NINTENDO AIMS TO KEEP SHARE, PLANS BIG PUSH IN 16-BIT GAMES

DAN ALAIMO

LAS VEGAS -- Sales of video games will grow by 15% in the coming year and become a $7 billion business, according to numbers released here during the Winter Consumer Electronics Show by Nintendo of America, Redmond, Wash. With a strong push on new "blockbuster" games for its Super Nintendo Entertainment System platform, Nintendo expects its 16-bit software unit sales to grow 50%, from 30 million to 45 million, said Peter Main, vice president of marketing. All Nintendo's numbers relate to a fiscal year that begins on April 1. "The name of the game is still the games," said Main, speaking during a press conference at the Show. "We are really taking off the gloves in the 16-bit arena and will go after it with a vengeance." This year's show, which took place Jan. 6 to 9, was the biggest Winter CES ever, occupying more than 1 million square feet of exhibit space and attracting 91,270 attendees. Many supermarket executives worked the show floor, primarily in the video games and multimedia areas. Among the supermarket companies in attendance were Raley's, H-E-B, Smitty's, Wegmans, Wakefern and King Soopers. In his presentation Main countered claims by Sega of America, Redwood City, Calif., that it is the market share leader in video games. Nintendo still has 70% of the U.S. and international business in hardware and software, he said. Nintendo's and Sega's 16-bit systems each have 30% of the games hardware and software market, while Nintendo's 8-bit system still has 11% of the market, he said. Nintendo's hand-held Gameboy has 22% of the market as opposed to Sega's Game Gear's 5%. Other systems, such as 3DO, the Sega CD system, Atari's Jaguar and Philip's CD-I, have 2% of the market, said Main. On a global basis, Main said Nintendo's sales are $5.2 billion compared with Sega's $3 billion. "You are going to see a far more aggressive attitude from this company in trying to hold this ground," he said. Nintendo is disappointed with its performance in 16-bit games during the current fiscal year, with sales of a projected 6.8 million hardware units and 30 million software units for total sales of $2.5 billion, he said. Total U.S. sales of $4.3 billion were "essentially flat with the year prior," he said. In explaining this situation, Main pointed to Sega's marketing aggressiveness. But he added, "I'm the first to admit that maybe we turned the ball over a couple of times here." To respond, Nintendo and its software licensees will bring out 85 new 16-bit titles, 37 Gameboy titles and 17 8-bit titles in the coming year, he said. Because of this effort, overall U.S. sales for the company will rise 15% to $4.9 billion, he predicted. Nintendo's 8-bit system "is going to be around for another year and will do about a half billion dollars in business. It will be driven by 1.5 million pieces of hardware and 15 million units of software, said Main. "There will be a lot of new software and marketing support in that category," he said. Sales of Gameboy have been stronger than expected in the current fiscal year, he said. Hardware unit sales are up a projected 70%, said Main. Nintendo continues to make progress in its 64-bit joint venture with Silicon Graphics, Mountain View, Calif., he said. Called Project Reality, the effort is expected to yield the next generation of technology for Nintendo, employing three-dimensional effects. Main would not reveal any specifics about the program, except to say the hardware will be on the market in 1995 at a cost of less than $250. High-tech, compact disc-based systems now on the market, like the Sega CD and 3DO, have not taken off as quickly as many expected, said Main. "The world is not interested in buying technology for technology's sake," he said. These products are backed by good marketers, he said. "But there still isn't compelling software to drive them," said Main.