SAN FRANCISCO — Nintendo Ltd. apparently made a rare strategic error last year when it agreed to work with Sony Corp. in developing a new generation of video game technology. The company is now looking to an alliance with Philips Consumer Electronics Co. to help undo the damage.
Such a realization explains a sequence of seemingly contradictory announcements that emerged Friday and Saturday as the consumer electronics industry gathered for its biannual show in Chicago.
The story began Friday when Sony Corp. announced a deal with Nintendo to develop a new type of video game system based on compact discs. Compact discs, widely used for playing music, can store huge volumes of information. As a result, they can provide far better graphics and sound than Nintendo's existing cartridge games.
Late this year, Sony plans to begin marketing a game machine called the Play Station that will play a new generation of compact disc-based games. It also will play Nintendo cartridges designed for Nintendo's new 16-bit game system--all for "several hundred" dollars.
But Nintendo apparently had second thoughts when it realized that Sony had aggressive plans to develop game software of its own, based in part on characters from Sony's Columbia Pictures and record company affiliates. Nintendo's strategy has always been to keep tight control over the game software, but Sony will retain licensing control over any compact disc games that play on its machine.
"I don't think Nintendo anticipated that Sony would compete with them head-to-head," said Jonathan Seybold, a Malibu-based computer consultant and an expert on CD technology. "I don't think they realized Sony would be so aggressive on software."
On Saturday, Nintendo announced that it had reached an agreement with Philips to develop a different CD-based game technology. Philips is one of the inventors of the compact disc and a fierce rival--and sometime partner--of Sony's.
Nintendo and Philips said they would work together to develop a low-cost CD game player that would be compatible with Philips' CDI, a long-delayed home entertainment and education system.
The new Philips-Nintendo format, however, is not scheduled to be ready until late next year, and Philips does not get the right to include a Nintendo cartridge slot in any machine it might market. It's also not yet clear whether Philips will build the CD player for Nintendo, or how big a development effort will be required to ready the new game format for market.
