Posted on: Monday, December 9, 2002
Santa's toting video games, not toys
By William Selway
Bloomberg News Service
SAN FRANCISCO — Video games such as Electronic Arts Inc.'s "Madden NFL 2003" interactive football software are a bright spot in what some retailers see shaping up as an otherwise drab holiday season for toymakers.
Shoppers may spend $2.8 billion on games in November and December, a third more than last year, according to Wedbush Morgan Securities.
Hundreds of new titles are being released for Sony Corp.'s PlayStation 2, Microsoft Corp.'s Xbox and Nintendo Co.'s GameCube.
The companies are cashing in as teens and young adults shift from traditional toys to interactive games.
"Video games are at the top of his list," said Latham Williams, referring to her 12-year-old son, Powen, at a Sony game store. "He'd rather do this than just about anything else."
Mattel Inc. and Hasbro Inc. are counting on old favorites to spice demand, such as Barbie in Rapunzel guise and toys tied to the latest Harry Potter movie. The lack of such blockbuster hits as Tickle Me Elmo characters or Pokemon cards will keep toy sales from topping last year's $25 billion, according to research firm NPD Group.
Consumers concerned about their jobs are unlikely to splurge on toys, say analysts who predict weak sales. U.S. households will spend $1,625 on average over the holidays, about the same as a year ago, according to consultant Deloitte & Touche.
Video-game makers tend to prosper when the economy weakens because people spend more time at home, toymakers and analysts say.
"In poor economic times, the video-game industry has done exceptionally well," said Robert Kotick, chief executive of Activision Inc., which produces "Spider-Man" and the "Tony Hawk Pro Skater" series.
"We're expecting a record year for the video-game industry."
Lower prices and better planning among console makers may boost demand. Last year, Microsoft's Xbox and Nintendo's GameCube weren't released in the United States until a month before Christmas.
Yoichi Wada, the president of Tokyo-based Square Co., is "definitely expecting a sales growth in the U.S.," compared with the previous year's shopping season. For the year ending in March, the company that makes the "Final Fantasy" role-playing game series has raised its sales forecast by a third.
Capcom Co., maker of the "Resident Evil" series of action shooting games, forecast sales to rise 34 percent in the United States and Europe in the fiscal year.
Shares in Konami Co., maker of the "Metal Gear Solid 2" espionage video game and "Yu-Gi-Oh!" cards, rallied 19 percent in the past two weeks.
Take-Two Interactive Software Inc.'s "Grand Theft Auto 3," which deals with car-jacking, has been the year's best selling game.
At the Sony store in downtown San Francisco, Mike Croke, 38, spent $100 on Electronic Arts' "Lord of the Rings" and Eidos Plc's "Hitman 2: Silent Assassin."
He didn't blink at the cost, saying the entertainment provided by the games was cheaper than a night on the town back home in Los Angeles.
"I could spend $100 in a bar in a couple of hours," Croke said.
"This is a bargain."
