Microsoft, Sony Try to Catch Up With Nintendo in 'Casual' Games

SANTA MONICA, Calif. – Legendary Nintendo designer Shigeru Miyamoto knows when his grand vision of video games for the masses has arrived.

"When my relatives start talking to me about video games, then I'll know that I have succeeded," the brain behind "Donkey Kong" and other hits said at this week's E3 Media and Business Summit.

For Miyamoto and Nintendo Co., making games more appealing to a broader audience has been a core strategy in recent years. And it appears to be working.

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Eight months since the Japanese company launched the Wii, the $250 console has been the top-selling system over far more expensive and technologically sophisticated machines from Microsoft Corp. (MSFT) and Sony Corp. (SNE)

Though their focus still seems more centered on the traditional hardcore gaming market, Microsoft and Sony both seem intent on trying to use Nintendo's success to their advantage.

Microsoft this week introduced a variety of new games aimed at a more casual, family friendly crowd on itsXbox Live online system.

One upcoming title, a movie-trivia board game called "Scene It?" is being designed to work with a new Xbox 360 controller that has four large-buttons instead of the usual 14 small ones.

Sony, while still keeping the focus on hardcore gaming with action titles like "Metal Gear Solid 4: Guns of the Patriots," showcased some titles with more casual appeal such as "Echochrome."

In the game, players guide a stick figure through a 3-D moveable maze that resembles something by artist M.C. Escher.

Sony also is preparing to launch an online 3-D service for its PlayStation 3 this fall.

Called "Home," the service will let users create their own digital likeness, called an avatar, then mingle online with other gamers.

They can create custom homes and meet up for games in a virtual town square, said Phil Harrison, head of Sony Computer Entertainment's worldwide studios.

Nintendo, not to be outdone, rolled out additional games and new controllers — including a wireless plastic mat that can be used as a virtual fitness machine.

But Miyamoto doesn't believe it's a race between the Wii and the other two big players on the block.

"I don't really view it as a competition," Miyamoto says. "My focus is on what I can do to make video games more interesting and more relevant."

Industry executives and analysts agree that what's good for Nintendo will end up benefiting Microsoft, Sony and everyone else in the business.

From "Killzone 2" on the PS3 to "Wii Fit" to Microsoft's "Halo 3," content is once again king, and it's poised to boost the video game industry into double-digit growth over the next few years, predicted analyst Colin Sebastian of Lazard Capital Markets.

"It's a pretty dynamic industry right now," said Sebastian, who expects game and console sales to grow at rate of 15 percent annually in the next two years. "It's less about which platform happens to be in the lead in terms of market share."

The industry, whose revenue tops Hollywood's domestic box office receipts, grew at a paltry 4 percent last year, mainly because consumers held off on spending while they waited for the PS3 and Wii to be released in November, he said.

The Wii has sold 2.8 million units domestically since then. The PS3 has sold 1.4 million consoles. (To boost sales, Sony slashed the price on its 60-gigabyte model PS3 last Monday by $100 dollars, to $499)

Microsoft, meanwhile, has missed its own targets, selling 11.6 million Xbox 360s worldwide, short of the company's goal of 12 million units. The console was first released in late 2005.

Nintendo is having the opposite problem.

The Wii has been sold out since its launch, and company executives this week said the shortage could linger through the crucial holiday sales period.

That didn't seem to deter the optimism at Nintendo, however.

"We think this E3 marks a conclusive turning point in the video game industry," said Reggie Fils-Aime, president and chief operating officer of Nintendo of America Inc.. "It may well be seen as a coming-out party for an entire industry as a staple of leisure entertainment. Because everyone is a gamer."