Recent developments in the computer games industry have led to a lot of speculation regarding its future. These have included profits warnings from UK developer Eidos, and, most notably, an announcement by Sega Corporation that the company is to stop producing its Sega Dreamcast consoles. This unprecedented move has shown that the company strategy has changed focus, concentrating entirely on the software side of the industry.
In the months leading up to this announcement, a number of developments led many to believe the company was about to diversify into multi-platform software production. Strategic alliances between Sega and a range of companies were forged. These joint ventures show how the company is set to expand. An alliance with Motorola Wireless will lead to Sega developing games for the company's future range of mobile phones. A tie with Palm Inc will also see a number of offline and online games being developed for the Palm V and Palm VII later this year.
Most importantly, Sega will also develop software for those who were its opponents in the industry up until now - Nintendo and Sony Computer Entertainment. The first confirmed games which have been announced include Space Channel 5, released later this year on the Playstation 2, while its insignia character, Sonic the Hedgehog will appear on Nintendo's forthcoming Game Boy Advance.
With production of Dreamcast due to cease shortly, Sega has also announced that it will integrate its console technology into future models of its Pace set-top boxes. Not only will this allow users to play the wide range of titles currently available through the box, but also to add connectivity through broadband to surf the Internet. The system will also have the added bonus of allowing consumers to download missed episodes of shows when technology permits.
Yet even with all of this potential for the future, everything that could have gone wrong for Sega did. Its console was released two years ahead of the competition - the Sony Playstation 2 - yet with a poor marketing strategy and a low number of quality titles, consumers generally held off for the Sony product. It seems that history had repeated itself in this failure: the company has seen failed attempts at using new technologies before. The MegaCD and the 32X of the mid-1990s are classic examples of new technology that could have revolutionised the industry, but that instead led to massive losses.
The changes made last year seemed too little, too late for Sega. European owners of the machine each received a free copy of the first online console game in Europe, Chu Chu Rocket. After a blitz billboard campaign to build awareness, a pan-European competition was set up to promote online gaming. Regional finals were held over the Internet for Irish users. When the finals came around in London, Dublin teenager Kevin Lim conquered all opposition to be crowned European champion. This is ironic, given that Dreamcast sales in the Republic have been far from good.
BUT even with recent developments, the console is far from dead. Sega is currently developing more than 100 titles for the Dreamcast, and a further 30 for other formats. New quality titles include the brilliant racing game, Metropolis Street Racing, epic role-playing game Shenmue, and the online world of Phantasy Star Online. With recent price cuts, the console is a great bargain.
So what does the future hold for the games industry? In the wake of Sega leaving the console market, three players are left: Sony, Nintendo and newcomers Microsoft.
As many players will have seen, the Sony Playstation 2 console was released pre-Christmas in Ireland. A rush to get a console ensued. There were also stories of desperate parents paying upwards of £600 to get their hands on a machine for Christmas morning.
But the rush has slowed and it looks like Sony's expected target of having 40,000 consoles in the country by the end of March will be met. To put that in context, that is the number of Playstation One consoles that was sold in the country in the two years following the original launch, back in 1995. The company also has the advantage of being the only one to set up a successful base in the Republic, which now enjoys the second largest penetration of Playstation One consoles per household in the world, second only to Japan. Sony has helped change the image of gaming from being anti-social, to a family pastime that an be enjoyed by all.
Nintendo is also set to make a comeback. The creators of the most successful console of all time - the 100-million-unit selling Game Boy - is to launch a new full-colour version of the handheld machine later this year. With mobile interactivity allowing it to be hooked up to the Internet, and with the ability to be linked to its other new machine, the next generation Gamecube, Nintendo seems likely to have another go at conquering the world market.
But the wild card of this $20 billion industry is Microsoft. Bill Gates has made it clear he wants to take on the console world head to head with Microsoft's XBox console. Due to be released in 2002, it will boast the most powerful components of any console on the market, and will be purely for games. So anyone who is looking for a DVD player or an Internet terminal will have to look elsewhere. The company plans to spend $500 million marketing the console as it is launched. More than 150 third parties have guaranteed titles for the new machine, including EA Games, Eidos and Capcom. This will build on the number of Microsoft controlled companies already producing for the PC divisions.
With the funding behind it, the console could potentially be subsidised at launch, attracting a large number of consumers to the machine. But in the year-and-a-half between now and then, Sony has time to consolidate its position as leader in the industry, and Nintendo will try to regain support.
Things have changed a lot since the first games, Pacman and Space Invaders, came out. In recent years, gaming has become more acceptable, even if it is in many different forms. With the gaming industry now even larger than the film industry, the future looks promising. Only time will tell who the future winners and losers will be.
Jamie McCormick is the editor of irishplayer: www.irishplayer.com