News: PlayStation2 To Debut in North America

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October 25, 2000 - 9:00pm

NEW YORK (AP)- This isn't child's play.

Sony's PlayStation2 video game console is set to go on sale at midnight in North America, and hard-core gamers or their deep-pocketed parents are expected to line up to buy it at $299 each.

But the company is admitting it won't be able to meet initial demand, and chief rival Sega is already on the attack. Sega and other competitors are aiming to discredit Sony's promise to become the center of living room entertainment.

Sega is pushing the graphics and Internet connection featured in its rival Dreamcast (news - web sites) console and, in a marketing campaign begun this week, is employing a rude red-haired kid to stick a big red tongue out at Sony.

Sega says Sony is coming out with a product that may have potential - the ability to download music and movie content and play online games - but the Sony modem needed to run these applications will not be available until 2001. Even then, consumers will need to have high-speed Internet connections.

Corporate bickering aside, PlayStation2 signals a new generation of consoles, where consumers can eventually play DVD movies, download music, play games with their friends in another city, and do some surfing - all through their TV sets.

Kaz Hirai, president and chief operating officer at Sony Computer Entertainment America, said the company didn't want something that mimicked a personal computer. We want to give the consumer the experience of broadband,'' he said.

We packed a lot of technology and potential into this system,'' Hirai said. We definitely want to be the center of home entertainment.''

Sony faces a double challenge next year, when Microsoft, armed with a $500 million worldwide marketing budget, launches its Xbox video game player and Nintendo (news - web sites) unveils GameCube.

All will be battling it out in the $20 billion video game market worldwide, where Sony now is the leader.

The Sony launch, which includes 26 new game titles, is considered the most ambitious in video game history. But an industrywide shortage of little electronic processing parts has slowed production.

Sony had to halve the number of consoles it could provide to stores before the holidays, provoking concerns about shortages during the shopping season.

Despite the shortfall in initial shipments, Sony says it will meet a target of shipping 10 million units worldwide by March 2001, of which three million are slated for North America.

Most retailers in North America have pre-sold the majority of their initial orders, leaving few consoles on the shelves for consumers to fight over on launch day.

Some retailers are stuck with not being able to honor their customers' deposits. To help meet demand at stores, Sony said it will not offer the game player on its Web site.

A slew of stores are staging midnight openings, selling the products to those who have already pre-ordered. But plenty of others, such as Best Buy and Circuit City, which bucked the trend toward taking pre-orders, will be selling a limited number on Thursday.

Toys R Us has pulled back on its advertising of PlayStation2, and has alerted customers that it won't have any additional consoles on the launch date other than fulfilling its pre-orders.

Chris Byrne, an independent toy consultant, cautions that all the fuss over PlayStation2 may be slightly exaggerated.

There are always the early adopters, the true gamers, who will want to have bragging rights, but that is the fraction of the market place,'' Byrne said. The rest, he said, will be willing to wait until after the holidays or will turn to Sega Dreamcast to get their fix.

Sega is using the shortage to its advantage, slashing last month prices of Dreamcast to $149, from $199, and offering $150 rebates. Sega, which has sold 2.2 million Dreamcast consoles since its launch in September 1999, expects to easily meet its original target of a total of 5 million by March, according to Chris Gilbert, executive vice president of sales and marketing.

As for Sega's ad campaign, that red-haired kid will be plastered on mobile billboards in the San Francisco area as well as in trade and online advertising.

Gilbert says Sega is just taking natural advantage of Sony missteps.

We feel great,'' said Gilbert. It's nice to have help from friends.''

Sony sniffed at what it called a case of following the leader.

I think it kind of shows you that Sega's marketing strategy is being driven by what their competition is doing,'' Hirai said.

By ANNE D'INNOCENZIO, AP Business Writer

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PlayStation2 To Debut in North America

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