VIDEO VISION : GAMES TO TAKE LEAD AT E3 SHOW.

Byline: Russ Britt Daily News Staff Writer

First there was ``virtual reality.'' Now there's ``reality immersion.''

That's the catch phrase Nintendo of America Inc. and Silicon Graphics Inc. hope to cast upon the world with the new N64 home game machine, designed to be twice as powerful as its most sophisticated competitors.

The overalls-clad hero in Super Mario Bros., which used to run along in a straight line and jump on occasion, now can do double back flips and headstands in a three-dimensional setting.

``This unquestionably is the single-biggest product launch in the history of Nintendo,'' said Peter Main, executive vice president for sales and marketing. ``We think we've got a platform here that will take us into the next century.''

Nintendo's new N64, scheduled to hit U.S. stores in September at $249.95, is the company's response to last year's machines announced by competitors Sony Computer Entertainment and Sega of America.

``It's not too late for Nintendo,'' said Cyrille Baudin, editor of Ultra Player, a Paris-based video game industry magazine. ``The machine is really good and the price is smaller.''

But Nintendo faces a bigger challenge on the Internet. On-line gaming is expected to steal the show at the video game industry's largest convention, the Electronic Entertainment Expo or E3, which will open today in downtown.

On-line games present a significant advantage for consumers because they can play opponents at other locations via the Internet or other networking tools. Five percent of the products premiering at the show will be devoted to on-line games, and major and minor software makers are gearing up to start developing new products.

``Like everyone else in the industry we have an Internet strategy, but we can't say what it will be yet,'' said Howard Lincoln, president of Nintendo of America.

Nintendo teamed with Silicon Graphics - maker of workstation computers used by engineers, Hollywood designers and graphics professionals - in 1993 to produce the new machine. The companies had hoped initially to bring it to market last year but were delayed by technical difficulties.

Compared with Sony's Playstation and Sega's Saturn - both 32-bit machines - the N64 gives three-dimensional action, requires no waiting during the game for software to load and has improved graphics, Nintendo officials said. It also allows players to adjust their viewing angle, offering perspectives from the back, sides, the front or even overhead.

It also is slightly less expensive than the Playstation, which retails for $299 and is outselling the Saturn by three to one. The N64, however, does not come equipped with a controller at its $249.95 price - that is an extra $29.95.

Sony officials feel they have an advantage because they will have a year's jump on Nintendo in the marketplace. Sony has sold 1.2 million machines in North America, compared with roughly 400,000 for the Saturn.

Sony has muscled its way into an industry where it had no presence a year ago, capturing 24 percent of the overall game market. In 32-bit machines, it has 72 percent of the market, said Jim Whims, executive vice president for Sony Computer Entertainment.

``What we're going to talk about is our leadership position in the marketplace,'' Whims said. ``We've got a great success story to talk about.''

The home video game wars again are figuring prominently at E3. Sony, Nintendo and Sega all have rented out the largest amount of space next to each other in one of five Los Angeles Convention Center halls.

In massive booths resembling large video arcades, the three companies are occupying roughly half the floor space in the center's newly constructed south hall. There are 400 exhibitors at the show overall, unveiling 1,700 new software titles.

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2 Photos

Photo: (1--Color) Workers place the finishing touches on sets at the Entertainment expo, which will open today in downtown Los Angeles.

(2--Color) Shigeru Miyamoto, designer of the Mario Bros. video game, displays the new Nintendo N64 game station Wednesday.

Myung J. Chun/Daily News