishers, thanks partly to Nintendo's continued commitment to using proprietary and relatively expensive cartridge formats rather than optical media.

Electronic Arts, the leading independent game publisher, has done relatively few titles for the Game Boy Advance. "That's mostly been because of the business side," said Bruce McMillan, executive vice president at EA. "Every time you do something on a cartridge, it's really hard to make a profit, unless you estimate sales exactly right, because you can't just crank out more as you need them like you can with optical media. And if you estimate wrong, you end up with a lot of surplus product."

McMillan said EA may show more interest in the DS, partly because the audience will skew toward the publisher's older demographic and partly because Nintendo's new 1GB media format is more publisher-friendly.

"The media Nintendo is talking about isn't as general as a DVD, but it's a step in the right direction," he said. "I think Nintendo gets the message...The content is our responsibility, but the media it plays on has to be cost-effective."

One publisher that hasn't had trouble with the Game Boy Advance is THQ, the leading third-partly publisher for the device. Peter Dille, senior vice president of marketing at THQ, said the company will support the DS with more mature titles but also expects to keep making money from Game Boy Advances staples such as the "SpongeBob SquarePants" franchise.

"The Game Boy Advance can be a great market, but you need to understand the software and the consumers of that software," he said. "It's almost closer to the toy business than the video game business."

 

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