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While Sega of America reviews agencies for its $25 million ad account, industry analysts say the company's days as a videogame hardware manufacturer may be numbered.

Although Sega remains a respected software brand among game players-especially for its hit video arcade titles-sales of its Sega Saturn hardware unit have stagnated and its market share has fallen to less than 15% of the estimated $2 billion market for high-speed videogame machines.

Rival Sony of America's hot-selling Sony PlayStation now accounts for an estimated 45% share of videogame machine sales, while Nintendo of America claims a 40% share with its popular N64 system, whose sales are accelerating.


"The Sega Saturn machine is no longer considered to be cool, but the brand has great name recognition and a good reputation for developing software," said Sean McGowan, an industry analyst for Gerard Klauer Mattison.

Rumors about high turnover at Sega and an exodus of talented software developers are also hurting, say industry insiders. Sega would not comment on its hardware plans or agency review.

At least nine agencies are vying for Sega's account, to be decided by the end of April, according to Mike Agate, president of Select Resources International, West Hollywood, Calif., which is conducting the search.

Contenders include BBDO Worldwide, Los Angeles; Butler, Shine & Stern, Sausalito; Fattal & Collins, Marina Del Rey; and Leap Partnership, Santa Monica. San Francisco shops Foote, Cone & Belding, Goldberg Moser O'Neill, McCann-Erickson Worldwide, Saatchi & Saatchi Advertising and Y&R Advertising are said to be in. Incumbent Ingalls Moranville de-clined to participate.

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