A project within Microsoft's Xbox division aimed at creating arcade systems based on the console's hardware is coming close to bearing its first fruit, according to reports from sources familiar with the plan.
Code-named "Chihiro" (after the young heroine of celebrated director Hayao Miyazaki's Oscar-nominated animated film Spirited Away, fact fans), the project is being worked on in collaboration with Sega, and Microsoft will be hoping that Sega will replace its current Naomi arcade systems (which use a powerful variant of Dreamcast technology) with the new Xbox-based boards.
This would not only give Microsoft's console a certain extra degree of credibility, but would also mean that the home system benefited from easy ports of hit arcade titles using the Xbox-based hardware.
Microsoft is somewhat late to this party, however, as both Sony and Nintendo are already well advanced in plans to create arcade machines based on their console hardware. The System 22 board, based on PlayStation 2 hardware, can already be found in many Japanese arcades, while Nintendo's high profile "Triforce" system, based on GameCube hardware, has the backing of arcade giant Namco. Sega is also working on Triforce titles.
Although the arcade market is certainly in decline, even in its traditional homeland of the Far East, many of the biggest titles of the last few years have been arcade ports - and several hotly anticipated titles such as Soul Calibur 2 are already available on arcade boards. There are also hints that the rise of online gaming may help to boost the profile of arcades, as the cabinets in them move increasingly away from being standalone machines and towards being networked devices.