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

Electronic Gaming Business, August 25, 2004

News-o-Matic

Whassup?: Recently-formed Warner Bros. Interactive Entertainment purchases Monolith Productions (Matrix Online, Tron 2.0, etc.) for an undisclosed sum. This fueled speculation that Warner Bros. has its eye on more in-house development and acquiring developers in order to become a publishing powerhouse in the industry. Meanwhile, Viacom, whose CEO Sumner Redstone keeps upping his stock stake in Midway, is looking at the prospect of acquiring the home of Mortal Kombat.

So What?: According to European trade reports, WBIE head Jason Hall (formerly of Monolith) assures everyone that it was an isolated acquisition aimed at giving the company some in-house development capabilities. Hall claims the WBIE plan is to be a co-publisher with others. Well, maybe. As Viacom's move to spec out Midway suggests, major media are starting to decide what place games development has within their corporate structures. With the margins on film production shrinking quickly, we expect to see bog media finally start buying publishers and developers in order to keep more of the revenue off of their licensed IP.

Whassup?: Nielsen Interactive Entertainment is looking to challenge NPD Funworld's video game sales data reporting. As director of the Interactive unit hinted to EGB several months ago, Nielsen seems to think there are more thorough and accurate ways of metering retails sales.

So What?: Here, here. We need more timely reporting on the video game side. We also need Wal-Mart data included. Perhaps most of all, we need the market to start considering used game sales. Used games have become enormously important financially to specialty retail margins because they have become a standard part of game buying habits, more so than any other media.

Whassup?: Infinium Labs, makers of the upcoming Phantom PC-based, Internetconnected game console, told investors at a recent meeting that Nov. 18 is the launch date for the much-delayed unit, according to a report in ITManagersJournal.com. With a sub price of $29.95/month, users will get the hardware unit free with a two-year contract. Rather than sell via ISPs as initially planned, Infinium will sell through retail and avoid splitting monthly sub revenues with ISPs. Officials with the company now say that they are aiming for the former hardcore ("lapsed gamers") who are now married with children and are looking for value and variety not $50 AAA titles. So What?: ITMJ editors rip Infinium a new one for a business model that seems to require recouping at least $360 a customer (hardware and commission costs) before break even. Infinium continues to look for more investor cash to fund this, however. President Kevin Bachus cannot say for sure what if any retailers will carry the unit, and he still won't reveal the name of a single publishing partner. Despite cool looking hardware, we have a hard time seeing the company landing major publishers and newer titles. That means the Phantom has the same appeal as games-on-demand but at more than twice the price.

Whassup?: Atlus is set to release fantasy strategy title Phantom Brave shortly, but the game is already enjoying strong reviews (84% on GameRankings) and it is a follow-up to cult faves Disgaea and La Pucelle. The game has retro graphics that recall the original PS unit, yet the titles continue to poke through in the press and apparently garner good sales. Developer NISAmerica says that previous titles Disgaia and La Pucelle sold 100,000 units and 85,000 units respectively. So What?: Let this be a lesson to over-hyped and over-produced titles. The market is now large enough to support earnest games that may even be years behind in production values. NISAmerica President Haru Akenaga tells EGB, "Our strategy is pretty simple. As we are a tiny company, we can't even compete with giant video game publishers in their fields. That is why we will stay a niche genre, and provide great quality games to the audiences in the genre continuously. We will be one of the nicest 'boutiques' in the industry.

Whassup?: According to NPD Funworld data for July console/handheld game sales climbed a healthy 27.5% over July 2003. PS2 software was up 26% for a 42% share of the market. Xbox games were up 50% for a 22% share. And GameCube software was up 57%, for 14% of the market. Spider-Man's good sales on the Nintendo platform is notable because it suggests that with certain genres and age targets the platform is not yet bowing to the big two.

So What?: The bounce-back begins. After a first half of tepid game quality and sales, the second half is poised to break all records, we expect. Not only are the major franchises kicking in, but the calendar is filled with blockbusters every month, ensuring a primed channel of consumers making their way back to game stores for a succession of must-buys and at each purchase being exposed to marketing for the next round. The timing is superb, because no matter how much they spend on Sims 2, Doom, HL2, GT4, etc., everyone is still going to buy GTA and Halo 2 for Christmas.