Now that the Christmas selling season is over, it's safe to proclaim the big retail winner under the tree: interactive games. Sales of video-game software and hardware are expected to hit a record $5.4 billion for 1997, thanks mainly to blockbuster holiday sales. The computer-game business surged as well, powered in part by swift-selling cheap computers. There were a lot of winners, but not everyone participated in the flood of demand for interactive entertainment.
Industry executives and analysts had expected a strong Christmas, mainly because of the increasing market penetration of the latest game consoles from Nintendo and Sony. Several million of both the Nintendo 64 (introduced last year) and the Sony PlayStation (launched in 1995) are now hooked up in American homes.
But few expected the intensity of the sales surge the industry has experienced throughout 1997, and especially late in the year. The surge affected both video games - those sold for TV-display consoles like the Nintendo 64 - and PC games, which are typically played via CD-ROM on a standard computer.
"This whole year has been a surprise," says Ed Roth, president of Leisure Activities Tracking Services for NPD Group, a market research firm. "Nobody would have predicted it would do this well."
NPD projects that while the toy industry in general will have grown 8 percent to 10 percent in 1997 by the time all sales are tallied, the video-game business will have expanded by up to 45 percent.
As for the Christmas season, "It's way bigger than we thought," says John Taylor, analyst with Arcadia Investment. "The numbers are off the charts."
Actually, the numbers aren't in yet. Most research firms, retail chains, hardware makers and software publishers say they won't begin the painstaking chore of scoring the holiday sales season until this week. Nonetheless, a smattering of clues provide a preview of what those numbers might show.
Here are some preliminary conclusions:
Virtually all Nintendo titles sold well.
While there are hundreds of games made for the Sony PlayStation, there are only about 40 available for the Nintendo 64. So when new games come out, buyers flock to the stores and drive sales of many of the $50-and-above titles to more than 1 million copies.
(In a post-Christmas promotion expected to be announced Monday, Nintendo is dropping the suggested price on seven different games to $39.99.)
Backed by a Taco Bell tie-in, Nintendo's "Diddy Kong Racing" sold an estimated 425,000 to 460,000 copies in the first two weeks of December alone, according to the NPD Group. "Mario Kart 64," meanwhile, a rare racing game available on the Nintendo 64, sold about 140,000 copies during early December. (Later figures aren't available.)
For an industry in which sales of 100,000 to 200,000 units signal profitability, such figures are impressive.
One possible exception to the rule: Interplay's "Clay Fighter." Already the title is being discounted to about $39.95 - a good $10 to $20 below typical Nintendo game prices. "That's a really bad sign," says Kraig Kujawa of Computer Gaming World, an industry publication.
Top selling video games - November 1997
Rank/ Title/ Platform/ Publisher/ Price
Diddy Kong Racing/
2. NFL Quarterback Club 98/ Nintendo 64/ Acclaim Ent./ $61
3. NBA Live 98/ Playstation/ Electronic Arts/ $43
4. Goldeneye 007/ Nintendo 64/ Nintendo/ $61
5. Mario Kart 64/ Nintendo 64/ Nintendo/ $60
6. Star Fox 64 w/rumble pack/ Nintendo 64/ Nintendo/ $60
7. Crash Bandicoot 2/ Playstation/ Sony/ $35
8. Super Mario 64/ Nintendo 64/ Nintendo/ $60
9. Madden 64/ Nintendo 64/ Electronic Arts/ $60
10. NFL Gameday 98/ Playstation/ Sony/ $35
11. Tomb Raider 2/ Playstation/ EIDOS/ $50
12. NASCAR 98/ Playstation/ Electronic Arts/ $41
13. Madden NFL 98/ Playstation/ Electronic Arts/ $37
14. Final Fantasy VII/ Playstation/ Sony/ $50
15. Extreme G/ Nintendo 64/ Acclaim Ent./ $60
16. Crash Bandicoot/ Playstation/ Sony/ $22
17. Jet Moto 2/ Playstation/ Sony/ $41
18. San Francisco Rush/ Nintendo 64/ Midway Home Ent./ $60
19. Super Mario Land II/ Game Boy/ Nintendo/ $19
20. Jampack Volume 2/ Playstation/ Sony / $4
SOURCE: NPD Group
Hollywood studios continued to struggle in the interactive arena.
