Two consumer electronics companies are vying to make video games more alluring than ever this Christmas by introducing portable hand-held models that the manufacturers hope will broaden the games’ appeal beyond their traditional market of young male video game junkies.

Nintendo of America Inc. and Atari Corp. have unveiled small units that are as powerful as full-size home video games but are portable and play much like portable audiocassette machines such as the Sony Walkman.

Although the products differ in price and technological sophistication, Atari and Nintendo hope that their newest toys will become a mainstream addiction and stimulate American consumers to expand their traditional competitive diversions beyond checkers, playing cards and board games such as Monopoly.

Nintendo, which controls about 80% of the $3-billion-a-year video game market, has begun a $10-million print and television advertising campaign for Game Boy. It also plans a promotional venture with Pepsico Inc., which it estimates is worth about $22 million in advertising and marketing value publicizing Game Boy.


Despite Nintendo’s ambitious plans, it is Atari’s $169.95 Lynx that experts say is the more technologically sophisticated game.

“The software drives everything, and there is no question that the Atari (Lynx)) product is superior to Game Boy,” said Larry Carlat, editor of Toy & Hobby World, a trade publication. “But Nintendo is Nintendo and they have the marketing muscle. If something has the Nintendo name on it, it’s virtually guaranteed to sell.”

Sunnyvale, Calif.-based Atari has been slow getting its Lynx game into stores. But the highly regarded Venice advertising firm Chiat/Day/Mojo is preparing television commercials to boost awareness, according to Ron Stringari, president of Atari’s entertainment division. And Lynx, he said, will be featured on millions of containers of Hi-C, a subsidiary of the Coca-Cola Co., in connection with a promotional contest sponsored by the soft-drink maker.

The Lynx game, which is slightly larger than a videocassette tape, displays images in up to 16 colors, unlike Nintendo’s $89.95 paperback book-size Game Boy unit that only has black and white graphics. The images produced on the Lynx game also move faster than Game Boy’s and are displayed on a screen about one inch larger than Game Boy’s approximately 2 1/2-inch diagonal screen.


Lynx and Game Boy have sound effects and replaceable game cartridges that operate games in which players navigate images using two buttons and a multidirectional pad.

The Lynx game, for example, comes with a “California Games” cartridge that lets players control the movement of a surfer on the waves and a BMX bicycle rider, among others. Similarly, in Game Boy’s “Super Mario Land,” the object is to negotiate Mario through the obstacles in a changing video landscape.

Although the products are similar in some respects, that’s not true of the companies that manufacture them.

For years there has been bad blood between once high-flying Atari, which dominated the video game market in the early 1980s, and Nintendo, whose quest to control both video game software and hardware mimics the strategy of giant Japanese consumer electronics companies such as Sony.


Earlier this year, for example, Atari filed an antitrust lawsuit that alleged that a proprietary “lockout” chip that Nintendo installs in each game cartridge enables Nintendo to monopolize both the video game and player market because the chip is designed to prevent all but Nintendo-authorized and manufactured games from playing on the system.

Nintendo has claimed that the security chip is needed to prevent inferior, low-quality games from damaging the market, as they did in 1982. The suit is pending.

With Game Boy, Nintendo hopes to further solidify its hold on the video game market. But Nintendo has its eyes on even loftier goals for the video game market.

Last month, for example, Nintendo announced plans to jointly develop, manufacture and market a home trading system for financial services with the Boston-based financial giant, Fidelity Investments.


Nintendo hopes to sell computer modems and accessories that will enable the estimated 20 million owners of the Nintendo Home Entertainment System to access a variety of Fidelity financial services, including portfolio management, trading securities and reviewing financial market information.

“This is a significant breakthrough in the electronic delivery of financial information and services,” said Jack Chafin, a senior vice president at Fidelity. “We think this will be a vital communication link in the 1990s.”

Nintendo is also holding discussions with American Telephone & Telegraph Co. regarding a future computer network linkup that might use a home video game to retrieve information.

“One of the strategies we would hope to pursue in the coming years is to enter into a new communications business, utilizing the Nintendo system,” said Hiroshi Yamauchi, president of Nintendo’s parent company, Nintendo Co. in Kyoto, Japan, during a recent meeting with journalists. “In the past, Nintendo was . . . (a) toy manufacturer in the broadest sense. But at present, Nintendo aims to become something different. We are groping for ways no other toy manufacturer would have taken.”


Atari has been content thus far to keep its game and personal computer divisions working on separate tracks. And it scoffs at the notion that any computer game should be used to handle other computing duties such as trading stock, home budgeting or other financial transactions.

“A personal computer is the best tool to handle that sort of thing as opposed to a computer game,” said Atari’s Stringari.

But in their quest to place at least rudimentary computing power in the hands of more Americans, Atari and Nintendo are--during this Christmas season--taking the unusual approach of limiting the availability of their new portable games to create the kind of Christmas hysteria generated by the Cabbage Patch Doll in fall 1983.

“We are keeping it (production) short on purpose,” said Peter T. Main, vice president of marketing for Nintendo, which plans to ship about 1 million Game Boys to U.S. retailers, although the company says it has production capacity to make nearly 2 million units.


Ideally, Main added, “you like to have demand exceeding supply by a margin of 10% to 20%.” But, he admitted, “we could run the risk of creating an aggravation factor that could backlash on us.”

The Lynx game will also be in short supply because Atari plans to ship only 100,000 units and restrict distribution to major cities this year.

As a result, retailers are scrambling to stock their shelves with what little supplies are available.

“We could sell out the whole production” of Game Boy for this year, said Michael Goldstein, chief financial officer of Toys R Us Inc. “We believed in the item right from the start.


“Atari is not selling all over the country,” continued Goldstein. “They are only targeting certain markets. But when you have a hot product like Game Boy, the whole (video game) category does well. So we expect all of the video games to sell well this Christmas.”