News From Japan: Sony; Sega, Bandai

In the wake of the machine's popularity, which Sony largely attributes to the variety and depth of game-developers' software, Sony Corporation is considering increasing production of its 32-bit machine, Reuters reports today. Currently, Sony reportedly produces 1.5 million units monthly and has shipped 13.5 million units worldwide since the machine's debut in December of 1994.

Reuters reports that Sony president Terushia Tokunaka believes the wide variety of PlayStation software has created a broader, more diverse customer base and therefore "could create a much larger market" than that of rival Nintendo's 64-bit machine. The numbers may bear this out: Sony estimates that it will ship 18 million PlayStation units this business year, generating an estimated US$5.60 billion when combined with software sales. By contrast, Nintendo reportedly expects to ship 12 million N64 units and predicts $2.7 billion in sales for its machine and related software in the same time frame.

In other gaming news from Japan, Reuters reports that the planned merger of Sega Enterprises Ltd. and Bandai Co Ltd. in October is likely to generate only a modest profit in their first joint earning report. Japanese analysts estimate that the new company is estimated to post sales of $3.53 billion its first year. According to an analyst at Morgan Stanley Japan Ltd., the primary reason for the merger is to "restructure and scrap unprofitable business."

The report names Sega's Saturn and Bandai's Pippin Atmark machines as each company's most notable money losers. Even so, Sega estimates a group net profit of $45.6 million for fiscal year 1996-97. Bandai, however, estimates a group net loss of $77.5 million, despite its hit virtual pet toy, Tamagotchi, of which the company expects to sell 13 million units by the end of the 1997-98 fiscal year.

Sega will announce its business results for the fiscal year that ended March 31, and its forecast for the current financial year, on May 23. Bandai is due to announce its results and forecasts on May 20.