Video Game Sales Blast Toward Record
The holiday selling season may be bah humbug for toy and apparel brands, but video game makers are shooting for what could be their best year yet.
Through November, video game sales were up 15% to $7.4 billion, according to retail tracking firm NPD. But December sales, which still haven't been tabulated, are a big part of the season that accounts for up to 50% of annual sales. So 2002 sales could top out at a record $10 billion, beating last year's $9.4 billion, industry watches say.
The category's biggest driver: an ever-widening audience. A new generation of video game players is joining the first generation of players, who have grown up but not out of the market.
" The simple explanation behind the boom in video games is the industry has a much larger audience that marketers are selling into now," says Doug Lowenstein, president, Interactive Digital Software Association. "That's translated into greater demand."
Beyond more gamers, the category is getting a boost from lower-priced hardware. Wal-Mart now leads the pack on console sales, holding 18% of the market for such products as Nintendo GameCube, Microsoft Xbox and Sony PlayStation 2.
Software, typically 18 months in development, then follows. How marketers play the game:
Is it real, or is it video? Games today have more advanced play and sophisticated looks. Gotham Games' Operation Desert Storm features 13 "operations missions" and a villain with an uncanny resemblance to Saddam Hussein.
"Game play is very important," says Jamie Leece, president, Gotham Games, which released Operation Desert Storm in October. "It's all entertainment. We're trying to suspend disbelief, and we can do that better if we're providing a full, rich, entertainment experience."
Spending more. Video game ads easily mistaken for flashy movie commercials are all over TV. Industry advertising is up 65% to $282 million through September vs. the same period in 2000, says ad tracker Nielsen Monitor-Plus.
"Dollars for the category are bigger than they've ever been," says Carolyn Feinstein, vice president of marketing and communications at Electronic Arts. The video game market leader increased its advertising and marketing budget 50% this year. New to Electronic Arts' ad plan is an effort to advertise No. 2-selling video game, Madden NFL 2003 on Monday Night Football.
Building franchises. Nintendo, with more than 1,000 titles, pioneered the market with GameBoy in 1989 and Super Mario, which first appeared in arcades in 1981. The brands continue to work wonders for Nintendo, whose November business is up 11% vs. the same month last year. "GameBoy defies every bit of logic about normal life cycles for a product," says Perrin Kaplan, vice president marketing and corporate affairs. "It seems to stick."
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