Sega out to steal lead in console software biz

Wants 25 per cent marketshare

By Tony Smith, 1st November 2000

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Sega has confirmed hints that the company intends to recast itself as a software and services business and move away from its traditional game console focus.

Central to the strategy is support for rival vendors' machines, a plan that's been hinted at before by Sega staffers, and made official when the company reported its latest financial results last week.

Speaking in Japan today, Sega Strategic Counsel Tetsu Kayama confirmed Sega's plan and its main goal: to boost Sega's console software marketshare to 25 per cent. Currently its code accounts for just 4.2 per cent of the market.

If it achieves that, it will overtake Nintendo's market leading 19.6 per cent share.

"We plan to expand our profit by utilizing our attractive and affluent software assets to appropriate devices," he said.

Kayama has only just joined the company, brought in to shape the company's strategy as it seeks to find a role in an increasingly competitive market. The console business was given a mighty shaking when Sony entered the arena with its PlayStation and quickly stole the market from its traditional leaders, Sega and Nintendo. PlayStation 2 will cement Sony's leadership, at least until Microsoft's X-box machine launches late next year.

Sega has fared badly against such heavyweights. Its marketshare has diminished and it has been forced to offer huge rebates on its Dreamcast console to persuade gamers to buy it. That has had a detrimental effect on the company's finances - last week it admitted that it will post a loss this financial year, instead of the profit it had predicted, thanks to the extent to which it has been subsidising Dreamcast sales.

Kayama is likely being groomed to succeed Sega president Isao Okawa, the company's chief strategist and who admitted today he is suffering from throat cancer.

It's not yet known which consoles Sega will support, but presumably it will hope to persuade vendors to cough up for exclusive launches, common in the console software business. Sega's financial report noted a joint venture project with erstwhile arch-rival Nintendo, so the GameCube has to be a prime candidate for Sega support. ®