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Summit Shows Game Biz in Good Shape

29 Jul, 2004 By: David Ward

Even though rumors of the PlayStation 3, Xbox 2 (Xenon) and other new hardware systems due in the next few years are coming fast and furious, the current generation of game systems continue to do well and should ensure that retail sales remain strong well into 2005, retailers were told at the annual Interactive Entertainment Merchant Association (IEMA) Executive Summit, held recently in Henderson, Nev.

The mood of the more than 700 attendees at the four-day event was largely upbeat, in part because many of the early worries that the industry could be headed for a major slump have largely dissipated.

“We've seen significant increases in hardware sales since the price drop,” Jeff Griffiths, CEO of retailer Electronics Boutique, said during a CEO roundtable. “I think the $149 price point is a much stronger price than we had last year. As for software, the back half of the year is significantly stronger than the back half of last year.”

Much of gamers' enthusiasm for this holiday will be centered on a handful of titles, such as Halo 2 for the Xbox and Grand Theft Auto: San Andreas for the PlayStation 2 (PS2), both sequels to major hits. David Zucker, president of Midway Games, suggested that's a continuation of a trend of publishers opting for well-known brands during the holiday selling season.

“The success rate of [games based on new intellectual property (IP)] in the fourth quarter is dismal,” he said, adding, “the first, second and third quarters are all better times to launch new IP.”

Too Dependent on Fourth Quarter?
Mitch Koch, Xbox VP for worldwide retail sales, believes the games industry remains far too dependent on fourth-quarter sales, adding that if the industry is to double in size, it needs to mimic the home video market in evolving into a 52-week-a-year business.

The problem is that, unlike the movie industry, there are not ready-made sales seasons outside of the holidays. Paul Eibler, Take Two Interactive's president, said the only opportunity for non-holiday sales spikes came when the hardware makers dropped the price of consoles in May of the past several years.

“Two years ago, you had Medal of Honor and The Matrix do really well in May following price drops,” he said. “This year, there weren't any major titles released around the price drop, so perhaps there's an opportunity to create an event around that.”

The panelists noted that the Microsoft Xbox, while still a distant second, is really starting to put pressure on market leader Sony's PlayStation 2, especially with the hard-core gamer.

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