| Show Product delays and prices hurt business of video gaming Mike Musgrove The Washington Post The video game industry ought to be riding high Public interest has never been greater overall sales are up and blockbuster blockbuster blockbuster block block- buster movies such as King Kong and Star Wars routinely routine routine- ly look to video games to extend their reach into popular culture But companies that make and sell video games are suffering caught up in an unusual set of or circumstances that are cutting profits and jobs just when they should be in top form Major game publishers Inc Atari Inc and Electronic Arts Inc all missed their most recent earnings expectations and each company has had layoffs in recent months Retailers such as Electronics Boutique Holdings Corp and Corp have faced similar problems There are many many things that are happening that are not normal said Michael analyst with Morgan Securities Inc In 2005 total sales of hardware hardware hardware hard hard- ware software and accessories rose to an time all-time high of billion according to research firm Group Inc big enough to make games a force in pop culture with aspirations of rivaling movies and music But the efforts of three major game-console game makers to come out with new-generation new devices have disrupted the industry Microsoft Corps got gota a head start by debuting in November but shoppers continue contin contin- ue to struggle to find any of the systems in retail stores Sony Corps on 3 is due out this spring but analysts believe it could be delayed And Co has released few details about the new system it will roll out later this year New game systems are expensive propositions for companies companies companies com com- that make titles such as Halo and the Call of Duty war games to play on them Game development costs tend to double double dou dou- double ble for each new generation of hardware as makers figure out ways to push new technologies while giving consumers compelling compelling compelling com com- reasons to reach for their wallets As costs rise this is still stilla a business largely stuck at a 50 price point for new titles The crunch is worse than usual because publishers do not know when the new gaming systems will be widely available available available avail avail- able so they do not know how many resources to devote to development said Meanwhile sales of games for last years year's devices have taken a hit now that game fans see the devices as somewhat obsolete There are other potential problems The new-generation new consoles look best when e I 4 ri k I f a. a o c o Y Q C QC G r t- t 1 r i The video game industry ought to be riding high Public interest has never been greater and overall sales are up but companies that make and sell video games are t r J suffering caught up in an unusual set of circumstances that are cutting profits and ana I jobs just when they should be in top form 1 plugged into high-definition high TV sets and it is not clear how many people will buy a new television just for the latest version version version ver ver- sion of the Madden football game And the cost of the new gaming gaming gaming gam gam- ing systems continues to rise Perhaps no question haunts the industry more at the moment than the mystery of when Sony's 3 will come out and how much it will cost A spokesman for Sony said yesterday that the 3 is set for a release this spring as the company has been saying for almost a year But a new report from Merrill Lynch Co that the might be delayed in this country until next year has been taken seriously seriously seriously seri seri- enough by analysts to tomake tomake tomake make Sony share prices take a tumble this week It gets worse for Sony investors The reports report's authors looked at the list of components going into the new and calculated that the devices will cost the company apiece to build The company will have to give the console a high retail price or sell it at a major loss the report ed Sony President Ken has said that he expects the device to be expensive While game consoles have typically enjoyed a year five-year Sony has said it is shooting for 10 years this time out Microsoft which still hasn't profited from the original rolled out the last fall in the hopes of gaining a competitive advantage over Sony The company has sold as many as it can manufacture about in North America but that's fewer than Wall Street analysts had expected expect expect- ed not to mention shoppers who have been unable to find the devices on store shelves While Microsoft and Sony have been circling each other the market for video games has changed exploding with options for consumers Electronics stores are having to cram in games and on add-on gadgets gadgets gadgets gad gad- gets to plug into a growing array of game devices including multiple multiple multiple mul mul- tiple systems from the big man man- For Sony theres there's the 2 and the 7 Portable while has the the DS and several styles of Games for personal computers continue to tobe tobe be popular and a new form of J. J gaming 0 online 01 me ro role playing 1 p e-p 1 games has become hugely a popular One online game World of has more than 5 million subscribers Doug ft Lowenstein president of the t Entertainment Software r ud Association on deemed the industry's indus indus- i try's troubles to be cyclical and entirely predictable What's important is that gaming is growing in popularity and consumers consumers consumers con con- sumers will continue spending as the industry works out its kinks he said The early adopters all know what's going on he said They all expect the 3 this year That always tends to slow slowdown slowdown slowdown down purchases for the current platform no matter how good I Ithe the current games are They're sitting on their dollars more than they will be a year ear or two w from now |
