Matsushita is game for Nintendo’s deal

Pact expands DVD horizon

The videogame wars heated up Wednesday as Nintendo unveiled plans for its next-generation console that will play games on DVDs, instead of cartridges, and integrate its faster, graphics-enhanced technology in future DVD players from Panasonic.

The announcement comes on the eve of E3, the three-day videogame confab set to begin today at the L.A. Convention Center.

Nintendo’s new machine, tentatively titled Dolphin, is set to challenge Sony’s far more popular PlayStation as the leader in the industry when it hits retailers shelves at the end of 2000, in time for the Christmas shopping season. The price was not disclosed.

Where Nintendo’s current flagship, the N64, features 64-bit imagery, Dolphin will display more life-like 256-bit graphics. Sony’s upcoming PlayStation II, set to launch in the fall in Japan, will display 128-bit graphics. Higher bit counts mean movements, colors and appearances are more realistic.

To launch Dolphin, Nintendo has inked a $1 billion multiyear pact in which IBM will build a custom 400-megahertz central processing unit that will act as the brains of the system, paired with Palo Alto-based ArtX’s 3-D graphics chip.

Matsushita has agreed to include the Dolphin technology in its next-generation DVD players, released through its Panasonic moniker. The system will also be integrated into set-top boxes, meaning the game console could work with cable and satellite TV connections, and take data from computers and video cameras for use in game play and data transfers.

“The two companies have now agreed to wide-ranging collaboration in the digital network home electronics area based on the DVD platform, which respects the copyright protection of content creators and whose market penetration is expected to grow to 60 million units by the year 2000,” Matsushita said in a statement.

The DVD format is new for Nintendo, which up to now has used cartridges in its game players. The cartridges are more expensive than CD-ROMs or DVDs.

Sony Corp. uses CD-ROMs in its current PlayStations. PlayStation II will use DVDs.

Nintendo was the last major player to unveil its plans for its next-generation player. Sega has released its new Dreamcast player in Japan and plans a U.S. launch in September. Sony is expected to release its PlayStation II in the United States by Christmas 2000.

All three are vying for a piece of the $6 billion video game player market. Sony now has about 60% of the U.S. market, Nintendo more than 30% and Sega less than 5%

Nintendo, however is not ignoring its N64 system, which the company believes can still sell 15 million more units. The company plans to release 100 new games for the console this year, including three new titles based on “Star Wars: Episode I — The Phantom Menace,” with the first skedded to hit retailer’s shelves Monday, two days before the pic’s release, and titles featuring Mickey Mouse through a pact inked last week with Disney Interactive.