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Sega Exits Console Business, Turns To Games

SAN FRANCISCO -Sega officially affirmed plans to stop production of its Dreamcast video game platform as it repositions its focus as a third-party software developer for other platforms including Sony’s PlayStation2 and Nintendo’s forthcoming Game Boy Advance portable player.

Sega America chief operating office Peter Moore said Sega was no longer able to compete with rival platform developers such as Sony, Nintendo, and soon Microsoft, all of which “have deeper pockets” than Sega.

Sega said that it has sold only about 3 million Dreamcast consoles in the United States through December, which was short of reduced forecasts of 4.5 million units and well shy of the initial 7.5 million-unit goal for March 31.

Cognizant that “you make money on the blades, not the razor,” Moore said Sega decided to focus on its core competency as a video game developer and publisher with a new platform-agnostic approach, focusing on its “advantage in the networked gaming arena.”

In addition, Sega announced a new three-pronged business strategy in addition to third-party software development, which will include licensing the Dreamcast chipset technology for a range of devices, including the Pace Micro Technology set-top box.

Sega also plans to work with Java to develop Sega games for wireless devices such as Palm’s handheld computers and Motorola’s cellular phones.

Sega expects the restructuring effort to be in place by April 1.

Moore said the company will emphasize its online expertise acquired through the launch of the SegaNet Internet gaming network, which it will continue to operate while expanding access to multiple gaming devices.

Sega, which still has ample inventory of its Dreamcast hardware, said it will continue to support the console with software titles “for as long as game players want it” and announced a retail price cut to $99.95 for Dreamcast units, effective Feb. 4. Pricing on leading Dreamcast game titles will also drop to $39.95.

An aggressive rollout schedule of Dreamcast titles is expected to remain through the end of the year, said Moore. More than 30 games, including Shenmue 2 and Crazy Taxi 2, are in development.

In addition to beginning development of PS2 and Game Boy Advance titles, Sega said it is in discussions with Nintendo and Microsoft to produce titles for the Gamecube and Xbox next-generation platforms.

Titles planned for other platforms by March 2002 include Yu Suzuki’s Virtua Fighter 4, titles from the Sakura Wars series, two titles from the Let’s Make a Sports Team series and Tetsuya Mizaguchi’s Space Channel 5- inspired properties for Sony’s PS2.