GAMES PEOPLE PLAY

RANDY WEDDINGTON

Expectations are running high for the fourth quarter games market.

The upbeat mood is being spurred by the debut of another game platform, PlayStation 2, shipping at the end of October. On top of this, there are further technological advances, and broadening audiences, along with the normal increase in product for the holidays.

Driving the momentum is the near-annual release of new gaming systems, with Sony now receiving the industry focus that was Sega's last year. "We have higher hopes for PlayStation 2 than we had for Dreamcast," said Greg Rediske, president, Video Management Company, Tacoma, Wash. "Sony's backward compatibility with its last system is a strong selling point."

"PlayStation 2 is obviously the most anticipated new format with its DVD capability," said Bill Bryant, vice president, sales, grocery and drug, Ingram Entertainment, La Vergne, Tenn. "PlayStation 2 games will include 'Madden 2001' and 'Grand Turismo 2000,' both of which should sell extremely well. The system will be on every gamer's wish list for Christmas."

Until then, however, specialists must deal with the impact its impending arrival has already had. "We've already noticed a Dreamcast drop in preparation for PlayStation 2," said Craig Hill, video specialist, Harp's Food Stores, Springdale, Ark. "Our customers' interest in the new system is high. But Dreamcast has done well in certain stores, supported by system rentals."

"Our Dreamcast business is getting lighter with the approach of PlayStation 2," said Brenda Vanover, director of video operations, K-VA-T Food Stores, Grundy, Va.

Other factors are also affecting that system's performance. "Sega's rebates are confusing to customers," said Debbie Baker, senior buyer, video games, Video By Cycling, Dallas. "They should just go ahead and mark down prices."

While Sony prepares for launch, other manufacturers aren't resting on their laurels. "Sega Dreamcast will release 'NFL 2K1,' 'NBA 2K1,' and 'Quake 3,"'said Bryant.

"Nintendo has probably the strongest holiday line-up we've ever had," said Beth Llewelyn, a spokeswoman for Nintendo of America, Redmond, Wash. "There are a number of 'A-list' N64 titles for video gamers of all ages: The sequel to the first N64 Zelda blockbuster, 'The Legend of Zelda: Majora's Mask;' 'Banjo Tooie,' the follow-up to Rare's mega hit from a few years ago, 'Banjo Kazooie;' and 'Mickey's Speedway USA,' another Rare title based on many of Disney's classic characters.

"There are a number of new Pokemon titles," she added, "led by 'Pokemon Gold and Silver' and 'Pokemon Puzzle League' for Game Boy and Nintendo 64 and 'Hey You, Pikachu!' for the N64. 'Pokemon Gold and Silver' alone are expected to sell 10 million copies in their first six months of release."

Supermarkets will benefit from Pokemon tie-ins, Llewelyn said. "There's a huge Pokemon promotion with Kellogg that started in supermarkets last month that will continue through September." The promotion extends across 11 Kellogg's brands, including cereals, Pop Tarts, and Eggo Waffles. Marketing support will include $3 million in television and print advertising, 15,000 in-store point-of-sale materials, a dedicated Web site, free-standing inserts, and a public relations campaign.

New technologies will further enhance the appeal of games.

"Nintendo is introducing a new voice-recognition technology with 'Hey You, Pikachu!'," said Llewelyn, "which should provide a fascinating new experience for younger gamers as Pikachu actually responds to their voice commands."

There are other exciting developments in store for the future as well. "Nintendo is currently working on Game Boy Advance in Japan," said Llewelyn, "which will incorporate network gaming via cell phone technology and allow users to access various Internet services. Any type of technological advances that further involve the gaming community in a more enhanced, interactive experience is something the industry will want to explore."

A shift in the target game audience and other positive trends among game players is also encouragement to the industry as noted in new surveys commissioned by the Interactive Digital Software Association, Washington, D.C.

According to the IDSA, 60% of Americans over age six, for instance, now report routinely playing interactive games.

As interactive gamers mature, the target audience for video and computer games edges nearer the mainstream, driving increased sales. In 1999 retail sales were $6.1 billion, a 15% growth over 1998 sales, reported IDSA president Douglas Lowenstein at Electronic Entertainment Expo 2000. "Last year, in addition to retail sales, another $500 million in revenue came from on-line games," said Lowenstein, "and another $880 million was derived from the rental of video games."

"The new face of gamers is a major reason why interactive entertainment is a growing and influential force," Lowenstein said, "that's shaping our culture, redefining entertainment, pushing technology forward, and helping to power the high-tech economy of the 21st century."

The surveys record these gamers demographically. One shows that 61% are 18 and over, with 37% under 17. Their average age is 28. And 43% are female.

Another IDSA survey breaks these figures down differently between formats.

Among frequent computer game players, 28% are under 18 years old, 30% are 18 to 35, and 42% are over 35. That contrasts with video game players, among whom 42% are under 18, 37% are 18 to 35, and 21% are over 35. That demographic shift can be important to supermarkets. "We tested CD-ROM rentals in one store," said Hill of Harps, "but the market wasn't there yet."

How long games are played was also a survey topic, with one-third of gamers reporting one to two hours of play per week, one-fourth three to five hours, and one-third six hours or more. "As home PCs have become more ubiquitous, as consoles have spread into millions of new homes, the user base has broadened," said Lowenstein, to include those who play the game only occasionally -- moms and dads, husbands and wives, brothers and sisters, friends and neighbors."

This development has already impacted the supermarket trade. "More of our customers are playing games," said Hill. "Even game accessories are selling very well."

How games are played was analyzed as well. Of the most frequent game players, 59% play with their friends, 42% with members of their families, 27% with their spouse, and 25% with their parents.

"The image of the gamer as a loner is way off base," said Lowenstein. "In fact, consumers report that game playing is a highly social activity that often involves the family."

"Any gamer loves a challenge and competition, not just against characters in a game but by his friends when they go head-to-head," said Llewelyn of Nintendo. "By involving more people in a game simultaneously, it adds excitement and fun to the gaming experience."

One way to achieve that involvement is via on-line access. "Both PlayStation 2 and Sega Dreamcast will have Internet capabilities that will allow gamers to play each other through the Internet," said Bryant of Ingram. "This change will take set-top games to the next level and will increase interest in the game format."

"The Internet very well may become a vital part of the video game experience in the future," said Llewelyn. "And Nintendo is certainly exploring the possibility of using the Web to deliver its characters and their adventures to gamers via that medium."

Analysts predict game creators will respond to this market evolution. "Game manufacturers will pursue this trend by producing more games that appeal to a broader base," said Bryant. "In the past, many game releases were targeted specifically toward males or females. Although gender specific games will still exist, Ingram anticipates more software will be developed that will appeal to both."

Another factor of concern to supermarkets is the amount of violence and other material inappropriate for general gaming audiences. "Manufacturers seem to be responding to consumer and government feedback," said Bryant, "and have increased the number of non-violent games." Suppliers agree that the industry is achieving a balance. "Seventy-one percent of all video games are rated E and appropriate for all age groups," said Llewelyn. "Over 90% of Nintendo's fall/holiday games are rated E."

This issue may not be as important as its media coverage suggests, however. "Let's not mistake the fact that kids theoretically can buy mature-rated games with the reality that few actually do," said Lowenstein. "Only 3% of those who actually purchase PC games and 13% of those who actually buy console games are under 18.