Set-top wars heat up; game makers vie for share - video games

Discount Store News, June 3, 1996 by Robert Scally

LOS ANGELES--Last month's Electronic Entertainment Expo (E3) here highlighted some of the trends that should help interactive software and hardware make the transition from a niche product aimed at video gamers and computer needs to a packaged goods commodity that is ready to fight for retail shelf space and a bigger share of consumers, entertainment dollars.

An army of new titles with greatly enhanced graphics and gaming capabilities were introduced at E3, as was marketing programs that involve cross-promoting multimedia with other products and home entertainment such as home video. Retailers will also be confronted this fall with a new battle between set-top game makers.

One-half million units of Nintendo of America's new N64 cartridge game will be shipped to the U.S. market during the fourth quarter, with another 500,000 on the way in the first quarter of 1997. Capable of full 3-D graphics, a dozen N64 titles will be out this fall and more than 50 other titles are in development.

The prices for Sony's PlayStation and Sega of America's Saturn platforms were slashed to $199, and a host of new titles are being introduced for both systems.

A number of other programs ranging from action games like Activision's MechWarrior 2: Mercenaries (a prequel to its popular MechWarriors 2) to children's education titles like Creative Wonders, Madeline: Thinking Games sport sharper offer more detailed graphics than have been seen in the past.

Nintendo's cartridge format N64 machine displayed dazzling 3-D animation, as did PC CD-ROM titles such as Mattel Interactive's Barbie Fashion Designer.

Internet components were a hot trend, and Sega hopes it will keep an upper hand in the set-top wars with the fall release of Net Link, a $199 add-on component that includes a 28.8 modem and a customized browser geared especially for customized World Wide Web home pages.

Hollywood became even more involved in the multimedia world at E3 with the arrival of studios like MGM Interactive. A number of Hollywood studios have been burned by the flops of movie-related titles, and MGM officials said that they will follow a more focused path-developing just five titles in a range of genres from action to family to movie tie-ins, said Fred Skoler, director of production for MGM Interactive.

"We're not doing shovelware," Skoler said. "We want to be selective and work with outside developers to create the product so we can put money into the games instead of infrastructure."

Publishers such as Disney Interactive, Creative Wonders, Thynx (a publisher of educational CD-ROMs) and Essex Interactive Media (a maker of budget-priced titles) are taking more of a packaged goods approach to marketing multimedia rather than following the traditional computer software sales model.

Thynx has undergone a name change (it was formerly the Bureau of Electronic Publishing) and has added new packaging that includes 3-D pictures. It is also using incentive promotions at the distributor, retailer and consumer levels to help build demand, said Paul Rynshall, vice president of domestic sales for Thynx.

Essex is building an extensive line of quality budget-priced titles and is packing its titles in slick cardboard boxes, each with its own unique art rather than in shrink-wrapped jewel boxes as a means of combating the perception that good lower-priced software is inferior to software with a higher price tag, said Joe Spector, vice president of sales and marketing for Essex.

Essex has more than 100 titles priced at $9.99. Many multimedia executives said that their experiments with budget-priced software had failed miserably.

But Essex has been successful, and its products sell well in stores ranging from Kmart to Egghead Software, Spector said.

Even some multimedia giants are exploring the use of budget-priced product. Disney Interactive is working on a line of fully functional, budget-priced games called Hot Shots that is set to debut in October and will be priced at about $20, said Joseph Adney, Disney Interactive's director of edutainment marketing.

Disney Interactive has helped make multimedia a regular feature of Walt Disney's product mix and not just an ancillary promotional item aimed at helping sell a theatrical movie or home video, Adney said.

"Walt Disney Co. is at its best when it can get synergies going," Adney said. Disney has been able to reach consumers over a wide spectrum of channels with a wide variety of products, he said.

In some cases, Buena Vista Home Video, which handles distribution for Disney Interactive, has been able to place video, audio and CD-ROM products from related titles side-by-side in retail displays, Adney said.

"It creates one-stop shopping for parents," Adney said.

Many multimedia publishers are also building features into titles that extend game play or other activities outside of the computer.

Mattel's Barbie Fashion Designer, which will retail for $40, allows girls to design outfits on the computer for their Barbie dolls. Girls can put actual material into a color printer and print out a pattern that can be glued together to create dresses for Barbie. Mattel also displayed a wireless infrared computer mouse called Magic Wand that can click on hot spots on a computer screen from across a room. The Magic Wand is due out early next year.