New lines of PC games bring 'family' fun to mass - Brief Article

Discount Store News, March 6, 2000 by Robert Scally

The plan at eGames is to provide a line of "Family Friendly" computer software--meaning no sex, violence, drugs or other unacceptable content--at budget prices ranging from $4.99 to $14.99, said Bill Acheson, vp of sales and marketing for eGames.

"We've done some research and there's a significant amount of concern among American families that there might be sexual or violent content in personal computer games," Acheson said. "We want to present a product that lets them know that they can be confident about our software."

The company has even developed a "Family Friendly" logo that is emblazoned on all of eGames' packaging.

EGames aims to capitalize on the growing household penetration of personal computers and the demand for budget-priced, family software likely to follow.

"We are trying to convince retailers that there are some new demographics associated with these new PC users," Acheson said.

Retailers need to merchandise their family software in such a way that it stands out from other PC and console game products, Acheson said. "We've developed a brand, brand positioning, a whole portfolio of products and a merchandising plan designed to have a very high level of appeal to the new gamer."

The household penetration of personal computers is on the rise while the cost of buying a PC is declining, Acheson pointed out.

Retail sales of consumer desktop PCs were up 37% for 1999 in unit terms when compared with 1998, according to marketing information provider NPD Intelect.

Despite price competition, dollar sales growth for PCs during 1999 was 9%, according to NPD.

By the end of 2000 as many as 70% of American homes will be equipped with PCs.

At the same time, the interactive games industry has grown to $7.4 billion in 1999, up 20.7% from 1998, according to PC Data of Reston, Va., a market research firm.

It's expected that the interactive gaming software market will grow to $23 billion by 2003.

Many of the new wave of computer users will be considered "casual" or "light" gamers, those who play familiar games such as solitaire on their computers in spurts of a few minutes at time. EGames' pricing strategy caters directly to the "light" gamer market with titles such as "Arcade Classics" and "Strategy Multi-Pack," which each contain numerous games on the same CD-ROM.

The multi-packs contain a sampling of eGames' software and are designed to be displayed near cash registers, on a hook-and-hang display for example, to appeal to new computer users.

Due to the rise in penetration of PCs, Acheson said the computer software's status is quickly shifting from specialty item to mass market product.

Acheson compares what is now happening in interactive software to what happened to home video a decade ago. When enough homes had VCRs the price of home videos became low enough that discount stores, followed by drug and food stores, jumped into the business.

"Now it's to the point where those chain [discount stores] are becoming the leading players in the software market," Acheson said.

Headquartered in Langhorne, Pa., eGames was founded in 1992 and originally named RomTech. The company changed its name early last year when it began to focus on its "Family Friendly" line of computer software.

Last year eGames renegotiated a distribution deal it had with GT Interactive, a move that allowed eGames to build its own direct relationships with retailers.

By the end of its first financial quarter for 2000 ended Sept. 30, 1999, 19 of the 20 top retail chains had agreed to carry eGames software.

The company's direct retail relationships now include Wal-Mart, Kmart, Target, Circuit City, Best Buy, CompUSA, Rite Aide, Office Max, Office Depot, Staples, Sam's Club, BJ's, Musicland, Electronics Boutique, Babbages, Hastings, Fry's Electronics and Toys "R" Us, among others.

Overseas and foreign language markets are also potential growth areas for eGames.

EGames currently distributes its products in 35 nations and six languages, English, French, German, Spanish, Italian and Portuguese.

While eGames' products have low prices, they offer high margin to retailers and the possibility of customization for product packaging, racks, point-of-purchase materials or other items designed to increase impulse buys.

As the personal computer becomes more of a mass-market item, more budget-conscious consumers will be looking for computer software and games, placing eGames in a good position to prosper.

"Clearly there's a mass market retailer opportunity for years to come in PC software," Acheson said.