GAME REBOUND

DAN ALAIMO

As the Sony PlayStation and Nintendo 64 video game formats reach maturity, retailers are seeing a resurgence in rentals, according to participants in SN's sixth annual state-of-the-industry video roundtable.

Game rentals of these two systems are strong and, in some cases, the retailers continue to see movement on the older 16-bit game systems, Sega Genesis and Super Nintendo. "Nintendo 64 and PlayStation are doing the best, but we are still renting the older 16-bit," said Brenda Vanover, video coordinator/merchandiser at K-VA-T Food Stores, Grundy, Va.

Other participants in the roundtable, which was conducted by phone, were: Brad Ufer, video merchandiser at Coborn's, St. Cloud, Minn.; Greg Rediske, president of Video Management Co., Tacoma, Wash.; Gary Schloss, vice president for general merchandise at Carr Gottstein Foods, Anchorage, Alaska; and Kirk Mueldener, director of video operations for Hy-Vee, West Des Moines, Iowa.

In talking about other entertainment software products besides video, the retailers reported mixed results with computer software, music and audio books. Here's how the conversations went:

SN: How are other entertainment software products, such as video games, computer software, audio books and music, going for you?

MUELDENER: Video games are coming back -- slightly. But we are facing a shrinkage problem there too, even on the rental side of the games. We will probably never, at least under my watch, venture back into selling games because of the shrink issue and because of the price protection that we aren't afforded while a lot of mass merchants are. So it's merchandising problems, rental theft, cost of games, availability.

We tried selling low-priced video games, but they just didn't pan out. We had a pre-viewed games supplier, but we had a lot of trouble with them rotating the leftover stock. We also had problems with them trying to retail out items that shouldn't be retailed at the costs they have. On top of that there was the theft problem.

On computer software, we tried some of the Disney software from this department. There were always the theft concerns and we eventually got out of it. We just didn't see much point in 10% sell-off. We've also tried shareware and got out of that, too. Basically, in this department, I've gotten out of everything but video sell-through and rental. I just don't have time anymore to try and grow anything else.

On 16-bit games, we are pulling them out and are selling them off pre-played. We tested CD-ROM and had no luck with that at all, so we are out of that. Audio books are very spotty, not a big business. It's just store by store, market by market and area by area. It does fairly well down in Kansas City, where you have a commute time.

VANOVER: Video games are going real well. Nintendo 64 and PlayStation are doing the best, but we are still renting the older 16-bit. We haven't started selling them off, but we're going to keep a close eye on the return on investment.

We only sell games if we're discontinuing a format or if it's a special order. If somebody comes in and wants a specific game, then we will order it for them. But that doesn't happen very often. In our area, if a customer wants computer software, they are going to go to a computer software store.

For the future, I think Nintendo 64 and PlayStation will continue to be the strongest systems. Customers will continue to rent them first and buy later, because they don't want to pay a lot for a game and then have their child not like it. We also rent CD-ROM and audio books. CD-ROM probably does better than audio books, but neither does a whole lot. Most people just buy CD-ROM. Audio books, at first it seemed like some of them were renting on a consistent basis, but lately we might just rent one a week.

REDISKE: We rent mostly Sony PlayStation and Nintendo 64. They are about 50/50 and growing all the time. More and more stores are finally getting involved, and having a lot of success in many cases.

There are still some stores that have 16-bit games, but most have gotten out of them completely, while others are cutting back. It depends on where they are located. In some rural marketplaces, 16-bit is still doing fairly well, although we don't bring anything new in.

With the previously played games, for us, it's just a matter of cleaning up, like we do with the movies. We sell off the non-moving inventory and as a general rule it sells rather well. On music, we do some in-and-out promotions and they can be very successful, particularly in rural markets where you don't have a lot of competition in audio. As for other rental products, audio books are so-so. We do much better selling the audio books. We don't rent CD-ROM, but sell-through is doing extremely well, much better than it ever has in the past, probably because the product mix is better.

SCHLOSS: We are cutting back on video game rentals. The whole video game industry is changing and there's so much new product coming out. We're just going to take a step back and really not get too much deeper.

We rent audio books in a few of our stores, and where we have them, they seem to do fairly well. It depends on the location of the store and the drive time for the average shopper.

UFER: We do not sell video games, except for used titles from our rental stock. When a new title comes out, we may buy multiple copies and sell it off after four or five months. We do that for inventory control and also because video games, like movies, have shorter legs than they ever had in the past.