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NPD Predicts Strong Q4
By John Gaudiosi



The videogame industry works on a set schedule every five years or so, as new game platforms are introduced to the market place. First, game manufacturers target the hardcore gamers and early adopters, who will go out and buy the systems regardless of price and sustain game publishers' business with 30 or more software purchases per year. Then, prices drop and the industry shifts towards the mass market, where the audience reaches casual gamers as well as younger gamers.

With GameCube already $99 and PS2 and Xbox featuring bundles with free games and peripherals, this is where we are today. The NPD Group, a videogame tracking firm, has compared game hardware and software sales from January to August 2003 to the same time period last year. Two things stand out from this report, which support the cyclical nature of the business. The Action and Family Entertainment game genres have shown the biggest unit growths at 33% each. And, in addition to hardware prices falling, games are also now cheaper to buy. Over 50% of new games this year, approximately 270 titles so far, retail for less than $40.

NPD found that while the overall videogame industry experienced a 3.4% decline in dollar volume, the unit volume for the industry rose 8.4%--the result of the aforementioned lower costs of entry. During the first eight months of 2003, console and portable game sales accounted for more than half the dollars generated by the industry as a whole, which includes the sales of console hardware and peripherals, but not PC games or hardware. Console and portable software sales showed increases in units as well as dollars, 14 and 5.7 percent, respectively

"The continuous rise in unit volume is good news for the video games industry," said Richard Ow, video game analyst, The NPD Group. "The most important factor is product is being sold at a faster pace than last year. Dollar decline is to be expected during the current video games cycle. The next couple of months will be critical for the industry, with highly-anticipated releases on the way. Over the next few years, software will be the primary driver for industry growth for the current next generation life cycle."

NPD predicts a strong holiday season. Typically, the months of November and December account for 55% of annual game sales. And game manufacturers and publishers are already flooding the retail channel with a wave of "AAA" titles.

NPD's report also found that over 43% of gamers spend more than seven hours a week playing games. The advent of online console gaming will continue to bolster these numbers, as gamers connect with friends from across the globe.

The market share for the key console players, omitting the game Boy Advance portable market, for the first eight months of this year has Sony with 64%, Microsoft with 20% and Nintendo with 16%. The GameCube price drop and recent Xbox bundles should make for a nice race to the finish for second place over the next few months.

Column: TV Finally Goes Gaming
By John Gaudiosi

Although I've always been a writer first (I began my career as a freelancer with The Washington Post while an undergrad), I worked in the TV business while I was in graduate school in the Washington, D.C. area, which is the number seven market place. While at cable news outlet Newschannel 8, during the days of the 16-Bit of Super NES, Sega's Genesis, the Sega CD and the Sega 32X, I produced a weekly videogame segment called "Digital Frontiers," which took advantage of the colorful entertainment medium and tracked trends and stories. I moved on to work for ABC, Fox Newschannel, PBS and NBC, where I continue to serve as a videogame critic for the Washington, D.C.'s NBC4 Consumer Reports division. That annual fall segment airs across the country via the NBC feed.

What's amazing to me is that it's taken this long for TV execs to finally take chances on videogames. You simply cannot get a more visually entertaining spectacle than videogames. The CGI in today's top-tier games, especially in the "Final Fantasy" series, are captivating to watch. In fact, most of the best games out there are as intriguing to watch as they are fun to play. Some games, like Sony's "SOCOM: U.S. Navy Seals," even allow eight players to join an online game session to watch the action as 16 additional players duke it out in virtual modern-day warfare.

Comcast-funded G4, which is the only dedicated videogame channel, is good for the games industry, but its low-budget shows and lack of audited viewership doesn't give it the exposure of an established network like Game Show Network, which reaches over 52 million Nielsen homes compared to G4's 11 million homes. I think GSN and other cable channels will continue to find room for new videogame shows, thanks in large part to the target male demographic ages 13 to 35 who play games. Advertisers want this elusive audience, and a sexy, fast-paced videogame/entertainment show isn't a bad way to lure them, especially one airing late at night, when gamers are up and there's nothing much on TV save infomercials.

There's a lot of activity now in the TV games space. GSN began its Video Game Block October 2 from 5pm to 7pm, which includes half-hour entertainment videogame shows "Gamer.tv" and "Game Sauce" (I serve as the U.S. producer for both London-produced shows), and the "GameSpy Minute," a segment focusing on PC and console gaming from the Gamespy.com editorial staff. Videogame magazine GamePro is also part of the two-hour block. Actress Carmen Nicole will serve as host for the block, updating viewers on news and events in the game world. GSN is also working on a videogame documentary on the history of gaming.

Another TV effort is "Gamer Nation," which IGN Entertainment premiered October 4 on San Francisco's independent station, KRON 4. The show will include news and features form IGN.com's staff, who are working with Our Tribe Productions on the show.

These game shows come on top of the already-established relationship between CNN and game magazine giant Ziff Davis Media, which gets an Electronic Gaming Monthly or Official PlayStation Magazine editor on the air every Thursday to talk about videogames.

Look for more videogame shows to go mainstream on other cable channels in the near future. Discovery Channel has already aired a couple of solid game documentaries, including a recent one on Xbox and MTV has explored gaming culture through its "True Life" series. And UPN debuts the first CG videogame sitcom, "Game Over," featuring the voice of Lucy Lui next February. With over 500 channels of opportunity, there's certainly room in this emerging category.