Video game industry getting stale?
By REED STEVENSON and BEN BERKOWITZ
Reuters News Service
SAN JOSE, Calif. - The video game industry is facing a hardening of the creative arteries as aging gamers' tastes increasingly shift toward sequels and games based on movies, industry participants said this week.

With more and more titles chasing the success of their predecessors and content owners digging deep into their libraries to tap older material for quick fail-proof conversion into games, the industry is faced with a question more serious than rhetorical: What's new?

"The gaming industry will shrink unless we start to see new games," said Toru Iwatani, who created Pac-Man, one of the first video games to become a worldwide hit.

One of the industry's first huge hits, published by Namco Ltd. in 1980, Pac-Man crossed gender lines and became a huge hit with women.

At the Game Developers Conference in San Jose, California, a gathering of industry insiders where the talk is more about how games are made than how they are sold, the dearth of new titles and the increasing cost of developing games was a common theme at keynotes and panel discussions.

The high up-front costs of developing games is also pressuring developers to rely more on sure-fire hits and take less risks on new, innovative titles.

Electronic Arts Inc. , the gaming industry's largest publisher, has perfected the art of getting gamers hooked on yearly releases of sports games and turning out versions of movie hits such as "The Lord of the Rings: The Return of the King" and "Harry Potter: Quidditch World Cup."

EA's U.S. market share in 2004 is more than twice that of its closest competitor, and the company generates more revenue in the December quarter than its closest competitor does in an entire fiscal year, driven in large part by those repeat sports and film titles.


CONSERVATIVE GAMERS?

Out of the top 100 games sold in Japan during 2001, 10 were original titles, but that number was halved in 2002 and fell to merely two in 2003.

"The ratio of original titles to sequels is dropping dramatically," said Ryoichi Hasegawa, an industry veteran who was at Sega Corp. before joining Sony Corp.'s gaming business.

Things are little better in the United States, where last December, according to the NPD Group, more than half of the 20 best-selling games on all platforms were sequels or derivatives of existing properties.

Part of the problem is the advancing average age of gamers, which is rising as the industry matures.

Last summer, the Entertainment Software Association, an industry trade group, found that the average age of gamers had risen to 29 years old, dispelling the view that gamers consist mainly of teenagers.

"Core gamers are advancing in age and they are becoming more conservative," Hasegawa told a panel.

Sony , which dominates the global console market, is planning for its PlayStation 2 console to have a lifespan of at least a decade, and its executives acknowledge that with such a long cycle, its user base will naturally age and have different tastes.

"We have to think very carefully about the type of audience we're reaching with our games," Andrew House, an executive vice president with Sony Computer Entertainment of America, said in a keynote address at the conference.

But it is not just EA chasing after proven material. Upcoming titles such as "Halo 2," "Half-Life 2," "Doom III" and "Grand Theft Auto: San Andreas" are all expected to top sales charts this year, in large part because the games that preceded them were so successful.

And licenses for films and TV shows are being snapped up left and right by publishers counting on consumers to opt for something familiar when trying to decide how to spend their $30 to $50 per game in discretionary income.

Just this year, EA has licensed "The Godfather" and Take-Two Interactive Software Inc. has set up an ongoing licensing deal with the Cartoon Network.

Ubi Soft announced Thursday that it had licensed the early 1980s TV series "The Dukes of Hazzard."

Despite the proliferation of sequels and licensed games, Pac-man creator Iwatani said that he had seen this happen before during his 20 year-career, and that new and revolutionary new games appear in a two- to three-year cycle.

"It's difficult right now but I expect to see a recovery in a couple years," Iwatani said.