Video-game industry poised for record sales
By Theresa Howard
The holiday selling season may be humbug for toy and apparel brands, but video-game makers are shooting for what could be their best year yet.
Through November, video-game sales were up 15 percent to $7.4 billion, according to retail tracking firm NPD. But December sales, which won't be tabulated until January, are a big part of the season that accounts for up to 50 percent of annual sales. So 2002 sales could hit a record $10 billion, beating last year's $9.4 billion, industry watchers say.
The category's biggest driver: an ever-widening audience. A new generation of video-game players is joining the first generation of players, who have grown up but not out of the market.
Beyond more gamers, the category is getting a boost from lower-priced hardware, with the three major game consoles all priced under $200. Wal-Mart leads the pack on console sales, holding 18 percent of the market for Nintendo GameCube, Microsoft Xbox and Sony PlayStation 2.
Software, typically 18 months in development, then follows. Here is how video-game companies are appealing to their fans:
Is it real, or is it video? Games today have more advanced play and sophisticated looks. Gotham Games' "Operation Desert Storm" features 13 "operations missions" and a villain with an uncanny resemblance to Saddam Hussein.
"Game play is very important," said Jamie Leece, president of Gotham Games, which released "Operation Desert Storm" in October. "It's all entertainment. We're trying to suspend disbelief, and we can do that better if we're providing a full, rich, entertainment experience."
Spending more on advertising. Video-game ads easily mistaken for flashy movie commercials are all over TV. Industry advertising is up 65 percent to $282 million through September, compared with the first nine months of 2000, said ad tracker Nielsen Monitor-Plus.
"Dollars for the category are bigger than they've ever been," said Carolyn Feinstein, vice president of marketing and communications at Electronic Arts. The video-game market leader increased its advertising and marketing budget 50 percent this year. New to Electronic Arts' ad plan is an effort to advertise No. 2-selling video game, "Madden NFL 2003" on "Monday Night Football."
Building franchises. Nintendo, with more than 1,000 titles, pioneered the market with GameBoy in 1989 and Super Mario, which first appeared in arcades in 1981. The brands continue to work wonders for Nintendo, whose November business is up 11 percent compared with November 2001. "GameBoy defies every bit of logic about normal life cycles for a product," said Perrin Kaplan, Nintendo's vice president of marketing and corporate affairs. "It seems to stick."
In the National Institute on Media and the Family's seventh annual Video Game Report Card, the group gave the video-game industry its first ever failing grade. Several lawmakers, including Sen. Joseph Lieberman, D-Conn., and Rep. Betty McCollum, D-Minn., unveiled the report recently in Washington.
The institute's David Walsh said the grade "reflects the dramatic increase in violent games and, in particular, games rewarding violence against women" and the ease with which kids can obtain adult games.
Games the group says aren't suitable for kids
- "BMX XXX"
- "Grand Theft Auto: Vice City"
- "Dead to Rights"
- "Run Like Hell"
Positive games for children
- "Animal Crossing"
- "Sly Cooper and the Thievius Raccoonus"
- "Super Mario World: Super Mario Advance 2"
- "Harry Potter and the Chamber of Secrets"
- "RollerCoaster Tycoon"