It's Hip To Be Square

Rule of thumb: when you're late to the party, you'd better be dressed to kill. That was the challenge faced by the folks at Nintendo at last week's Spaceworld exhibition in Japan. Since the gaming press had already witnessed the stunning graphics of 128-bit videogame systems like Sega's Dreamcast, Sony's PlayStation 2 and Microsoft's Xbox, would Nintendo's dual launch of the GameCube console and the Game Boy Advance handheld be enough to wow the largely male audience of 2,000? The company dragged out the heavy artillery--loud techno music, smoke machines and women in latex skirts. Been there, seen that. Fortunately, all of that was just was just the lead-in to the playful, eye-catching demos that everyone had come to see. There were 128 Marios bouncing around on an endlessly shifting landscape; a nightclub filled with rambunctious Pokemons; a "Star Wars" X-Wing fighter leading a blazing assault on the Death Star--all so vividly rendered that they could have been stolen from a Pixar movie. And judging from the raucous response, the standing-room-only crowd clearly felt that GameCube was well worth the wait.

If only everything came so easy to Nintendo. Sure, players and reviewers say it publishes the world's best videogames. But the company's missteps and delays over the past few years have allowed old competitors to stay alive and new ones to enter the arena. Sony's PlayStation, which debuted in 1995, has outperformed Nintendo 64, selling 73 million units to Nintendo's 29 million. More recently, Sega was revitalized thanks to the success of Dreamcast in the United States, and the 800-pound gorilla named Micro-soft is set to crash Nintendo's Mario party with the Xbox next year. Even last Thursday's event wasn't completely trouble-free; a day later Nintendo's high-flying shares dropped because of the later-than-expected launch date for GameCube (July 2001 in Japan, October 2001 in the United States).

Fortunately for Nintendo, PlayStation 2 hasn't been infallible. Sony's extravagant promises that its software would look far better than anything else on the market may have effectively blunted Sega's post-1999 Christmas sales, but when PlayStation 2 launched in Japan this March, the games were mostly hastily produced, disappointing updates of existing titles that failed to deliver. (Fortunately for Sony, its stateside launch date of Oct. 26 has given developers enough time to make truly high-quality games for the U.S. market.) Bigger threats to Sony's dominance are the persistent complaints from game designers that it's difficult to program the PlayStation machine, and the perceived arrogance of the company's U.S. executives, who represent PlayStation's most lucrative territory. "We have very good relationships with Sony in Japan. But here, it's not so good," says the U.S. spokesperson for one Japanese game developer, citing lukewarm marketing support as an example of how Sony may be taking developers for granted.

That leaves a small opening for a newly humbled Nintendo, which has finally learned from its past mistakes. When Nintendo 64 came out in 1996, it sold more units in four months than Sony did in a year. But there were some serious design flaws. Like PlayStation2, it was hard to program, and it used cartridges to store games instead of discs, which are far cheaper to produce. Those decisions drove key independent game developers like Square (the makers of the hit franchise Final Fantasy on PlayStation) into Sony's arms. Today Nintendo hardware development chief Genyo Takeda repeatedly uses the word hansei ("reflective regret") when he refers to the difficulties of programming Nintendo 64 games. "When we made Nintendo 64, we thought it was logical that if you want to make advanced games, it becomes technically more difficult. We were wrong," he admits. "We now understand it's the cruising speed that matters, not the momentary flash of peak power." Another change that developers will welcome: after three cartridge-based systems in a row, Nintendo is finally switching to discs, which should help bring down costs to third-party developers.

Yet Nintendo is continuing to march to its own drummer in other ways. Unlike Sony and Microsoft, who are strategically positioning their consoles as multipurpose digital entertainment devices that can play DVD movies and connect to the Internet, GameCube's sole stated purpose is to play games. So even though its games will be stored on DVDs, Nintendo has opted for a smaller, three-inch disc that is incompatible with regular DVDs, which the company says will help guard against piracy. And its strange controller design, which looks like a Swiss Army knife for toddlers, left many people scratching their heads. "Our main mission is to create a new kind of entertainment," says Shigeru Miyamoto, creator of Zelda and Mario. "The technology behind the GameCube should unlock new ideas from game designers."

One of those new ideas is that the lines between console gaming and handheld gaming should be erased. Game Boy Advance is designed to connect to the GameCube, either to exchange minigames and data or to be used as a controller for GameCube games. The GameCube-Game Boy Advance tie-in smartly plays to one of Nintendo's strengths: the runaway success of Game Boy. Since its 1989 debut, 100 million units have been purchased around the world, making Game Boy the most popular game machine in history. And Nintendo already has an inkling that its strategy will work. To boost sales of its flagging console, Nintendo created the game Pokemon Stadium, which lets kids go Poke-a-Poke on a television by plugging their Game Boys into an N64. The result? Yet another Poke-size hit.

Still, Game Boy Advance isn't just an accessory for GameCube. It's 17 times faster than its predecessor, its color LCD screen can handle 32,000 colors and its horizontal display boasts a 50 percent larger viewing area than the Game Boy's square screen. It's also backward-compatible, so Tetris and the other 1,000 or so games that have already come out will still be playable. Four Game Boy Advances can be connected for multiplayer action. But the most intriguing part may be the wireless capabilities. In Japan, and possibly in the United States, users will be able to connect the Game Boy Advance to a mobile phone to send and receive e-mail, exchange data (e.g., game characters) with other players and surf special Web sites designed exclusively for Game Boy Advance users.

Will all of this be enough to put Nintendo back on top? It's unlikely, because GameCube, which was originally supposed to come out by the end of this year, is now scheduled to reach the United States in October 2001. That not only gives PlayStation 2 and Dreamcast a huge advantage, but it also puts GameCube on a collision course with the fall 2001 release of Microsoft's Xbox. And with four 128-bit consoles and a spanking-new handheld on the market, Christmas 2001 promises the most brutal battle royal in the history of this industry. Memo to parents: start saving those pennies now.