Sega Games the Systems

Simon Jeffery, head of the software maker's U.S. arm, talks about the Sony PS2's staying power and where the money is in game development

In the video game industry, it's known as the transition. That's the months-long window when manufacturers Microsoft (MSFT), Nintendo (NTDOY), and Sony (SNE) launch their new breed of consoles and start phasing out the old. By now, investors know the drill: The companies will absorb big losses as they buy brand-new technologies, organize supply chains and assembly lines, and spend money on splashy ad campaigns.

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