REPORT: GAME UNITS, PCS TO HIT HIGH SCORE BY 2000

DAN ALAIMO

WASHINGTON -- Total U.S. penetration of advanced generation video game console systems and multimedia-equipped personal computers will exceed 90 million by the year 2000, according to a report issued this month by the Interactive Digital Software Association, here.

Following substantial price cuts earlier this year, the console systems, such as the Sony PlayStation, Nintendo 64 and Sega Saturn, will grow from a base of 5.8 million units last year to 30 million in 2000. Meanwhile, multimedia personal computers, including CD-ROM and DVD-ROM drives, will grow from 21.9 million last year to 62 million in 2000. The report credited the NPD Group, Port Washington, N.Y., and Nintendo of America, Redmond, Wash., for the console numbers and IDC/Link, New York, for the PC statistics. Sales at retail of all interactive entertainment software, including games for the dedicated consoles and for PCs, will grow from $3.7 billion in 1996, to $5.3 billion in 1997 and to $8 billion in 2000, said the 40-page report.

"We are anticipating continued strong double-digit growth both on the PC and console sides of the business," said Doug Lowenstein, president of IDSA. The trade group will hold its third Electronic Entertainment Exposition -- better know as "E3" -- from June 19 to 21 in Atlanta.

This reflects a return of the game business to the mass-market levels last seen in the heyday of 16-bit game systems in 1993 to 1994, noted industry observers. Over 37 million units of the 16-bit Sega Genesis and Super Nintendo hardware systems have been sold, the report noted.

"If you look at the numbers that IDC/Link is forecasting for this year, it is going to be awfully close to being back to its peak level this year. And if not this year, there is no question that it will be back in 1998," said Lowenstein.

As a result, rentals and sales of console games and CD-ROMs will be strong for supermarkets that offer them, he said.

"Supermarkets should recognize that entertainment software is a mainstream business in this country and in the world. For some people, it is as much a part of their lives as watching a home video or watching television," he said.

"By carrying products in this area, supermarkets will be appealing to customers who have grown up with video games and computer games as a part of their leisure time menu of options," Lowenstein said.

Changing demographics of interactive software consumers provide more good news for supermarkets, Lowenstein noted. According to the report, preteen and teenage boys remain the core demographic, but the market is broadening. Of those using games on computers, 72% are over 18, with one-half of those over 35; 42% of game console users are over 18. Meanwhile, 40% of consumers using entertainment software on PCs are women, while 27% of game console users are female. "More and more females are showing interest in interactive games, which is of particular interest to supermarkets who obviously have a significant number of women customers," said Lowenstein.

A majority of the industry leaders interviewed for the in-depth report believed that the consoles will co-exist with PCs for market share, appealing to significantly different market segments. The interactive software industry expects on-line gaming to eventually become a significant source of revenues, but that in five years, the majority of entertainment software will still be acquired at retail.

Game Platform Expansion

By 2000, penetration of advanced video game console systems will nearly equal that of 16-bit systems at their peak. Meanwhile, the installed base of personal computers equipped to run multimedia software are expected to nearly triple.

Number of Video Game Platforms Installed in the U.S. Market

1996Projected 2000

5.8 30

"Next generation" consoles** million million

21.9 62

Multimedia PCs million million

includes Sony PlayStation, Nintendo 64 and Sega Saturn systems

Source: Interactive Digital Software Association, Washington; Nintendo of America, Redmond, Wash.; IDC/Link, New York; NPD Group, Port Washington, N.Y.