They oohed as animated football players threw one another to the ground. They ahhed as vividly colored martial artists gouged each other’s eyes. The crowd huddled around ultrathin TVs earlier this month at the Metreon, a four-story Sony entertainment palace in San Francisco, was getting a sneak preview of Sony’s much-touted PlayStation2. And they were loving it. But this Sony-sponsored launch party was hardly a tough audience. Many of the well-dressed game gawkers were actually foot soldiers in the Sony empire, loyally cheering on a product crucial to the company’s future. The real test for Sony comes this week when it rolls out 500,000–mysteriously down from a promised 1 million–of the $299 black boxes in stores across the U.S. Game magazines and Internet sites are already buzzing with the question of the season: Is PlayStation2 the great hope of computer gaming or the great hype? For Sony it’s not just fun and games. The economics of computer gaming have come a long way from the drop-a-quarter-in-the-slot days. It’s now a $20 billion-a-year worldwide business. Last year games contributed more than $6 billion to Sony’s sales and $730 million in operating profits. The Japanese giant has sold a mind-boggling 75 million first-generation PlayStations, 27 million of them in the U.S. And with game consoles grabbing an ever larger share of the game market from PCs and Macs, sales of PlayStation2 could get even bigger. But PlayStation2 is being launched into the most competitive gaming environment ever. Sony is locked in a high-stakes platform war with Microsoft, Sega and Nintendo to lay claim to electronic outposts in living rooms worldwide. Right now the fight is over who will cater to the virtual sniper-attack and dune-buggy needs of legions of young gamers. But before long, these companies are betting, game consoles like PlayStation2 will become broad-ranging digital home entertainment centers used by everyone for everything from music playing to video watching. Still, the corporate battle for digital dominance in the years ahead will be determined in no small part by what happens this week, as junior high students everywhere reach a collective decision on just how way-cool the graphics on Smuggler’s Run really are. Even before this Thursday’s official launch, Sony has lost goodwill, not to mention sales, for PlayStation2 with its glitchy product rollout. The company’s recent announcement that it was cutting the number of PS2s available on launch day by 50% was a cruel blow to parents who had promised Junior one of the first units. And it is a headache for the 20,000 retailers selling PS2s–many of which began taking orders six months ago. The stores are bracing for hordes of irate customers. “There will be people lined up in front of the doors,” sighs Dan DeMatteo, president of Babbage’s Etc., the nation’s largest specialty video-games retailer. Babbage’s has prepaid orders from five times as many customers as it will have units for this week. A sign of the frenzy to come: a week before launch date, bidding for the $299 PlayStation2 on eBay had hit more than $500.
