NEC Introduces High-Tech Toys

MOVE over Nintendo, Atari, and all you other manufacturers of home video systems. Here comes NEC - with a lot of financial and corporate muscle behind it. NEC Corporation is no newcomer to the multibillion-dollar world of fast-action, shoot-'em-up home-video games. The Japanese company, based in Tokyo, has the No. 1-selling home video-game system in Japan. Now after several years of market research and planning, NEC is entering the United States market, going head to head with such giants in the industry as Nintendo, which currently dominates the American market in sales, sophisticated computer systems, and popular video games.

In a press conference here, NEC announced that starting later this year - presumably around the Christmas season - it will offer consumers a completely new home video-game system, with more-advanced technology and software. The multi-use video system, called the TurboGrafx-16, is expandable: It can use different types of optional equipment. According to company officials, the use of a 16-bit graphics processor allows programmers to create more detailed and realistic screen presentations, faster-paced games, with less on-screen flicker, or ``ghosts.''

The basic system will be priced at about $199.

Few industry observers, however, expect the new system - for all its technical prowess - to displace Nintendo as the US market leader. Nintendo is found in 15 percent of all homes in the United States.

``I just don't see Americans rushing out to pay $200 to buy a 16-bit machine, says Gary Jacobson, an industry analyst with Kidder, Peabody & Co. ``The machinery may be good. But this is a case where I don't think you can get better games than exist on the Nintendo system. This is a case where the software [for the NEC system] won't keep up with the quality of the system itself.''

Mr. Jacobson sees the video industry continuing strong this year. ``The plateau will come in 1990,'' he says, as most homes eager to purchase such a system will already have done so.

Video-related products are expected to rack up total retail sales of about $3 billion during 1989, says Laurie Lively, an entertainment analyst with Oppenheimer & Co. Nonvideo game toys (which she calls ``traditional toys'') will come in at slightly under $9 billion at the wholesale level. Total video and nonvideo toy sales at the retail level this year will be about $16.5 billion, Ms. Lively says.

In recent years, she says, ``video games have siphoned off a large part of the expenditures spent on the traditional toy market.''

But she does not see the new NEC system's adding much to the loss of consumer dollars going to traditional toys. Rather, she says, the competition will likely be among the video-game systems themselves as a ``market-share battle.''

NEC, for its part, insists that it will provide the innovative software necessary to attract consumers to its TurboGrafx-16 system. The company is already a market leader in computers, chips, monitors, television sets, and other video-related products, says Keith Schaefer, senior vice-president of NEC Home Electronics. Now, Mr. Schaefer says, the company is ``sending out a clear signal'' that it will provide a broad range of compatible products in the home entertainment sector.

NEC has about four consumer-related companies in the US. The home-video system will be marketed by NEC Home Electronics (USA), based in Wood Dale, Ill.

Because of the 16-bit graphics processor, NEC claims that characters in its software are larger and more realistic than in competitive systems. Moreover, the software is contained on a small plastic card that is about the size of a credit card. Competitive systems, by contrast, require bulky cartridges that can present storage problems. NEC plans to have about 20 game titles available by the year-end holiday season.

The first software card for the NEC system will be Keith Courage in Alpha Zones, which is described as a fast-paced game taking place in the year 2017, 13 years after a giant meteor has collided with Earth. Courage, the hero of the game, must fight his way through seven layers or zones of Earth's surface to fight a group of nasties called the Beastly Alien Dudes (BAD).