"Nintendo is enlisting help from IBM and the consumer electronics giant Matsushita to create technology for its next-generation video game player, which will be packed with greater computing power to deliver crisper and more animated graphics.

The deal announced this week follows similar deals among other game makers in recent months as the industry moves toward adding more functions to the game players such as Internet hookups and improved sound.

"The gaming machine is no longer going to be just a gaming machine," said Ryan Brock, an analyst at Access Media International in New York. "Nintendo and others are creating platforms that will allow Internet access, information to be stored and maybe even word processing."

Under the new alliance, IBM will make a custom computer chip for Nintendo's new console based on its Power PC Processor, which is currently used to power Apple's Macintosh computers.

The pact between IBM and Nintendo is valued at about $1 Billion US. The companies also plan to explore the use of IBM technology in other Nintendo products as well.

The new model, which the company is calling the Dolphin, would supersede the current top-line offering from the Japanese company, the Nintendo 64.

Japan's Matsushita, the world's largest maker of consumer electronics with brands such as Panasonic and Quasar, will make digital video disc drives for the new Nintendo game machine.

The DVD format is new for Nintendo, which used previous versions of its game players. The cartridges which are more expensive than CD-ROMS or DVDs, were a major reason why many game developers have abandoned Nintendo in recent years.

The companies did not release the financial terms of Nintendo's arrangement with Matsushita.

The new Nintendo system is expected to go on sale in the U.S., Canada and around the world at the end of 2000 in time for the holiday shopping season. The company did not release the anticipated retail price of the player.

Nintendo's alliance with IBM and Matsushita marks the latest example of a gaming company linking with technology firms to build a high-powered video system. Sony Corp. is aligned with Toshiba Corp. and Sega Enterprises Ltd. is working with Microsoft Corp.

Nintendo became the last of the three major video-game companies to unveil plans for its next-generation system. Sega already released its new Dreamcast player in Japan and plans a U.S. launch in September, while Sony is expected to release its Playstation II in Japan this year and in the United States by Christmas 2000.