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Issue Date: Vol. 50, No. 4, April 2010, Posted On: 3/30/2010

Home Videogame Market Continues To Evolve

by Staff Reporter
videogame, video game, arcade games, coin-op games, xrcade, x-arcade, NPD Group, Nintendo, Nintendo DS, PlayStation, iPhone, 3DS, portable gaming, iPod, Electronic Entertainment Expo, Electronic Arts, Michael Pachter, Wedbush Morgan Securities, Kotaku, PlayStation Portable, Sony, Electronic Arts, Battlefield 1943, Madden NFL

America's $9.9 billion consumer videogame industry continued to see sales drop in January and February, said research firm NPD Group. But various developments announced in March indicated that the shape of the home game market might soon be changing, in terms of technology and marketing strategies.

Technologically, handheld videogame software sales continue to be dominated by dedicated systems -- specifically Nintendo's DS, which accounted for 70% of all mobile software sales last year. But games for Apple's iPhone and iPod are rising fast, commanding 19% of handheld sales last year -- nearly double the volume achieved by Sony for its PlayStation Portable platform.

Another technology shift could be portable game players that present 3D graphics, but do not require players to wear polarized glasses. Nintendo said such a product, tentatively named Nintendo 3DS, is slated for release in the next 12 months. More details about the product will be released in June at the Electronic Entertainment Expo (E3) in Los Angeles, Nintendo said.

Marketing of videogames may also be due for evolution. In recent years, the consumer videogame industry has typically provided players free releases of brief, playable portions of upcoming titles -- the equivalent of the movie industry's previews of coming attractions. But according to a March 23 report from Gamespot.com, Electronic Arts may be planning to start charging consumers $10 or $15 for "very long demos" of forthcoming games.

EA is a leading consumer videogame publisher, best known for Battlefield 1943 and the Madden NFL series. Gamespot based its report on recent remarks by leading home videogame industry analyst Michael Pachter of Wedbush Morgan Securities, who in turn said he was quoting top EA officials.

Within 24 hours of Pacter's comments becoming public, EA denied the report or at least tried to soften it. EA's marketing director advised another consumer videogame news outlet, Kotaku, that the company will not charge consumers for "traditionally free game demos" -- even though he confirmed that "paid-for trials are among a number of options being considered." However, EA officials stressed that no firm decisions have been made about rolling out any such new marketing strategy, what games might be affected, and what prices might be set.

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