Sega unveiled details Wednesday surrounding a set-top box jointly developed with British manufacturer Pace Micro Technology. The set-top box can play games originally engineered for Sega's Dreamcast console.
After deciding to leave the game console business earlier this year, Sega announced that it will focus its efforts on developing games for set-top boxes, handheld computers and cell phones.
Nintendo, meanwhile, finalized the calendar for the release of its delayed Game Boy Advance, the company's next handheld player. The Game Boy has sold more than 120 million units worldwide, and Nintendo will try to build off that large base with its next-generation player.
The Game Boy Advance is scheduled for release on March 21 in Japan and on June 11 in the United States.
Nintendo's popular Game Boy handheld device will be a major licensee of Sega's games.
The announcements follow a transition in the gaming console business in which older names such as Sega and Nintendo have been supplanted by Sony and its PlayStation. The gaming industry will also experience a shakeup in the fall when Microsoft is set to ship its Xbox system in both the United States and Japan.
Sega decided to leave the console business, stopping Dreamcast production at the end of January and slashing its retail price from $150 to $100. Set-top boxes, such as the type that will come out of the alliance with Shipley, England-based Pace, will effectively keep circulating hardware that runs the company's games.
"Sega is trying to be part of a larger trend in set-top boxes where they are getting smarter and offering more features," Gartner analyst P.J. McNealy said. "They're not just for decoding cable signals and pay-per-view."
The first pictures of the set-top box, which has yet to be named, came out Wednesday. In addition to being compatible with existing Dreamcast titles, it will include high-speed broadband capabilities and a hard disk drive. Sega representatives would not comment further on the device.
Nintendo's new Game Boy Advance will use a 32-bit processor, and gamers will be able to play titles that were developed for previous versions of the Game Boy. The predecessor to the Game Boy Advance uses an 8-bit processor.
"Nintendo has a loyal following of kids 12 and under, which no other company has been able to get at," McNealy said. "And with the Advance and its upcoming Game Cube, it will at least hold off Sony and Microsoft."
Realizing how important the Game Boy Advance is to the company, Nintendo has already delayed the release of the handheld twice to ensure a smooth launch, a lesson that Sony knows all too well after a supply shortage hurt the success of its much anticipated PlayStation 2 introduction.