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THE MORNING BUZZ: Retailers Expect A Good Year for Video Game Revenues

17 Jan, 2002 By: Kurt Indvik

This week Blockbuster Video announced an exclusive 30-day rental window deal with video game manufacturer Capcom for its new PlayStation 2 game Maximo: Ghosts to Glory. The retailer is guaranteeing the title in stock.

"We want customers to rent their games before they buy, so we're going to be bringing our customers lots of special offers this year," said Brian Woodrick, director of interactive merchandising for Blockbuster.

This may be Big Blue's opening salvo, indicating it and other video specialty chains see 2002 as a breakout year for video game rentals. A sampling of 25 responses to Video Store Magazine's Top 100 Retailer Survey for 2001, in progress, shows 2001 revenues from video game rental and sales (as a percentage of total store revenues) will stay about even or a fraction ahead of 2000, which was 6.2 percent.

However, in this same sample 56 percent of retailers anticipate revenues from video game rentals and sales growing in 2002 over 2001. And there is reason to be confident this will occur.

The most important factor is the November 2001 introduction of both the Nintendo GameCube and Microsoft Xbox game consoles, joining Sony's PlayStation series to make a major three-way war in the game platform and software battle for dominance. Gamers are passionate about their…er…sport and there are great expectations for a lot of sampling of hardware and software before players add an additional platform to their home systems. And at that point, with games running about $50 each, there will also be plenty of testing (renting) new games before forking over that hard-earned money. "The rental market is more important especially to younger players, because games cost $50 and if they are going to spend that kind of money they want to know they like it," said John Davison, editorial director for Ziff Davis Media Game Group.

Of course Hollywood and the gaming industry have been trading characters for years. Tron (coming up on a DVD release) pretty much started the whole idea two decades ago and this year we have, among others Lara Croft: Tomb Raider and Final Fantasy as, arguably, more spectacular recent efforts toward the fusion of the two worlds. The next steps will be for the two camps to find effective ways of cross-marketing each other's products, which with the ascendance of DVD, is likely to be eminent.

It's only a matter of time and how before video games, maybe even in 2002, reach 10 percent of specialty store revenues, overall.

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