Not too many big-name entertainment companies are deeply involved in the field. But two that are - DreamWorks and Fox - found a couple of their most prominent titles faltering late in the year.
DreamWorks' "The Lost World: Jurassic Park" for the PlayStation, for instance, ranked only No. 33 among video games during the first two weeks of December, according to the NPD Group. And Fox's "Croc," a PlayStation title for which the studio had high hopes, was ranked down at No. 47.
To be sure, those titles were released earlier in the year and performed better back then. Moreover, DreamWorks has yet to release a separate Jurassic game (this one on PC) that's expected to sell well. But many had expected the existing Jurassic Park game still to be stomping the competition.
Top Selling PC Games - November, 1997
This Month/ Last Month/ Title/ Publisher/ Average Price
Riven: The Sequel to Myst/
2/ 4/ Myst/ Broderbund/ $19
3/ 1/ Microsoft Flight Simulator/ Microsoft/ $42
4/ */ Barbie Magic Hair Styler/ Mattel/ $34
5/ 5/ Lego Island/ Mindscape/ $36
6/ 3/ Jedi Knight: Dark Forces II/ LucasArts/ $44
7/ 8/ Deer Hunter/ GT/ $20
8/ 7/ Microsoft Age of Empires/ Microsoft/ $47
9/ 18/ Barbie Fashion Designer/ Mattel/ $41
10/ */ Tomb Raider II/ Eidos/ $48
11/ */ Monopoly Star Wars/ Hasbro/ $46
12/ */ Tonka Search & Rescue/ Hasbro/ $29
13/ */ Barbie Ocean Discovery/ Mattel/ $43
14/ 20/ Monopoly Game CD-ROM/ Hasbro/ $29
15/ */ Tonka Construction/ Hasbro/ $20
16/ */ Battleship/ Hasbro/ $29
17/ 6/ Command & Conquer: Aftermath/ Virgin/ $22
18/ */ Madden NFL '98/ Electronic Arts/ $43
19/ 13/ NASCAR II/ CUC Software/ $45
20/ */ Wheel of Fortune/ Graphix Zone/ $21
* Title not on last month's top selling list
SOURCE: PC Data
Productivity and education titles didn't sell nearly as well as games.
No one can attest to this trend any better than Broderbund Software. Its "Riven," the sequel to ultra-popular "Myst," outdistanced even the rosiest of projections. The company has shipped more than 1 million copies of the hit game since its late-October release, roughly doubling many analysts' forecasts. The intricate puzzle game typically sells for about $40.
But weakness in Broderbund's education ("Carmen Sandiego") and productivity ("PrintShop") products offset much of that gain, and analysts downgraded their ratings of Broderbund stock after company officials in December acknowledged the growing weakness. Unlike with games, freshness doesn't count for much in evergreen categories like education and productivity, so consumers apparently feel less need to rush out and buy the newest software upgrades.
"Productivity and education have been declining for most of 1997," says Leonard Brecken, analyst with Oppenheimer & Co. "They all claim the budget PCs will help them, but I haven't seen any evidence of it."
Among the other companies expected to have been hurt over Christmas in these categories: Walt Disney, which already has scaled back its development of "edutainment" products to reflect the market dynamics.
In the high-profile battle among interactive football games, there were two winners.
Both Acclaim's "NFL Quarterback Club 98" and Electronic Arts' "Madden 64" badly wanted to be No. 1 on the Nintendo game field. But the former, on the strength of ground-breaking graphics, has begun pulling away, finishing November as the second biggest selling Nintendo title, vs. No. 9 for Madden. Still, the strong showing by Electronic Arts, which is new to the Nintendo platform, illustrates how much opportunity Electronic Arts, a sports-game specialist, may have for growth on that console.
Toy makers continued to climb the interactive-game charts.
Only a couple years ago, the likes of Mattel and Hasbro were mere blips on the interactive screen. Now they are major forces.
In November, the last month for which data are available, Mattel had the No. 4 seller among PC games with "Barbie Magic Hair Styler" and Hasbro had five of the Top 20 PC titles, led by its new "Monopoly Star Wars."
Sega's downward spiral continued.
The venerable video game company found its Saturn console less appealing than ever among consumers. Some toy stores, such as some Kaybee outlets, didn't carry the item at all. Others simply placed it on the low-volume bottom row of retail shelves.