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Sega downplays rumor of Dreamcast demise

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(CNN) -- Despite several published reports, Sega of America Inc. downplayed suggestions Tuesday that it will be ceasing production of its Dreamcast video game console, adding that notions the company would produce software for its competitors were also misleading.

A statement from Charles Bellfield, Sega of America's vice president of marketing and communications, said while the company has a policy of not commenting on rumors, it "has not made any statement regarding ceasing manufacturing of Dreamcast or development of other video game platforms.

"Sega of America stated today that the company globally reaffirms its commitment to Dreamcast," the statement reads. "In fact, Sega has more than 100 games worldwide coming out for the platform next year."

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A spokeswoman for Sega of America said the idea that the company would develop software for Sony Corp.'s PlayStation 2 or Microsoft Corp.'s upcoming Xbox may have arisen from a previous announcement that the company would be offering games for other platforms such as personal digital assistants (PDAs) and set-top boxes.

Originally launched in September 1999, the 128-bit Dreamcast system promised enhanced graphics and online capabilities for its users. However, since that time, Sony's PlayStation 2 console -- which was released in Japan in March and in North America in late October -- has gained a significant proportion of the market share.

Sega, the world's third-largest home video game maker, has been struggling to emerge from three straight years of red ink and battle increasing competition in the video game industry, fueled by Sony's aggressive PlayStation promotions.

Shares in Sega Corp. surged on Tuesday after a Japanese media report said the struggling game maker could soon announce a plan to supply software for its rivals.

Details of Microsoft Corp.'s new game console system, Xbox, were unveiled at the recent Consumer Electronics Show in Las Vegas. Still just a prototype, Xbox is expected to be available by fall 2001.

Nintendo will be joining the fray in late 2001 with its GameCube machine.

Reuters contributed to this report.



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