Fears grow as Sega delays store debut

Speculation rises as giant stalls last chance of redemption.

The official UK launch of Sega's Dreamcast on 5 September was overshadowed by concerns about the three-week delay before it is available in high-street shops, speculation over stock levels, and whether or not Sega can dent Sony's dominant position.

The launch party went ahead, but the date for the 128-bit console's store appearance was shunted from 23 September to 14 October.

The 21-day slip will have amused rival console giants, Sony and Nintendo, having already slashed the price of their game consoles to £79.99 in an attempt to steal Sega's thunder and upset the £199 Dreamcast launch.

But the move has also upset many retailers' marketing plans.

The delay was blamed on glitches with the internet capability of the console in Europe, but the Australian launch has also been postponed.

The setbacks have also led to speculation about the availability of the console, trouble the company does not need for its prodigal console. Many see the Dreamcast as the Japanese giant's last throw of the dice following the flop of its Saturn console.

Some observers believe the Nintendo 64 will particularly suffer from the Dreamcast's market entry, but Sony's huge installed base of 50 million worldwide, with four million of those in the UK, will make it difficult for Sega to earn the title of PlayStation killer.

The Dreamcast has already sparked huge interest with 300,000 advance orders received in the US before the end of August. In the UK, consumers are expected to be just as keen, with even the most hardcore PlayStation users switching to Sega instead of waiting a year for the PlayStation 2.

Chris Ratcliff, head of the G30 consortium of independent games retailers, said: "People tend to have loyalty to technology, not brand loyalty to a company. They just want bigger and better consoles."

The Dreamcast's powerful specification will generate significant interest. A spokesman for Sega said: "There may well be a mad scramble." But he refused to reveal how many consoles had been pre-ordered in the UK.

The delay to the launch has done little to endear Sega to UK retailers.

Will Copeland, managing director of retailer One Step Beyond, was forced to delay his marketing campaign. "It's a nightmare. I'd planned my advertising and now the whole campaign is on hold," he said.

However, Sega refused to disclose the percentage of consoles allocated to the UK independent sector. Independent stores represent approximately 15 per cent of the total market, a figured Copeland believed to be highly underestimated. He also claimed Sega has allocated only 12 per cent of the units to the sector, a figure that, in his opinion,will result in shortages.

Gem, the distributor that sells Dreamcast to independent retailers, also kept quiet about the actual number of units being made available to the independents, although it has been busy assuring retailers they will receive sufficient numbers of the console.

Paul Donnelly, managing director of Gem, said: "The independents will get a fair and significant allocation of stock as they are an important sector."

The Sega spokesman refused to comment on the delay and how it will affect stores, particularly the independents, but Donnelly was upbeat. "We are all disappointed about the delay but the customer won't go away. The delay gives time for more stock and titles to be available at the launch," he said.

Ratcliff believed that Dreamcast could present an opportunity for Sony to attract a different breed of consumer for its PlayStation.

"The Dreamcast is targeting the latest generation of console users, so Sony must target later adopters, those who thought they didn't want a games console, or those who could not previously afford one. The Dreamcast will sell well - the technology has no direct competitor. As for the PlayStation, there's life in the old dog yet," he said.

Sony is hardly quaking in its boots, especially with its next generation console scheduled for release next year. A spokeswoman for Sony said: "We have sold more than 20 million PlayStations in Europe since 1995. That's a lot of people, in fact, more than have ever bought video games in the past. To say we would change our strategy is wrong, PlayStation has already taken gaming to a different consumer - from the typical 12-year-old to a higher average age. We are not a static company, we are always producing more games, and we welcome competition as it rejuvenates the market."

The aggression of Sony's PlayStation price cut was highlighted at ECTS last week, when SNK dropped the price of its handheld gaming device, the Neogeo Pocket Colour, before it hit the shelves. The price fell to £59.99 from £69.99 because the company felt the pricing was too similar to console prices.

Nick Gibson, analyst at Durlacher, said: "I don't think the Dreamcast delay will really damage Sega.

It does seem to have been quite straight about the cause. However, Sony is still such a powerful player that Sega will have to look at innovative ways of approaching the market. The bundling deal with Sky's set-top box was the latest example."

He added that he believed the convergence of the set-top box and games console may be one of Sega's plans. Such a move would shift the industry goalposts and could leave Sony on the sidelines.

The only problem is that the three giants in the games sector have probably all had that idea, and it will certainly be another race to see which one hits the market first. Sega has won this round with internet access, but the battle for TV channel access has not even begun.