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It's a typical grind-it-out afternoon in Haneda, a drab industrial district on the southwest rim of Tokyo Bay. Gray, methodical, efficient. But step inside a nondescript eight-story building on the main road, and you're plunged into a frenzied milieu of colors and sounds: the headquarters of video-game powerhouse Sega Enterprises Ltd. Visitors from France gawk at a big-screen display of animated martial-arts experts facing off before a blazing sunset. Four stories up, young game creators in T-shirts peck away at Silicon Graphics Inc. workstations, putting semihuman figures through movements that defy gravity and logic.

Sega has built a $4 billion company on escapism. But suddenly, it needs to engineer an escape of its own. After three years in which it increased revenues fivefold and profits sixfold and wrested gobs of market share from Nintendo Co., this spinner of video fantasy is tasting reality. Thanks mainly to a bloody price war with Nintendo in Europe, Sega's profits may plunge 63% in the current fiscal year ending Mar. 31, according to new estimates by Goldman, Sachs & Co. For the coming year, excessive inventories should permit a 52% rebound at best. The current generation of video games is losing steam, it seems: Many customers are waiting for new machines due late this year or in 1995.