Things Look Up For Game Industry

Some big-name titles that didn’t make it out in 2003 are instead scheduled for early 2004, and may stave off the burnout that usually comes when a console hits its fourth year, as Sony’s PlayStation 2, Microsoft’s Xbox and Nintendo’s GameCube are about to do.

Having sold approximately 22 million consoles in North America since launching its PlayStation 2 game console, Sony Computer Entertainment dominates the games market. Historically, game sales tend to dip after new generations of consoles reach the four-year mark. This is the time when so many people own the game consoles that everybody who might buy a PlayStation 2 already owns a PlayStation 2. It’s also the time when people start to lose interest, the market reaches its saturation point and consumers lose interest in existing systems.

With this generation, however, such big titles have been announced for early 2004 that the market could remain solid.

“Next year could be great just based on the games that did not make it out in 2003,” says Andy McNamara, editor-in-chief of Game Informer magazine. “The sales of ‘Halo 2’ and ‘Gran Turismo 4’ will be enough to start the year right.”

“Halo 2,” a first-person perspective shooter published by Microsoft, is the sequel to the biggest-selling game released for the Microsoft Xbox game console — “Halo.” The original “Halo” was so popular, in fact, that some industry insiders refer to Xbox as “the Halo delivery system.”

When Microsoft released Xbox, company representatives described it as the most powerful game console ever made. “Halo” was the game that proved them right. With spectacular graphics, fast action and networkable multiplayer options, “Halo” proved once and for all that first-person perspective shooters could succeed in the console market. (The only other first-person shooter to succeed on this level was “Goldeneye 007,” for Nintendo 64.)

And then there’s the upcoming “Gran Turismo 4,” the latest game in Sony Computer Entertainment’s mega-popular series of ultra-realistic driving simulations with dozens of models of real cars — both common and exotic — that look and handle exactly like the cars they represent. No other driving simulation so perfectly captures the spirit of mundane driving.

McNamara says that it could possibly become the best-selling game ever released on PlayStation 2. The current titleholder is Rockstar Games’ “Grand Theft Auto: Vice City,” which sold more than 9.5 million units and has not yet been released in Japan.

Since roughly twice as many people own PlayStation 2 as own Xbox and Nintendo GameCube combined, best-selling PlayStation 2 games are the de facto best-selling games in the industry.

Two of the biggest games that missed their projected 2003 launch dates were “Doom 3” and “Half-Life 2,” both first-person perspective shooters for PC computers. Sequels to two of the most popular PC franchises of all-time, both titles were awarded game of the show at past Electronic Entertainment Expositions (E3, the biggest trade show in gaming) — “Doom 3” in 2002 and “Half-Life 2” in 2003. In many ways, the E3 game of the show award is the most prestigious trophy in gaming.

But even big-name sequels like “Doom” and “Half-Life” will not be enough to save the sagging computer games market, says video game industry analyst John Taylor of Portland-based Arcadia Investment Corp. “People have migrated. They’re playing games on TVs. They’re not playing as much on PCs.” According to Taylor, high-profile releases like “Doom 3” may bring a two-month spike to the PC games market.

” ‘Doom3’ and ‘Half-Life 2’ are hard-core titles for a hard-core platform,” says Jeff Brown, vice president of Electronic Arts, the largest and most successful independent game publisher. According to Brown, the market is dominated by more casual gamers — people who purchase five to 10 games per year and tend to purchase games with sports themes.

This year’s best-selling game likely will turn out to be “John Madden NFL,” which is published by Electronic Arts — most estimates are that somewhere between 4 million and 5 million copies will be sold.

As the market shifts more toward casual gamers, prices tend to go down.

“Pray for hardware price cuts below $149 (for Xbox and PlayStation 2),” says Taylor. “At $129, those systems will be a great value. I think you will see more ‘best of’ and close-out games selling at lower prices, too.”

The other shift will be in new handheld game systems. Sony has already announced plans to release PSP (PlayStation portable) by Christmas 2004. The new system will be significantly more powerful than Nintendo’s Game Boy Advance, sporting a larger screen and reading software stored on mini-DVDs. Sony has not demonstrated the unit publicly, but it is said to be nearly as powerful as PlayStation 2.

Taylor estimates that PS2 will retail for $149 — $50 more than Game Boy.

Having lost its lead in the console market, Nintendo is unlikely to sit still as Sony breaks into portable gaming. Nintendo has already said it plans to announce new hardware this May. Many people believe the new system will be a GameCube-compatible, enhanced version of Game Boy that plays games on both cartridges and GameCube-compatible mini- DVDs.

Nintendo executives refuse to comment on such rumors, confirming only that they will make some kind of announcement later this year.

With the Sony label’s cool factor and appeal to adults, Nintendo will need to maintain both a lower price point and a superior library of games if it hopes to maintain control of the portable market. Game Boy products have long commanded more than 90 percent of the portable games market.