GameCube Hardware Shortages May Limit New Platform Rentals at Launch19 Oct, 2001 By: David Ward
While Nintendo of America remains committed to the rental channel, a limited amount of GameCube hardware may prevent the company from an aggressive push.
Senior marketing v.p. George Harrison says the company will primarily work with Blockbuster at launch, but suggests there won't be a lot of joint promotions with the rental giant simply because Nintendo is still not sure how many units it can provide. Nintendo has promised 600,000 to 800,000 GameCube hardware units for the Nov. 15 launch, but other sources say the actual number for the United States may be closer to 500,000 with the balance going to Canada and South America. Harrison says Nintendo will supply Blockbuster with additional promotional discs that feature three playable demos and movies of five other games.
Accessory maker InterAct says it would begin adding a few GameCube and Microsoft Xbox controllers and memory cards to the sellthrough rack in all Blockbuster stores at launch. InterAct business development v.p. Ken Tarolla says these products would be priced $5 to $10 below first-party peripherals.
The mood in the rental channel seems to have shifted Nintendo's way, at least in terms of its battle with newcomer Microsoft Xbox. Linda Sanderson, purchasing v.p. with Vancouver-based Rogers Video, says her chain has reversed an earlier decision not to carry GameCube hardware.
“We're going to have some but not much,” she says. “We've been told we're going to get some but we're not getting a lot, so we're not putting it in every store, just our top game stores.”
With Nintendo promising close to 20 GameCube titles by year end, Sanderson says it makes sense for the rental channel to get behind it since early adopters will buy a handful of “must have” titles when they pick up their system, then turn around and begin renting games to determine what their next purchase will be.
At least one executive for a major game publisher suggested most game makers continue to have mixed feelings about the rental market. For one thing it's never been a huge revenue stream and, while it has been somewhat proven that gamers often rent before they buy a game, the executive says most publishers are more worried about consumers renting games in lieu of purchase. “Even if they like a game, a lot of game magazines now say, ‘This game can be rented and finished over a weekend.' That's a lost sale for us.”
The source goes on to say that Hollywood Video's efforts to institute a game revenue-sharing model similar to the movie model fell apart when publishers and the chain could not agree on what the upfront cost for the games would be. “They wanted them for below what it costs us to make them,” he said, adding third-party game publishers must pay a royalty to the hardware maker for each game they manufacture. That can vary from about $6 to $7 for a front line Sony PlayStation 2 game to about $20 for royalty and cartridge cost for an N64 game.