Game designers the big winners in console wars

Game design

For its part, Tose says it's busy making software for GameCube on behalf of Sega and Capcom Co, creator of the "Biohazard" series of shooter games.

Well known for its long-lasting relation with Nintendo by modifying games originally made for PlayStation into versions for Nintendo's game machines such as the Gameboy Advance handheld player, Tose said in October it would beef up the number of software developers at its Chinese subsidiaries from 175 to 400 in the three years to August 2004.

"Software titles such as `Virtua Striker' will attract users currently unfamiliar with Nintendo machines" like the Nintendo 64 game console, said Takashi Oya, an analyst at Deutsche Securities.

"GameCube will gain more than 30 percent of the market by 2005 while PlayStation 2's share will be 60 percent," or six percentage points lower than PlayStation's current share.

A flourishing video-game industry spells good news for companies such as Nintendo and Sony. Tokyo-based Sony's game business accounted for 14 percent of its revenue in the quarter ended September.

Sony dominates

Sony succeeded in the video-game business by offering a business model more profitable for software makers.

Instead of storing its games on cartridges, which are more expensive to make and don't have the ability of deleting data once information is stored, Sony opted to use compact discs. Software makers could then reuse the discs of unpopular game titles returned from retailers, thus reducing costs.

The result: PlayStation's share of the video-game market will probably soar to 66 percent by March compared with 27 percent for the Nintendo 64, a comparable console, according to Deutsche Securities estimates.

With the GameCube, Nintendo opted for a digital versatile disc instead of a cartridge to store games. Because software makers fear the console market may be dominated by a single company, they've begun developing games for a number of different consoles. Ultimately, game console sales are determined by the availability of software, analysts say.