In Mortal Kombat for Video Game Crown : Entertainment: Nintendo officials are likely to find out next week that holiday sales have given the title to rival Sega.

By LESLIE HELM

Jan. 4, 1994 12 AM PT

TIMES STAFF WRITER

REDMOND, Wash. — “I’m in the second dungeon of (The Legend of Zelda) Links Awakening,” says a young man putting a call into the game counseling center at Nintendo’s U.S. headquarters here. “I’ve just had the dog eat the flowers so I could get in the dungeon. But I’ve used up my keys, so I can’t get in the next one.”

Tom Kristensen, one of 300 game counselors spending the week frantically trying to respond to the post-Christmas rush of questions from new customers, taps into his computer and comes up with this advice: “You have to beat the skeletons to get another key. Stab them from behind. Get behind him and be quick.”

As people across America try their hand at outsmarting the latest electronic demons given to them for the holidays, Nintendo has just completed “Hell Week.” The company may have answered as many as 200,000 customer calls in the week between Christmas and New Year’s Day.

But next week may be another hell week for Nintendo, for a different reason: Executives here are anxiously awaiting the final release of holiday sales numbers--and things aren’t expected to look very good. This past holiday season is likely to be remembered as the one when rival Sega Entertainment overtook Nintendo as the king of the video game business.

“Sega is dominating the business . . . with a more hip image,” says Lee Isgur, analyst at Volpe Welty & Co. He expects Sega to show sales to customers of as many as 6 million units of its 16-bit Genesis machine in 1993, compared to 5 million to 5.5 million of Nintendo’s equivalent machine. Isgur and other analysts suggest Nintendo’s share of machines and software cartridges for the 16-bit market has slid from 55% at the beginning of 1993 to about 45% today--making Sega the consensus choice to emerge as market leader this year. “If I were Nintendo, I would be worried.”

Nintendo still hopes to show it has defended its overall market share crown for 1993. The company’s portable game machine, Game Boy, outsold Sega’s portable. And Nintendo still has strong sales of the slower 8-bit game machines. Sega has no equivalent machine.

But video game sales are driven by the fast machines, and here Nintendo’s setback could have long-term consequences. Fewer game console sales today mean loss of momentum and fewer future sales of the far more profitable cartridge games.

One particularly painful blow was inflicted when Mortal Kombat, a top-selling street-fighting game released in September, became an overwhelming favorite on the Sega machine. Nintendo’s version cut out a final scene that shows the victor tearing his victim’s heart out. Sega’s version, which left the scene in, became a must-have among teen-agers.

Nintendo is hopeful that its decision to cut violence from its games, while painful in the short term, will win over parents and improve its market position over the long run.

“If you look at the focus groups, Nintendo kids are good kids,” says Perrin Kaplan, a spokeswoman for Nintendo.

“Sega kids are irreverent. They have an attitude,” she says, calling Nintendo’s way the “Disney approach.”

Don’t count on it. One of the most pressing questions on Nintendo’s hot line comes from kids who want to know the “blood code” for Mortal Kombat. There are rumors circulating that by punching in a secret code, the bloody last scene will magically reappear. The kids are invariably disappointed to discover there is no such code.

In a computer discussion group over the Internet network recently, Nintendo fans suggested a boycott and letter-writing campaign to protest Nintendo’s censorship of its games.

The full scale of Sega’s rout of Nintendo is still unclear. Paul Rioux, executive vice president at Sega of America, says there was a last-minute spurt in sales of its CD-ROM attachment to its Genesis machine, which allows inclusion of real film footage in games. Rioux says there are now close to 1 million Sega CD-ROM machines in homes, a critical number because most software developers don’t want to develop games for a new system until there are at least that many machines in use.

Nintendo has no comparable product to show and is asking impatient Nintendo fans who call in on the hot line to wait until Nintendo has its own, more powerful product available toward the end of 1995.

Nintendo’s one consolation has been its strength in the portable game market. But even here, Sega has been making strong inroads, selling 2 million of its more elegant color machines.

Although Nintendo may sell twice as many, it doesn’t earn much more in dollar sales, because its portables are far cheaper.

But don’t cry for Nintendo. With Sega, it continues to dominate a video game market that already accounts for a quarter of all toys sold and is growing at 10% to 15% a year, more than double the growth of the overall toy industry, according to Ed Roth, vice president for toy services at NPD Group, a marketing consultant.

According to some market reports, half of all U.S. homes now own either a Nintendo or Sega game system. Powerful new video machines such as Atari’s Jaguar and one from start-up 3DO have captured media attention, but they’ve hardly put a dent in the market.

And a day at Nintendo’s game counseling center shows that while Nintendo may be losing market share, it still has a large and loyal following.

At 5 a.m., a woman calls, asking for a tip that will help her husband master a video game so he will finally come to bed. A fishing crew off the coast of Alaska uses their radio phone to put in an urgent call for help on a new game. A mother locks herself in a laundry room to get some quiet away from her kids while she dials for help.

During “Hell Week,” game counselors put in long hours answering as many as 250 calls a day. But most seem to enjoy the work, and that helps maintain Nintendo’s image for good customer service.

Sporting long hair, jeans and sneakers and with their leather jackets thrown over the backs of their chairs, game counselors play the latest Nintendo video games while answering caller questions through their headsets.

Melvin Forrest, 22, has been at the job for three years and still can’t believe his luck. He was manager at a fast-food restaurant three years ago when he entered a Nintendo video game contest. He made it to the finals, where his opponent was a 7-year-old video game whiz.

“He got the trip to Disneyland in Florida,” Forrest said, chuckling. “I got this job.”

He recently traveled to India, where he lived until age 6, to meet the family of a woman his parents have arranged for him to marry. “When they asked me what I do, they couldn’t believe I get paid to play video games all day.”

The job isn’t all fun. Mark Coates, a veteran game counselor, says there is an art to satisfying the caller’s curiosity without ruining the challenge.

“Kids want to get through the game as fast as possible. We try to just give them tips,” says Coates. “Otherwise they don’t get the full value of the game. Where you should get 100 hours of playing time you might only get half an hour.” Parents have complained in the past that their children master the games too quickly, squandering a $50 investment.

The Video Game Market

Although Nintendo still leads the U.S. video game market, Sega has gained substantial market share and now leads Nintendo in the critical 16-bit segments. Some analysts project Sega will capture the overall game makret lead in 1994. 1991 Share

Nintendo: 76%

Sega: 17%

Other: 7% 1993 Share

Nintendo: 57%

Sega: 42%

Other: 1% Note: Shares based on overall game market revenue. Source: Gerard Klauer Mattison Researched by ADAM S. BAUMAN / Los Angeles Times Times staff writer Brian Ray Ballou contributed to this report.