GAMES SCORED INCREASED SALES IN 1996

DAN ALAIMO

WASHINGTON -- It looks like video games are coming back in a big way.

Following a period when game sales and rentals were down, interactive entertainment software sales increased 16% during 1996, said Douglas Lowenstein, president of the Interactive Digital Software Association here. Games for personal computers grew 19%, while games for set-top devices grew 14%.

A round of price cuts earlier this month on hardware for the newest set-top game formats should add more life to the category, which many supermarkets offer as part of their video-rental departments. Sony Computer Entertainment, Palo Alto, Calif., cut the price of its PlayStation from $199 to $149. Nintendo of America, Redmond, Wash., followed two weeks later, reducing the price of Nintendo 64 to $149. Although Sega of America, Redwood City, Calif., had made no announcements about its Saturn platform, observers expected it to fall into line as well.

Some analysts said they expect the prices on these platforms to go as low as $99 by next Christmas. In the past, lower prices on hardware resulted in the kind of mass-market penetration of the systems that made rentals of the software a strong category for supermarkets.