Video games becoming major industry
Published: Wednesday, January 26, 2005 at 6:01 a.m.
Last Modified: Tuesday, January 25, 2005 at 10:10 p.m.
A good video game can cost $10 million to make and nearly that much to market. It can take designers, programmers and producers 30,000 hours to bring it from idea to reality.
But a popular title - such as the Madden NFL 2004 football game - can bring in $236 million.
That kind of long-bomb potential for profits is why the video game industry broke the $7 billion sales barrier in 2003, or about $10 billion if you include software and hardware. That was double the revenues from that sector in 1996 - and also more than revenue generated from movie ticket sales.
Experts say there are several reasons gaming is growing so rapidly: The graphics are getting better and stories more involved, thus appealing to a wider audience; the hardware to run the games is getting cheaper; and the stigma of video games being "geeky" is a thing of the past, with professional football players and musicians pitching these electronic products.
A concrete example of that growth is Electronic Arts- Tiburon in Maitland. Tiburon, formed in 1994 with three employees, has grown to 400 and plans to continue add 100 jobs a year for the next several years. Electronic Arts bought Tiburon in 1998.
In 1994, Tiburon lost $15 million. In 2000, EA-Tiburon brought in $130 million. Last year, the firm more than tripled that with $410 million.
Of course, that success is built on the company's flagship franchise: Madden NFL. In the past 10 years, the series has gone from blocky players so pixilated they don't even have jersey numbers to characters so detailed you can see their faces wince in pain when they get tackled.
But Shawn Minors, an avid video game player from Port St. John, prefers Sega's video football game - NFL2K5. The game play is better than Madden's, he said, and the game is cheaper ($19.99, compared with Madden's original price of $49.99, but since lowered).
Minors said he doesn't think EA's five-year exclusive licensing agreement with the NFL (EA will be the only game company allowed to re-create NFL players, teams, stadiums and images) will kill the competition among football video game producers.
Other companies "will have to be more imaginative" when developing football games in the future, he added.
Virgil Cox, the store manager at EB Games in Viera, Fla., said some of his customers have expressed concerns that EA's exclusive arrangement with the NFL will hurt the competition among football video game producers.
"Sega really pushed EA this year because of the competition," Cox said.
EA-Tiburon's Vice President and General Manager Steven Chiang wouldn't comment on whether the new deal would curtail competition, but said EA-Tiburon is committed to making the most realistic and entertaining games.
And the demographic for those games is wide - from the teens to the mid-30s - and percentage sales gains are growing in double-digit figures in recent years, said Hal Halpin, president of the Wilton, Conn.-based Interactive Entertainment Merchants Association.
"The gaming world has matured with its audience," he said, adding that gamers who grew up with Atari and Coleco Vision now are buying titles for the Sony PlayStation 2, Microsoft Xbox, Nintendo GameCube and computer. "It's become part of their broader entertainment diet."
Many times, that virtual diet includes regular trips to retailers such as EB Games, formerly known as Electronics Boutique. The company has 1,500 stores and has been adding 300 stores a year, said EB Games Director of Marketing Liz O'Sullivan.
"We are in a growth mode," she said, adding that the gaming has surpassed the movie industry in total annual revenues. "With the quality of the games and different systems geared for different age groups, there is something for everyone. We are going where the gamers are."
Reader comments posted to this article may be published in our print edition. All rights reserved. This copyrighted material may not be re-published without permission. Links are encouraged.
Comments are currently unavailable on this article