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by
Daniel Huebner and Jennifer Olsen
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 News
Week
of April 17-April 23, 2000
[Thursday, April 20,
2000]
Sega
Cuts Costs
Sega Enterprises is looking to make big budget cuts in an effort to get
back into the black. The company hopes to cut nearly $280 million of costs
in order to offset an operating loss of the same amount this year. Though
the company hasn't offered a specific breakdown of the cost-cutting measures,
Sega has suggested that areas such as marketing and research would feel
the pinch. "Our sales costs this business year will fall, returning to
normal. As we have said several times, we aim to post a profit this business
year," said a Sega Enterprises spokesperson.
Neo Magic Out
Long time laptop graphics chip maker Neo Magic is bowing out of the PC
graphics market. Neo Magic is following the lead of S3 by eliminating
its PC chip business to focus on the emerging market in Internet appliances.
The company is setting its sights on the development of technologies for
MPEG-4 video, broadband wireless communications, and Internet system integration.
"Our PC-centered view of the world has changed," said Neo Magic CEO Prakash
Agarwal said, "We are now turning our capabilities in a new direction,
where we believe there are multiple growth opportunities." Organization
changes related to the company's new focus include the elimination of
two departments and addition layoffs resulting in a 35 percent reduction
in Neo Magic's workforce since last quarter.
[Thursday,
April 20, 2000]
N64
Resurgent
Against all conventional wisdom, the Nintendo 64 is once America's best
selling video game console. While publishers and retailers seem to be
abandoning the machine as quickly as possible, the N64 managed to grab
46 percent of American console sales since the March 6 launch of its new
series featuring translucent case colors. Playstation was a close second
with 43 percent, while Dreamcast languished at 11 percent. Nintendo gives
some of the credit for the rebound in sales to the new colors, but it
may be the demand for Nintendo's Pokemon Stadium that is truly
responsible. "During March, sales of the Nintendo 64 jumped 30 percent
from the same month a year ago, while those of our nearest competitor
plunged 32 percent," says Nintendo's Peter Main, "we expect another five
to 10 million pieces of N64 hardware to be sold."
Sega
Import Investigation
The United States International Trade Commission has agreed to investigate
whether memory chips used in the Sega Dreamcast console violate patents
held by Rambus. Rambus asked the Trade Commission to investigate in March
when it filed an infringement suit naming Sega and Hitatchi. Rambus is
asking that the Trade Commission block imports of the contested chips.
"By instituting this investigation, the ITC has not yet made any decision
on the merits of the case,'' reads a commission statement regarding the
investigation, and a date for a decision has not been set.
[Wednesday,
April 19, 2000]
X-Box
Payday
Nvidia is the happy recipient of a $200 million payday from Microsoft.
The funds are a contractual advance payment for the graphics processors
that Nvidia will produce for Microsoft to include in its upcoming X-Box
game console. Remarkably, the $200 million payment is very near to the
amount 3dfx paid to acquire Gigapixel, the company originally slated to
provide graphics technology for the X-Box.
Activision
Defense
Activision is taking defensive measures to ward off any unwanted takeover
bids as it undergoes a major reorganization. The company is enacting a
stockholder rights measure granting shareholders additional stock or compensation
at rate roughly double their current holdings, but with the new rights
kicking in only if someone makes a move to acquire 15 percent or more
of the company. Those already holding stakes of better than 15 percent
do not trigger the rights plan. Activision is in the midst of a shakeup
that will focus the publisher's business on Internet and next-generation
console games.
Humongous
Donation
Humongous Entertainment, while in the middle of a transition that will
see it lose its founders and become an integrated unit of publisher GT
Interactive, is making good on a holiday promise. Humongous offered a
$10 rebate on 16 product this Christmas, with buyers having the option
of giving all or part of that sum to the Make a Wish Foundation. More
than 100,000 customers gave, enabling Humongous to make a $228,000 donation
to the foundation that grants wishes to children facing life-threatening
illness.
60 Percent Play
Results of a new survey released by the Interactive Digital Software Association
say that three out of five Americans above the age of six, or 60 percent,
play video games. The survey also showed the average gamer to be 28 years
old and revealed that nearly half of all game players, 43 percent, are
female. The study, conducted by Peter D. Hart Associates, surveyed 1281
people in 816 households during the month of March.
GT Settles
GT Interactive has offered Hasbro a settlement in their intellectual property
dispute. Under the terms of the agreement, GT acknowledges Hasbro's rights
to classic games titles it acquired in its purchase of Atari in 1998 and
will cease publication of its own titles based on those properties. GT
will also make an undisclosed cash payment to Hasbro. "When you look at
our games and their games side by side, there's no doubt that the defendants
have copied the creative expression of the Atari games, not just abstract
ideas," said Hasbro's Tom Dusenberry. Similar intellectual property complaints
against Xtreme Games and eGames have not been settled.
[Tuesday,
April 18, 2000]
Infogrames'
New Label
Infogrames is expanding its North American operations with the creation
of a new publishing label. The new I-Stars brand will be headquartered
in Los Angeles and will focus on family, handheld, and movie license titles.
Infogrames has lured THQ board member and vice president Mike Haller to
head up the new office. The company plans to consolidate its existing
licensed publishing business in part by relocating its San Jose based
Warner Brothers product line to the new I-Stars location. "We also have
aggressive plans to seek out a variety of hot licensed film, book and
television properties," said Infogrames CEO Bruno Bonnell.
Hedlund
Exit
Veteran Blizzard designer Stieg Hedlund, whose credits include work on
both Diablo and Diablo 2, is setting out to found his own
development company. Hedlund and Blizzard North Art Director Bob Steele
are teaming up with six additional programmers and artists to create the
Full-On Amusement Company. Though the team is already well into the production
of their first Lith Tech 2 based game, Hedlund will wait to join in until
after completing his Diablo 2 duties. "Full-On is a chance to start
with a blank canvas," said Hedlund, "I'm going to show people something
they've never seen before."
Loosened
Controls
Japan's Trade Ministry is moving to simplify the export control procedures
it had placed on Sony's Playstation 2 console. The ministry had first
enacted export controls in early March due to encryption technology used
by the system, demanding that Sony obtain a special permit to export to
the United States and Europe. The ministry imposed further sanctions in
April because it believed that the Playstation 2's components could be
adapted to weapons systems. The restrictions would have forced Sony to
get a license for any export of more than one unit, as Japanese export
law requires such licenses for any export of possible military technology
valued at more than $472. Japan's Trade Ministry revised its procedure
after reclassifying the PS 2 as a general purpose product.
[Monday,
April 17, 2000]
Interplay
Revision
A change in the fourth quarter results of Virgin Interactive Entertainment
is forcing Interplay to revise it financial results for the fourth quarter
and the year. Interplay holds and 43.9 percent stake in Virgin Interactive,
and the downward revision of Virgin's financial has the effect of decreasing
Interplay's total assets while increasing the company's net loss. Interplay's
revised financials show a net loss of $9.6 million for the fourth quarter
and $41.7 million for the twelve months ended December 31, 1999. The new
fourth quarter loss is 18 percent greater than the $7.8 million that Interplay
originally posted on March 21 and represents the stripping away of $1.7
million that Interplay had recognized as equity net income in Virgin Interactive.
Interplay's operating loss of $4.6 million is not affected by the revision.
Past
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