Videogames: Movies gain as game fodder

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The $10.5 billion interactive entertainment industry, unlike other consumer product segments over the last year, has shown remarkable resilience in the face of a slow-growing economy and post-9/11 realities.

Whether driven by the need for escape or the desire to kick back and enjoy increasingly cinematic and lifelike content on the three major videogame consoles, computer and videogame software sales hit $6.35 billion in 2001, up 7.9% from 2000, according to the Interactive Digital Software Association. Adding in videogame consoles, handhelds and other hardware, the industry has grown to $10.5 billion.

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Wall Street analysts are bullish on the sector. A recent Bear Sterns report noted the interactive videogame industry would "grow faster than any other media sector ... Growth in the game software market is likely to outpace that of the Internet (advertising), television, radio, motion pictures, music, and newspapers."

As the industry strives to reach beyond traditional kid and teen demographics, more and more games will be based on and marketed like hit movies. Blockbuster game titles like Activision's "Spider-Man" and "Tony Hawk's" series, Sony Computer Entertainment America's "Gran Turismo 3" and THQ's World Wrestling Entertainment titles are increasingly being marketed like big-budget movies.

A flood of videogames is expected based on a raft of summer and fall movies including "Star Wars Episode II: Attack of the Clones," "Minority Report," "Men in Black II" and "Sum of all Fears," a film based on a Tom Clancy novel. Microsoft Corp.'s Xbox console has snared Mr. Clancy's "Splinter Cell" as an exclusive to its platform via Ubi Soft.

The action and adventure and role-playing genres have mass appeal. Nintendo Corp. of America's popular character-based "Mario" and "Zelda" franchises, along with a smattering of other new titles, are on their way and stoking excitement for Nintendo's GameCube console, successor to its previous generation N64 format. Nintendo has made solid progress in positioning its handheld Game Boy Advance to older gamers-young adults and mobile professionals.

Xbox moving to 22% share

Marketers have spent lavishly to support their platforms as they try to lure a mass audience to gaming. Xbox is the new kid and has yet to prove itself. Launched just last November, the Microsoft console platform nevertheless is expected to end 2002 with a 22%share in North America, up from 16% in 2001, according to Soundview Technology Group. It also predicts Sony's PlayStation 2 will rack up 50% of the market, down from 70%, and Nintendo's GameCube, also less than a year out of the gate, will get 28%, up from 14%.

By far, Sony is the leader, having shipped more than 33 million PlayStation 2 consoles globally. Sony also has had a year's lead in debuting its next-generation console.

Aside from the consoles, Microsoft, Nintendo and Sony have embarked on online gaming strategies that are bound to unfold slowly over time. Microsoft says this fall it will launch the Xbox Live, its gateway to online gaming via the Xbox.

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