Posted on: Tuesday, December 25, 2001

New video game systems invigorate whole industry

By Mike Snider
USA Today

The white-hot competition between two new video game systems is turning out to be a blast for the entire industry.

Not only are Microsoft's $299 Xbox and Nintendo's $199 GameCube, both introduced in mid-November, virtual sellouts with each having sold more than 700,000 to date, but Sony's PlayStation 2, Nintendo's handheld Game Boy Advance and even Sega's discontinued Dreamcast are selling at a rapid clip.

In the head-to-head combat drawing the most attention, Xbox and GameCube appear to be in a dead heat. Xbox sales had hit an estimated 738,000 by the end of November, while GameCube had sold about 534,000 by that time, said Heath Terry, analyst with Credit Suisse First Boston Equity Research, based on data from the NPD Group, a research firm that tracks toy sales.

But NPD's reports cover only 60 percent of total U.S. sales — not including Wal-Mart, which is Nintendo's largest customer, according to Nintendo's Peter Main.

Main said Nintendo has sold more than 700,000 GameCubes so far. "It's a horse race," he said. And Terry acknowledges that "it may be (his) GameCube numbers ... may be slightly below actuality."

But each is on target to sell well over 1 million systems by the end of the season, a record pace.

Even though the new systems are getting all the attention, the PlayStation 2 ($299) and Game Boy Advance ($89-$99) are hotter sellers. "I think the most surprising thing we've seen so far is (PS2's) strength," Terry said.

Even Dreamcast, which Sega quit producing earlier this year, sold more than 200,000 units last month; many retailers have marked it down to about $50. And Wal-Mart sold more than 400,000 of the older Game Boy Color units in less than an hour during a $40 Thanksgiving-week sale.

Video games are already on track to exceed the projected $8 billion in sales this year.