According to New York's Link Resources Inc., the interactive-entertainment market is estimated to hit $12 billion in hardware and software sales this year. By 1998, it will top $24.9 billion. It's no wonder the war to produce the most engaging home video-game systems is heating up. And while much of the attention has been focused on better video, using more powerful 32-bit graphics chips, market leader Sega Enterprises Ltd. isn't ignoring another critical factor: sound.

The Redwood City (Calif.) U.S. unit of Sega recently signed a licensing agreement with QSound Labs Inc. for its "virtual audio" technology. QSound's setup uses a special digital signal processor (DSP) and software codes to reproduce sounds that can seemingly surround the player. But unlike the true surround sound effects produced by expensive home theater systems, QSound needs only two stereo speakers. So, if a monster were chasing the player's on-screen persona, the virtual audio scheme would make it sound as if the creature were right behind the player even though there are no speakers physically there.

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