Console Makers Plan to Show They’ve Got Game
Every year, the video game industry struggles to overtake Hollywood box-office revenue as it seeks the same respect and credibility afforded the movie business. And every year, it falls short.
As the industry gathers this week in Los Angeles for the annual Electronics Entertainment Expo, the question is whether this year will be any different. Probably not, but 2001 probably will be a pivotal year as powerful new consoles supported by $1 billion in advertising aim to take the $6-billion video game industry into the mainstream.
Microsoft Corp. and Nintendo Co. both plan to introduce new game consoles this fall to compete with Sony Corp.’s PlayStation 2. These machines differ from their predecessors in that they offer more vibrant graphics and faster game play. The Microsoft and Sony boxes also have the potential to play DVD movies and connect to the Internet, making them far more versatile than consoles of the past.
That power and versatility are fueling a push to break the traditional mold of games designed for teenage boys and go after a much wider audience--people who don’t consider themselves “gamers” but play simple games such as solitaire on their personal computers or backgammon on their Palms.
“People who have never played games will now try them because they’re going to look like things they see on TV or film,” said Don Mattrick, president of worldwide studios for Electronic Arts Inc., the world’s largest independent game publisher. “It’s going to make games a lot more . . . accessible to people.”
Already, an estimated 168 million Americans--or almost 60%--play games, according to the Interactive Digital Software Assn., an industry group based in Washington. The problem for the industry is that many of these people play free games such as online spades.
And in 2000, video game sales actually fell. The industry pulled in $6 billion in U.S. software sales in 2000, down 5% from 1999. That compares with $7.7 billion in movie theater revenue in 2000. Despite Sony’s launch of PlayStation 2 last October, software sales lagged and consumers held back spending to see what Microsoft and Nintendo have to offer. Sales were further dampened by production problems that forced Sony to scale back its North American distribution.
In all, 2000 was a “transition year,” an industry euphemism for the drop in sales that inevitably comes when last-generation consoles have lost momentum and next-generation consoles are just beginning to take off.
But there are signs that sales are picking up. In the first three months of this year, console sales grew 146% in dollar terms over the same period last year--from $190 million to $467 million, according to the NPD Group Inc., a research firm in Port Washington, N.Y.
Much of the increase was due to sales of PlayStation 2, which has become increasingly abundant. Combined with the 1.3 million consoles sold last year, Sony shipped a total of 3 million consoles in the U.S. by the end of March. Part of the pull for consumers was the ability of the PS2 to play DVD movies. Sony is also positioning its box to become the entertainment hub for all forms of digital entertainment by introducing a modem and hard drive later this year.
This type of convergence is gradually pushing video games into popular culture. The lines are blurring between games and cinema, for example. Movies, including the upcoming “Final Fantasy” and “Tomb Raider,” are increasingly derived from popular video games. And games themselves are becoming more cinematic, thanks to the sheer computing power packed into new game consoles and everyday PCs.
Still, games are not a slam dunk for everyone. For one thing, traditional games tend to draw a largely male crowd. Part of the reason is that men design most games, said Jennifer Pahlka, publisher of the Game Developer magazine and executive director of the International Game Development Assn. in San Francisco.
“Only about 10% of front-line developers are women,” Pahlka said. “To draw in a more diverse audience, we’ll need to recruit a lot more women into the industry.”
Another challenge is developing a viable business selling online games. Game publishers agree that consumers want to play games online. Console makers are counting on it as they incorporate modems and hard drives into their designs with the express intent of allowing online games. But with online advertising in the doldrums, the industry must somehow find ways of getting consumers to pay.
“There’s a period of turmoil for online games that will continue for some time,” said Simon Jeffery, president of LucasArts Entertainment Co. in San Rafael, Calif. “Sure, there are millions of casual online gamers, but they are used to having free games. It’s going to be hard for them to make the transition to pay for that.”
Spurring consumer interest in games, however, will be a full frontal assault by console manufacturers to sell their boxes this year. Microsoft, which is launching its Xbox console this year, will spend $500 million over 18 months in advertising and marketing. Nintendo, which will come out with its Gamecube console in November, and Sony are expected to toss in several hundred million dollars to promote their products as well.
How much hype will that kind of money buy? In comparison, Microsoft spent $200 million in television and print advertising six years ago when it introduced its Windows 95 operating system, its biggest single-product introduction to date. That included the rights to use the Rolling Stone’s hit song, “Start Me Up.” In 2000, Microsoft spent close to $200 million to market and advertise its MSN Online service. In 1999, the most recent year available, Advertising Age magazine set Microsoft’s total advertising at about $250 million.
“All this marketing money is going to generate a great deal of buzz around our industry, “ said Doug Lowenstein, president of the IDSA industry group. “People are going to hear a lot about us, and that will generate tremendous curiosity. This business is no longer going to be in the backwater. It’s going to be front and center.”
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Times staff writer Greg Johnson contributed to this report.
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A Game Effort
Top-selling games on consoles tend to be geared toward children. PC games such as “Diablo II” appeal to older players.
Movies vs. Games
Movie revenue in 2000: $7.7 billion
Computer/video game revenue in 2000: $6.0 billion
Top Games in 2000
PC Games
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Title Publisher The Sims Electronic Arts Who Wants to Be a Millionaire Disney Interactive Roller Coaster Tycoon Hasbro Interactive Diablo 2 Blizzard Who Wants to Be a Millionaire 2 Disney Interactive The Sims Livin’ Large Electronic Arts
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Console Games
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Title Platform Publisher Pokemon Silver Game Boy Color Nintendo Pokemon Gold Game Boy Color Nintendo Pokemon Stadium Nintendo 64 Nintendo Pokemon Yellow Game Boy Color Nintendo Tony Hawks Pro Skater 2 Sony PlayStation Activision Legend of Zelda: Majora’s Mask Nintendo 64 Nintendo
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Sources: NPD Interactive Entertainment Software Service, National Assn. of Theatre Owners
Video Game Show E3 to Kick Off
The Electronic Entertainment Expo is the video game industry’s equivalent of the Cannes Film Festival--an annual bash where publishers and developers hawk their wares.
The show, which begins Thursday at the Los Angeles Convention Center, is closed to the public. E3 offers retailers and industry analysts a close-up look at coming hardware and software.
