The game industry has grown up around successive generations of hardware, like the original Nintendo game box or the Sony PlayStation. Consumers benefited since competing formats spurred the advancement of video game technology. And the companies that owned a gaming platform made money through licensing fees, which third-party game developers pay for the right to make games for the company's console.

But now this comfy arrangement is getting thrown out of whack by a new wave of emulators -- software that in effect allows one kind of machine to impersonate another. An emulator program running on a PC or Mac mimics the hardware of a video game console, video arcade machine or another computer platform, enabling the computer running the emulator to use most software designed for the emulated hardware. Most emulators are created for fun and distributed for free by their creators. But as they grow powerful, they're beginning to force a fundamental transformation in how the game business works, liberating code from its hardware shackles -- and threatening the end of the game console as we know it.

Three years ago, about when the emulation (or "emu") scene first started, emulators were quirky examples of programming coolness. Most emu developers weren't setting out to start an industry revolution -- they were just nostalgic for old hardware formats and wanted to resurrect them in software form on a modern computer. Today, almost every piece of computer hardware -- from obscure products like the Nintendo VirtualBoy, which flopped in the market, to the Palm platform -- has been emulated, or is about to be. And an expansive scene for emulators has emerged on the Net.

But in January, two events brought the console video game industry to a crossroads with the emu scene -- and the companies affected, Sony and Nintendo, didn't have much control over what happened. Connectix, a San Mateo, Calif., personal computer hardware and software company, premiered the Virtual Game Station, a commercial program that emulates the Sony PlayStation console on a Macintosh G3. Nintendo, meanwhile, faced the emergence of a free Nintendo 64 emulator, UltraHLE, on the Net. Since Nintendo 64 games come in a cartridge format (PlayStation games are on CD-ROM discs), the only way the emulator can be used is by running a "dumped" ROM (code that has been transferred from a Nintendo 64 game cartridge into software form) on it. The sudden appearance of UltraHLE has since prompted a rash of piracy throughout the Web and related newsgroups for ROMs of Nintendo 64 games.

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Sony and Nintendo responded to these events with lawsuits. Nintendo publicly stated its intent to sue the authors of UltraHLE, but has so far not followed through on the threat. Sony has been more determined in its pursuit of the authors of emulators, and has achieved a victory for now.

The company tried twice to block Connectix from selling the Virtual Game Station, and both times the U.S. District Court in San Francisco threw out Sony's claim that the emulator violates its intellectual property rights. However, in April, the court granted a preliminary injunction stopping Connectix from shipping additional copies of the Virtual Game Station after Sony persuaded the court that the emulator had been developed by copying the PlayStation's basic instruction set (a no-no under the legal definition of "reverse engineering," the technique which emulation falls under).

Connectix denies the charge and has stated its intent to fight it, while continuing to provide customer support for the Virtual Game System and developing a version of it for the PC. Sony has failed, though, to stop shipments of another commercial PlayStation emulator, Bleem, developed by three emu programmers who started a small company to sell it.

As emus become more powerful and popular, enthusiasts fear that they'll draw more negative attention and lawsuits, strangling the fledgling movement. Sony and Nintendo claim that their target isn't so much the emulators themselves as emulator-enabled piracy; but that argument holds some major inconsistencies. In fact, both Virtual Game Station and Bleem were designed to work only with legal copies of PlayStation game discs. And though Sony has been achieving financial success lately with the PlayStation -- the company's game division contributed nearly 40 percent to its overall consolidated operating profits for its last business year -- the profits have flowed mainly from licensing fees paid by third-party developers.

So wouldn't PlayStation emulators that use legal copies of PlayStation games just bolster the company's bottom line? You'd think so. But as Kazuo Hirai, president of Sony Entertainment of America, told Next Generation Online in an interview at this year's E3 in May: "It's a matter of principle to us. I don't think I would want to be ... in a position where I am profiting from sales of software to run on something that is based on copyrights and intellectual properties that are, by the way, being stepped all over! I would say, 'OK, we don't need that extra unit sale,' if that means I get to protect my copyrights."

Despite such claims, something other than copyright and intellectual property rights violations by emulators is bugging Sony and Nintendo. These companies are fighting to reinforce the boundary separating the console and computer gaming worlds.

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