My column last week on Nintendo's probable return to dominance in the video game business caused a lot of interest among gamers, who generally found me to be either an astute observer or a total idiot, and sometimes both at the same time. My mama always said I was special. In the process of praising and/or rebuking me, these readers brought to light a number of additional points that I probably should have mentioned in the earlier column. These points go even further to flesh-out the story.

First, there is the relationship between the Sony PlayStation and Nintendo. It is true that Sony originally designed the PlayStation, or some PlayStation precursor, as a custom product for Nintendo. But for some reason, Nintendo never accepted the Sony design, which then reverted to the designer. Having done the work to build a world-class video game console, Sony decided to sell the PlayStation on their own. This much is common knowledge. But why did Nintendo turn down the Sony design?

I understand Nintendo rejected Sony's design specifically because of its CD-ROM drive. Sega was already using CDs to distribute video games while Nintendo had, to that point, stuck with masked ROM cartridges. Cartridges are far faster to load than CDs, but they are also much more expensive and are severely limited compared to CDs in the amount of data they can hold. For this latter reason, a high-performance video game console of four to five years ago that used cartridges rather than CDs would have used a very different approach to software. The games had to be very different on the inside. So Nintendo's decision to stick with cartridges was, at the same time, a decision not to go with the Sony design. They couldn't just stick a cartridge adapter on the Sony machine.

The deeper question is why Nintendo chose to stick with cartridges. Only the folks at Nintendo's intergalactic HQ in Kyoto know for sure, but my guess is the design had mainly to do with internal Nintendo politics. It didn't make outward sense from an economic or game standpoint, so it must have had to do with the overriding politics of Nintendo and its cartridge suppliers.

The answer comes down to how Nintendo ran (and probably still runs) its distribution system in Japan. The system dates from Nintendo's days as a card game company, and in it, the wealth creation was tied to people at various levels in the complex system of middlemen buying more product than they could legitimately use. If people wanted to stay in the scheme and be assured of getting the good, saleable product, they had to put up with being stuck with less-desirable goods as well.

Nintendo charged its developers and game publishers for inventory that might never sell to an end-user. Nintendo made their profit margin on every piece delivered, rather than on each piece sold at retail. No returns were allowed. And since masked ROMs had long manufacturing lead times and assembly caused delays, developers and publishers were encouraged to buy lots of cartridges lest they be stuck without stock if the game became a big hit. For Nintendo, the game was already a hit if an optimistic publisher could be persuaded to buy lots of cartridges. Except for the biggest of blockbuster hit games, it didn't matter to Nintendo's accounting department whether the game was good or not, or whether customers even bought it.

So Nintendo was tough on their partners, but they were the only game in town until Sony came along. Sony had a more streamlined distribution system and publishers could buy CD-ROMs at low manufactured prices, with short delivery times. Sony likened their game discs to hamburgers: "Cheap, fast and hot," Sony's Teruhisa Tokunaka said, characterizing the difference between CD-ROM and ROM cartridge game distribution.

That's how Sony stole game developers from Nintendo for the original PlayStation. Nintendo learned a lesson there. The upcoming GameCube does not use masked ROM cartridges. Instead its games are delivered on proprietary mini-DVDs. This medium has the quick manufacturing of CDs, yet retains Nintendo's grip on the supply chain. It looks to be a successful compromise.

While Nintendo clearly lost out to Sony on the PlayStation 1, as detailed in last week's column, Sony is having a hard time keeping developers and gamers alike on its PlayStation 2. Games — megahit games that are the killer apps of the video game biz — now cost tens of millions of dollars to produce. Sony's decision to promote the PS-2 platform, rather than the games that ran on that platform, was viewed by many game developers as a betrayal. But the situation was made even worse by last Christmas's shortage of PS-2s. Some of my savvier (or more cynical) readers think the PS-2 drought was created by Sony specifically to create greater demand for PS-2 machines by restricting the supply. Nintendo has been accused in the past of using similar methods. Sony's fear, in the minds of these readers — remember, this is their theory, not mine — was that gamers would drop the PS-2 when they realized that there simply weren't many (some say "any") good games available on the system. I'm not sure I buy this theory, but it is interesting and would make a good plot twist for somebody's novel.

The reason there weren't many good PS-2 games comes down to developers feeling alienated by Sony, games being so expensive to write that companies were doing fewer, bigger, games, and difficulties programming the PS-2. Specifically, the PS-2 vector unit (the Emotion Engine) is difficult to program, while the GameCube and Xbox have simpler implementations. This vector problem represents additional time, cost, and risk in developing for the PS-2.

By the way, if there is a clear winner in this looming Sony-Nintendo-Xbox battle, it is Motorola. Moto's Metrowerks subsidiary makes the Code Warrior software development tools for both Sony and Nintendo and probably for Xbox, too, though there has been no announcement to that effect.

But the most compelling thought raised this week by readers had less to do with any of these games platforms than with the trajectory of the game industry as a whole. Games just aren't as compelling as they used to be, and that could lead to a big problem.

"I think the biggest issue is not who will win the next generation consolewar, but will the 2001 or 2002 be 1984 all over again," wrote one particularly persuasive reader. For those who don't remember, 1984 was when Atari, the industry leader in gaming, went almost overnight from $2 billion in sales to near-bankruptcy.

"The problem with the Atari 2600 was that there were too many games, and too many not fun games," my reader continued. "People got tired of spending lots of money on a console and a couple games that weren't fun and they never played."

"This is happening right now with everybody I've ever talked to who has a Playstation 2. It'll be the same with the Xbox. The crash of '84 caught the game industry by surprise. Sony limited supply, which prevented a crash, but when the Xbox is out, the market will be flooded with big companies competing with each other based on quantity rather than quality. A lot of big companies in the game industry (or Interactive Entertainment as they'll call themselves) are going to lose a LOT of money in the next two years."

Uh-oh.