Data Filter: The News You Need in Easy-to-Swallow Gel Cap Form

Electronic Gaming Business, May 19, 2004

News-o-Matic

Whassup?: NPD April data shows an unsurprising 2.9% decline in software sales from April 2003, which was an especially strong release month. Fight Night 2004 (EA) won the month with a combined PS2/Xbox sell-through of 565,700 units for $28.1 million in revenues. Midway got a much-needed hit with NBA Ballers, which sold 333,700 units. As expected, the $149 Xbox helped bring unit sales of hardware up 19.5% and Xbox unit sales up 136%. Month-to-month PS2 software sales were off 9% as were GBA sales (-28%), while GameCube titles improved 20%, and Xbox rode its new pricing to a 72% increase in game sales. So What?: EA continues to glom market share, with overall sales up 36% yearover-year for the first four months of 2004, although THQ, too is up 24.8%. If the Xbox and PS2 price cuts help consoles penetrate the mass market, then this Christmas becomes a very interesting test case for how this market shift affects overall buying habits. Piper Jaffrey's Anthony Gikas, for instance, believes the holiday buying will consolidate even further and focus on ten major game brands.

Whassup?: Video gaming has become a trendy accoutrement to the downtown club experience, reports Media Life. NYC singles night spots Play and Social Club now sport PS2s hooked up to oversized plasma screens for group play. Club goers are already having to reserve spots in advance.

So What?: With a generation raised on the social nature of console multi-play, expect the hinterlands to grab this NY trend and make consoles the new darts of the bar scene. Our advice is to follow your market. The gold goes to the games company that endorses and cultivates this trend with game promotions and comarketing tie-ins with beverages. This could be bigger than LAN parties because it grabs a mainstream audience where it most likes to play.

Whassup?: The young male demographic that supposedly fled from TV to video games last year (or so game executives like to claim), apparently has returned to the tube. According to media mag Broadcasting & Cable, TV viewing among 18- to 34-year-old men dropped 8% off of previous norms in the last quarter of 2003 but in the first quarter of 2004 was only down 6% and in the first part of the second quarter is down just 1%, as reflected in Nielsen ratings. Nielsen skeptics argue that the initial drop and eventual rise in that segment has more to do with methodological tinkering with the metrics model, while Nielsen claims males were responding to TV programming that was more relevant to them. So What?: Lesson learned. Those who live by the numbers also die by the numbers, so the industry shouldn't be so quick to prove this TV vs. gaming argument. With most consoles connected to the main screen in a household, we expect there will continue to be fluctuations back and forth that make the kind of wild claims we heard last year about the flight to gaming questionable at best. A recent GameDaily/ePoll seemed to show that young males valued both games and even reading over TV watching, which seems pretty unlikely. Self-reporting on media usage is notoriously unreliable. For the time being at least, game executive to avoid embarrassment by not claiming the 18-34 male demo is playing games instead of watching TV. The latest numbers just don't support it.

Whassup?: It sounds like both Microsoft and Electronic Arts blinked in finally coming to an agreement on adapting EA titles to Xbox Live. After demurring from MS's business model, which retained both subscription fees and the user relationship, EA relented and will bring 15 titles to the online platform in coming months. No details were disclosed, but Cameron Ferroni, general manager, Xbox Live is quoted in reports as saying that both companies will share in subscription revenues.

So What?: Microsoft's only real win at E3 was the EA partnership, but it does position Xbox Live to surge. Wedbush analyst Michael Pachter believes that Microsoft is capable of owning the connected console space with its bottomless pit of additional online content and experience from losing billions in its Web ventures. Expect some aggressive partnerships between Xbox Live and key ISPs, and MSN itself already has millions of subscribers.

Whassup?: MS also announced it will bring Xbox Live Arcade online later this year, which is a slate of casual games pitched to women and non-core gamers such as Bejeweled and classics like Dig Dug and Galaxians. In addition to targeting a new demo, Arcade uses a new model for connected consoles, fee-based downloadables. Players can download full versions of the games to their hard drives for $10 each. Microsoft will promote the service this Christmas with free discs that let current Xbox Live subscribers sample the games. So What?: The online arcade piece is the one worth watching, as MS sees it as a key to softening the edges of their hard-core console for women and family users. It won't work. No one is going to subscribe to Xbox Live or even connect their consoles to a home network just to play these games on their TV, and if someone else in the house already subscribes, then it is a hardcore player who is not going to give up the controller easily. This generation of consoles will remain gender specific, where females fear to tread. If Sony and MS let mom surf the Web (Sony has already shown an AOL browser for its network) and check her email via the console, then the platform might make headway.