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Sega Goes High-Tech With Dreamcast

September 9, 1999

NEW YORK (AP) _ Sonic the Hedgehog runs faster than ever before. Metal swords bang with a perfect clang.

Sega Enterprises is looking to dazzle American consumers with special effects, hopeful its new Dreamcast video game system will propel the struggling company back to the top of the U.S. gaming market from the brink of death.

Dreamcast hits the nation’s stores on Thursday, and retailers are bracing for Christmas-like crowds through the weekend as video gamers rush to get first dibs on the super-powerful machines and the first 16 games designed for it.

Prior to Thursday’s launch, Sega tallied more than 300,000 pre-orders for the $199 machine _ three times more than anticipated. Dreamcast games will sell for about $50 each.

But big hype and a strong launch won’t guarantee long-term success, especially with Sony and Nintendo due to introduce new machines and Dreamcast sales drooping in Japan, where the game was introduced a year ago.

Industry watchers warn that Sega will need to keep introducing new games, building sales through next year for Dreamcast to succeed in the United States.

``They have managed to create a big buzz and now they have to deliver,″ said John Davison, editor-in-chief of Electronic Gaming Monthly, a magazine based in Oak Brook, Ill. ``They can’t afford to stumble at all.″

Sega was an industry leader in the early 1990s with its Genesis gaming console, but its next system, Saturn, bombed when it was launched in 1995.

Now the Tokyo-based company holds about 1 percent of the U.S. video-game market, having been trampled by Sony and Nintendo products with more powerful machines and wider game selections.

For its fiscal year ended March 31, Sega had a loss of almost $400 million and slashed about 1,000 employees, about a quarter of its workforce.

That’s why Sega is betting big on Dreamcast.

With a $100 million marketing and advertising campaign, Sega hopes to convince consumers that its new 128-bit system _ four times as powerful as the best-selling Sony PlayStation and twice as fast as Nintendo 64 _ will provide a more exciting gaming experience.

Dreamcast is the first home-gaming system to include Internet capabilities. With a modem in its base, consumers can e-mail, chat, browse the Web and download game enhancements. Starting next year, they’ll be able to play one another online.

The machine also features advanced 3-D graphics that make the on-screen images look clear and crisp. In the new Dreamcast football game, NFL2K, a gamer can select bad weather and a spectacularly realistic rain storm begins on the screen.

Dreamcast’s computer brain is also designed to ``learn″ from its mistakes against a game player. If your quarterback passes repeatedly to a single receiver on your football team, the game reacts after a handful of throws by assigning a back to shadow that receiver, forcing you to change your strategy.

``They have taken a big graphical and technological leap with Dreamcast,″ said Joe Fielding, editorial director at the Web site videogames.com. ``It is far better than anything out there.″

Many retailers, surprised by the heavy demand, planned to open their stores Wednesday night and early Thursday and have added extra staff to keep up with the expected crowds.

By 10 p.m. EDT on Wednesday, stores were already reporting lines of anxious buyers.

``I had to have it immediately. I couldn’t wait,″ said Ken Grose, a 21-year-old college student who joined a group of 30 people at the Electronics Boutique store at the King of Prussia mall outside Philadelphia.

``As soon as I get the machine and three or four games, I am running home to play it,″ he said. ``I’m having an all-night Dreamcast party.″

Merchants say Dreamcast will be a best-seller for the upcoming holiday season.

``We are actually planning for this to be a bigger event than ``Star Wars″ was in May,″ said Tom Alfonsi, senior vice president of merchandising at K-B Toys. ``Going into this, we never thought this would be so big. But now we see how big it really is.″

Still, it’s not clear whether Dreamcast’s high-tech capabilities will be enough to maintain the early momentum into next year.

``There are a lot of good things about Dreamcast. It’s price is right. It is very powerful,″ said Dan DeMatteo, president of the 500-store Babbage’s Etc. chain. ``But there is that question looming out there over whether it be able to survive a war with the other players in the next few years.″

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Associated Press Writer William Schiffman contributed to this story.