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Game On!

18 Jul, 2002 By: David Ward

While admittedly a somewhat more uncertain road for video stores than movies, console and portable games should deliver strong revenues for both rental markets for the next three years as the installed base of Xbox, GameCube and especially the PlayStation 2 systems soars, an executive for distributor Ingram Entertainment told the audience at the July 16 “Videogaming 2002” seminar at Home Entertainment 2002.

Jeffrey Beck, director of sales for interactive media, said the total sellthrough and rental revenues of Xbox, PlayStation 2, GameCube and GameBoyAdvance should grow from $11 billion this year to $15 billion by 2005 as the total number of homes with game systems grows from 40 million to 70 million by 2005.

Although Sony PlayStation One and Two dominate both markets, Beck pointed out that the next generation rental and sellthrough markets are actually evolving quite differently. While 18 of top 20 sellthrough games are rated ‘E' for everyone or ‘T' for Teen, he said most of the games that are popular renters are either rated ‘T' or ‘M' and feature various levels of violent content.

Beck said that trend would likely continue on, adding he didn't think the price drop of Xbox and PlayStation 2 to $199 and GameCube to $149 will necessarily make the overall demographics of the systems that much younger.

But while video stores can make money from console software, Beck reiterated that unlike movies, “The game industry has always been focused on sellthrough.” As a result video stores have to make their own markets, as neither the hardware makers nor the software publishers are likely to ever offer much in terms of posters, POP displays or other types of channel support for rental.

Beck also opined against the current industrywide policy of five-day game rentals, suggesting that most games can be finished in two days. He added one retailer he works with offered his customers the choice of either two-day or five-day game rentals and found that 90 percent of his customers preferred the shorter period.

Microsoft, Sony and Nintendo have all announced plans for some kind of Internet-enabled game play this year, a move which has triggered concern among traditional retailers that consumers may spend more time online playing games and less time in stores renting or buying them.

But Beck dismissed such concerns, saying that the chance to play their friends online may even actually spur rental as consumers go out and borrow games he normally wouldn't consider playing.

Despite rumors that game publishers may soon follow the home video industry in instituting revenue-sharing, Beck said he has no hard evidence that most publishers are moving in that direction, although he did say several have admitted to at least considering such a move.

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