Now let the games begin

As Microsoft enters the video games market with its X-box, Sally Chatterton looks at rival products and asks, will it be up to the struggle ahead?

Pass any computer games shop at the moment and you'll find the gamers there in a state of wide-eyed and delirious ecstasy, for 2002 is proving to be a vintage year for button mashers.

This Thursday, Microsoft's X-box, the most powerful console yet, launches in the UK. In two months' time, the veteran of video-gaming, Nintendo, launches its first new console (not counting the handheld Gameboy incarnations) in five years. And, last weekend, one of the fastest-selling video-games, Metal Gear Solid 2 – an exclusive title for the Sony PlayStation 2, or PS2 – was released in the UK. Its launch was delayed over here to coincide with the X-box release but, in the US, it generated nearly $19m worth of sales in the first week alone.

With figures like that being bandied about, and bearing in mind that this is an industry worth over £11bn a year globally, it's little wonder that Bill Gates decided it was time for his company to have a pop at the video-game game.

Microsoft's decision to play the games market was initially treated with a degree of healthy scepticism. After all, it is a software company, not a hardware one; software is cheap to make in multiple copies, while hardware is a loss-maker. And, with Sony ruling the roost with its PS2 and Nintendo, in a very comfortable second position thanks to the brute force of its users' brand loyalty, surely there was no room for another contender?

But only seven years ago, Sega and Nintendo ruled the pixelated world. Sony then carried out a similarly impudent foray with its first console, the PlayStation, to similar gloomy sounds. But 1995 saw computer games redefined. Anorak ownership was no longer a prerequisite for a console owner. Gaming became cool, stylish even, with titles such as Wipeout, Tomb Raider and the original Metal Gear Solid.

Much as Microsoft does now, Sony had the money to make mistakes and learn from them. Slowly but surely, Sega was edged out of the picture and, with the PS2 launch just over a year ago, Sony has tightened its grip on gamers' cash the world over.

For the moment, it isn't going to be easy for Microsoft. Sony has sold 20 million consoles worldwide, and currently dominates the marketplace. Everyone, even grannies, have heard of the PlayStation. As Peter Molyneux, a computer-games developer at Lionhead Studios and recognised as one of the most innovative developers at work in Britain today, puts it: "The PlayStation has become playground-speak and beating that will be quite a challenge for Microsoft." Competition, however, particularly within the technology industry, can only ever be a good thing; Gates's intervention should be welcomed because Sony's predominance always carried the danger that it might become complacent in its mastery of its universe.

But, faced with the choice of three next-generation consoles – each with at least one exclusive, must-have title – how do you decide which one to buy? Sure, any gamer worth their thumb blisters wouldn't have this dilemma. They'd buy them all. But if you can only have one?

Ultimately, the kind of game you want to play dictates the kind of console you buy: if you want cartoon-style wit and innovation or a box for the kids, pick Nintendo. If you're after the more visceral thrill of the more powerful shooting and fighting games, you're left with the choice between the X-box and PS2. For the moment at least, the PS2 is your safest option. So buy it now, and start saving for the others. At £199, Sony's machine is £100 (that's three games) cheaper than Microsoft's £299 and, since November 2000, has built up an impressive portfolio of titles. That temptress Lara is about to leap into the PS2 saddle, there's Metal Gear Solid 2, Grand Theft Auto 2, and, if it's left-field Nintendo-style creativity you're after, Herdy Gerdy is extraordinarily good. The machine is also backwards compatible – all PlayStation 1 games can be played on it – and you get a DVD player, too.

Also, games developers finally have mastered the tricky architecture of the machine, so the games are becoming more sophisticated, and the huge take-up makes third-party developers and publishers confident in its future. This, in turn, means a greater variety of titles on offer and exclusive software deals to reel in the punters. Admittedly, there's a lot of rubbish around (franchises, pointless sequels, film tie-ins) but those are alleviated by the quality of the good stuff.

Although Microsoft's hulking black and green box has brute force on its side, with a processor nominally twice as powerful as the PS2 and a hard disk as well, the key question is, does it have the software to harness that power? The answer is, not yet. But the first-person shoot-'em-up Halo is, for some, worth the hefty price of the console alone. Halo, however, stands head and shoulders above the other launch titles. Oddworld, an intriguing platform adventure from Lorne Lanning, is the only other release to genuinely surprise. Otherwise, the launch package consists of some very good-looking versions of games we've already seen elsewhere; Microsoft, never short of a marketing phrase, calls them "definitive" versions.

Nor does the X-box come with DVD playback, and this will be a key factor for some. You have to buy a separate £20 remote control – rather cheeky, given that you've just shelled out £299. Still, the first year in any console's life is never truly exciting, and the power in the box should eventually make for some stunning and more realistic gameplay.

Nintendo, although somewhat sidelined in the next-generation console play-offs, will continue to be a force to be reckoned with. The creator of Mario, the now instantly recognisable cartoon plumber, has a huge and devoted following, thanks to the quality and exclusivity of its titles. Shigeru Miyamoto, arguably the greatest-ever developer and creator of such timeless greats as Mario and Zelda, works for Nintendo at its Kyoto offices. And the GameCube launch brings a typically idiosyncratic bunch of games, including Luigi's Mansion and the quirky Pikmin. Nintendo also has managed to secure rights to further development of the Resident Evil series. So, although it may not be the next-generation console of choice for the first-person shoot-'em-up fan, families will head straight for it and it should be every discerning gamer's second purchase.

So, in the short term, Sony is safe from the X-box; it's unreasonable to expect Microsoft to catch a rival with seven years' lead immediately. As Joao Diniz-Sanchez, editor of Britain's leading gaming magazine, Edge, advises, "Gates needs to establish the X-box brand first and think about taking over the world second... Things should be a lot closer in the next hardware round." That's expected in about four years. But the X-box's power has obviously unsettled Sony – there is talk already of the PS3.

Molyneux predicts the X-box could have the long-term edge over its rivals because it is so easy for developers to write games for; in effect, it's a cut-down PC with a great graphics card and PCs are a platform that games companies are used to. And it's the games that count. But even the medium-term outlook for the X-box isn't so rosy. If there isn't enough take-up, developers and publishers will remain cautious about committing time and resources. More worrying, the second wave of games recently released in the US hasn't exactly garnered glowing reports. Some games are reportedly dreadful.

Diniz-Sanchez says that the market to watch is Japan. If the X-box fails there and Japanese developers stop their support of Bill Gates's machine, the future might not belong to Microsoft: "No console would survive in the current video-game environment without Japanese-produced software," he says. And, according to an industry insider, second-hand X-box hardware is already selling at a discount in Akihabara, the electric city that is Tokyo's electronics and gaming district.

But don't expect immediate casualties. All the players have too much money to spend and are concentrating on the long-term. If the X-box fails to take off in Japan, Microsoft will just have to hope that there is a healthy enough market in the West to sustain it.