The mainstream media has caught the video game bug. The New York Times ran an article today proclaiming that the video game industry is back. They admit it will take some time for the market to grow and there are doubts that it will ever reach the heights seen before the gaming crash in 1983.
Focusing on Nintendo, some new sales goal information has been divulged. In fact, Nintendo has revealed it hopes to sell 1.3 million NES units over the holiday season. If they can achieve these types of sales, you can bet that they will be the ones to beat. You can read the full article below:
Don’t look now, but here comes Pac-Man. Again. Video games, the entertainment craze blamed for everything from sore thumbs to the decline of the nation’s youth, are making a comeback.
Three companies will be selling home video game machines this Christmas. Retailers that have not sold machines for two years are stocking up again. And television will soon reverberate once more to the zapping and beeping sounds of commercials about invading aliens and missile warfare. ”The fun is back,” Atari says in the first television commercials it has made in two years.
”It’s like back to the future,” said James H. Levy, president of Activision, a video game cartridge company that went from rags to riches to rags.
A New Audience
No one expects video games to be the fad they were in 1981 and 1982. Manufacturers estimate that 2 million game machines will be sold in the United States this year, far less than the more than 8 million sold when the fad was at its peak in 1982. Some 10 million to 15 million cartridges will be sold, compared with 75 million back in 1983.
Still, manufacturers and retailers hope that improved technology and a new audience will make video games, which are played by plugging them into television sets, a steady business.
”We have kids that are just coming of age who were not around for the first time,” said Ronald Judy, vice president of marketing for Nintendo of America, which sells game machines.
For those with poor memories of that period, a brief reminder is in order. Atari Inc., a pipsqueak of a company a few years earlier, rose to $2 billion in revenues. Hollywood studios, toy companies and all manner of entrepreneurs rushed to produce game cartridges with names like Demon Attack, Eggomania, Space Vultures and Revenge of the Beefsteak Tomatoes. There were even some X-rated games. For a fleeting moment, game designers became the new rock stars.
But by the end of 1982, the market dried up quickly as consumers were lured to more versatile home computers or simply became bored. Atari shrank to a skeleton and was sold. Most of the other companies left the business. Retailers took a bath as millions of cartridges remained on their shelves. Atari dumped truckloads of unsold cartridges into a landfill in New Mexico.
Japanese Join In
The comeback involves one battle-scarred old-timer – Atari – and two Japanese companies that were only peripherally involved in the first round. This is ironic because video games had been the only consumer electronics product that the Japanese did not dominate, although they did make some of the most popular software, such as Pac-Man, Donkey Kong and Space Invaders.
Now, by persistence and timing, the Japanese may come to control the video game market after all. The market for home video games developed later in Japan than in the United States, and is still fairly strong. Japanese manufacturers are therefore able to make a run at the American market, whereas most American concerns have left the business.
Leading the way is Nintendo, the Japanese company that developed Donkey Kong and which is by far the video game leader in Japan. Tests Conducted in U.S. The company, which has its American headquarters in Redmond, Wash., sold about 90,000 machines in a test-marketing last Christmas in New York City. It did another test in Los Angeles starting in February. Now it is going nationwide. Also entering the market is Sega Enterprises Ltd., an arcade video game company once owned by Gulf and Western Industries and now affiliated with the Computer Services Company, a Japanese software concern.
Both companies boast Japanese-made machines with slick technology. Game cartridges now can have far more electronic memory, and thus far many more levels of play before the game repeats itself. Strategy games are possible in addition to shoot-em-up games. Sega, with American headquarters in San Jose, Calif., is negotiating with Parker Brothers to sell an electronic Monopoly game.
Guns and Robots
The accessories are also more advanced. Nintendo has a robot that reacts to what is on the screen. Both companies are selling guns for shooting at the screen in addition to the traditional controllers.
Prices might be a deterrent to the success of this comeback. Nintendo’s game set has a list price of $180, including the guns and robots. The basic machine and joy sticks alone sell for $100. Sega’s system sells for $120 in the basic model and $150 with the gun. Both are likely to be heavily discounted by retailers. Game cartridges will sell for $20 to $35.
Pursuing a low-price strategy is the Atari Corporation, which has continued to sell its 2600 machine, the original video game machine. The 2600, of which more than 20 million have been sold, does not offer the same quality as the Japanese machines, but it costs only $40.
Atari, based in Sunnyvale, Calif., also plans to sell a new, more powerful machine, the 7800, which was introduced several years ago but never brought to market. The 7800, which will sell for about $80, will play cartridges designed for the 2600. It will also have more powerful cartridges.
Some Retailers Cautious
Nintendo plans to spend $16 million this fall on advertising, Sega more than $9 million and Atari in the ”low millions,” according to officials of those companies. In its heyday, Atari alone used to spend $75 million on advertising.
Most major retailers are carrying the games again, although some remain cautious. Sears, Roebuck & Company, the nation’s largest retailer, is carrying the Nintendo system in its Christmas catalogue but not in its stores. K Mart, No. 2, will carry only the Nintendo machine, and will have it in 700 stores by Christmas, a spokesman said.
Software developers are even more cautious. Activision continues to produce some games for the Atari 2600 but is not developing new ones. A few computer game manufacturers, such as Broderbund and Electronic Arts, have licensed games to Atari, but Atari will have to spend its own time and money to convert the games for use on its machines.
Few companies will develop software for Nintendo and Sega, which rely mainly on an ample supply of games developed in Japan. Both Japanese companies are insisting on manufacturing and distributing all cartridges themselves, a policy the American software vendors do not like. The Japanese companies say it is necessary to prevent the cartridge glut that helped kill the business a few years ago.
By all accounts, the biggest seller this Christmas will be Nintendo, which has the broadest distribution and has retailers most excited. Mr. Judy said Nintendo hoped to sell 1.1 million to 1.3 million machines.
”The arrival of the Nintendo created our interest again,” said James E. Jones, electronics buyer for Gemco, a discount store chain that is carrying video games for the first time in two years. ”We tried it in a couple of stores over the summer and it did real well.”
Atari has ambitions to sell one million 2600 machines and a far smaller number of 7800 machines. Competitors and some retailers, however, question whether Atari is really committed to the business or is merely seizing an opportunity to sell off inventory. Michael Katz, an Atari vice president, said the company was committed and pointed out that Atari had made its first television commercials in two years.
”If this category is handled right, it can be an ongoing category,” said Bruce Lowry, president of Sega of America. Mr. Judy of Nintendo agreed: ”We won’t experience the boom and we won’t experience the bust.”
[Source: The New York Times]