SAN FRANCISCO -- Silicon Graphics Inc., a powerful U.S. computer graphics company, and Japan's Nintendo Co. Ltd., the leading video game manufacturer, Monday announced plans to jointly develop a three- dimensional virtual reality game machine for home use.
The companies unveiled their new joint venture product called 'Project Reality' -- melding the latest advancements in computerized virtual reality graphics with home and arcade video games.
The collaboration between Nintendo of Kyoto, Japan, and Silicon Graphics, based in Mountain View, Calif., marks another major alliance in the rapidly developing consumers electronics market.
Nintendo, which is projecting $5 billion in retail sales this year, will invest a 'significant amount of money' to fund the joint venture while Silicon Graphics will provide the engineering expertise and its MIPS software and microprocessors.
Silicon Graphics stock was up 50 cents to $40 a share in mid- afternoon trading on the New York Stock Exchange. But the stock of 3DO, a competitor of Silicon Grafphics, was down $1.25 to $24.75 a share on the over-the-counter market.
'This product will leapfrog all other home entertainment devices,' said Howard Lincoln, senior vice president of Nintendo. 'It will be real-time, real fast and way past cool.'
Although video game graphics have improved greatly over the last decade, they have not keep pace with computerized virtual reality.
Officials at Silicon Graphics, whose software and work stations were used by animators for the movies 'Jurassic Park' and 'Terminator 2,' hope to usher in a new era in video game graphics.
'What we are designing is real-time video, graphics and video,' said Edward McCracken, president and CEO of Silicon Graphics. 'It will read information five to 10 times faster than a personal computer.'
Research and development of the new product already has begun using Indigo work stations, a high-powered, three-dimensional design unit.
'We have been doing research on the design platform (microprocessors used to empower the work stations) for over a year and began talking with Nintendo nine months ago,' said Jim Clark, founder and president of Silicon Graphics.
The delivery system for the new product, whether it be CD ROM or cassettes, has not as yet been determined. However, Clark said the computer software will be powerful enough to design either.
'That will be a business decision made by Nintendo,' he said. 'We will give them a device that can do either.'
Lincoln said the announcement of the new product did not mean Nintendo was abandoning its efforts to market its popular Super NES and Game Boy devices.
As for a time table, Lincoln said the first product would be a coin- operated video arcade game projected for release in 1994. A home version will be ready for 1995 and priced at less than $250.
'The first step is to educate the video game designers in the technology of computer graphics,' Clark said. 'That will take a little time.'
Once the product is developed, Silicon Graphics will be paid a royalty from Nintendo, which has an exclusivity clause in its long-term contract. However, Clark did admit that some of the technology will cross over to be used in the Time Warner-Silicon Graphics interactive digital cable TV system.
As for the companies that will be licensed by Nintendo to design the games, Lincoln said 'the licensing agreements will be in line with what we've done in the past.'