News-O-Matic

Electronic Gaming Business, Jan 28, 2004

Whassup?: NPD Funworld reports overall 2003 game industry revenues were relatively flat over 2002. Console sector sales fell 2.7% to $10 billion, mainly off of falling hardware revenues, since console and portable software sales were up 5.4% to $5.8 billion. PC games continue to decline, now down 14% after two previous down years. Console game unit sales were 186.4 million, with 52.8 million PC games sold.

So What?: The numbers may be in but there is still wide disagreement over their meaning. NPD analyst Richard Ow says they are "impressive" given the mid-point in the console cycle and discounting among publishers and hardware makers, although he does not foresee 2004 beating these numbers. Others say ho-hum, as do we. Mid single-digit growth is not impressive in a growth medium. It is more the sign of a slump in which the lack of compelling game experiences this year has shown itself at retail.

Whassup?: Palm-based game device maker Tapwave offered a status report on the progress of its Zodiac game PDA, saying that it was responding to user feedback with a major update to its software soon. As well, Tapwave says that 1,800 developers have requested the development kit, up from 550 in September, 70% of which are not traditional Palm developers. Both Doom II and Tony Hawk Pro 5 are in final testing as well.

So What?: At the Digital Games Summit, Tapwave executives said that they were surprised that the more expensive version of the unit is actually selling better than the low-end version. This suggests that some of the upcoming, costlier handhelds from Sony and Nintendo will have some audience, and that price is not necessarily what has kept the Nokia N-Gage from registering with U.S. buyers.

Whassup?: Sony partners with Digimask to allow PS2 gamers to put their own faces on game characters. The technology converts images of themselves from the Eye Toy camera peripheral into a 3D head that can be fixed to game characters. For online contests especially, this could be an important way of personalizing gamers; identities. According to Sony 2.4 million Eye Toys have been sold worldwide.

So What?: Game designers take note; personalization is a serious lure, especially for teens and twenty-somethings that were born with digital DNA. If you are looking for innovation, think beyond this good game head notion and start thinking about how a game could alter aspects of an environment in which she plays, choosing game soundtracks and then trade some of these mods with others.

Whassup?: RealNetworks acquires downloadable games developer GameHouse for $35.6 million in cash and stock. GameHouse generated about $10 million in revenue in 2003 and over $5 million in net income off of widely distributed titles like Super Collapse II and Puzzle Inlay. The company will stay at its current Seattle location and CEO Garr Godfrey will become General Manager. According to HitWise, GameHouse.com was the 21st most popular games destination online in December with a .64% share of all gaming traffic.

So What?: GameHouse was quick to assure its current distribution network, including Yahoo, MSN and EA's Pogo that it would continue to distribute its games outside RealArcade. Real was just as quick to say that RealArcade would continue to distribute games from other publishers. Nevertheless, by becoming a game developer Real becomes that much less an impartial distributor who clearly makes more money off of its own games than anyone else's.

Whassup?: At an investor's conference last week, Electronic Arts executives revealed the company would be a major supporter of the upcoming PSP platform, with up to a dozen titles in the year after launch, with its major franchises taking the lead.

So What?: EA also said that development costs for its PSP titles would be a heady $1 to $2 million, even though Sony has not informed this major PSP supporter what the revenue model will be for the platform. This is considerably more than the typical six-figure price tag on most GBA games, although the expected $39.95 list for PSP games and (we hope) lower production costs of discbased media will help offset the bigger budgets.

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