Business

THE GREY MARKET

Hot-selling adult titles prove that video games aren’t just for kids

MICHAEL SNIDER August 18 2003
Business

THE GREY MARKET

Hot-selling adult titles prove that video games aren’t just for kids

MICHAEL SNIDER August 18 2003

THE GREY MARKET

Business

Hot-selling adult titles prove that video games aren’t just for kids

MICHAEL SNIDER

I TURN THE CORNER and duck just in time to dodge a laser disc that nearly takes my head off. With speed and agility honed by years of gaming, I dash into the hallway, centre the targeting reticule on the advancing red neon security guard and launch a disc right back. ZAP! The streaking blue line right through the guard’s burly frame says it all. Another kill. Two company reps, chaperoning my test run of Tron 2.0 from a discreet distance, offer congratulations, but I barely hear. I’m busy kicking butt.

The movie on which the game is based came out in 1982, when I was 12, and was spun off into an arcade game the same year. I remember racing my light cycle (okay, my 10-speed) down to the bowling alley/arcade on Walkley Road in Ottawa, quarters practically spilling out of my pocket. Fast-forward 20 years and I’m in a public-relations firm’s offices, reliving my childhood with a preview copy of the updated game. I can’t wait for the official release in late August so I can grab my own copy. It’s almost like they made it just for me.

Actually, they did. There are a lot of us who grew up playing Atari and ColecoVision in an era when owning a console was rare and very cool. Video game developers now call us the grey market: adults who still like to spend evenings running through digitally designed sets shooting things, or playing God with the lives of Sims characters. Games aren’t just for kids: according to a U.S. survey by the Entertainment Software Association, an industry research group, the average age of gamers is 29, and 41 per cent of most frequent computer gamers and 22 per cent of console gamers are over 35. These people own homes and cars, have kids of their own and money to spend on games, graphics cards and consoles like PlayStation 2 and Microsoft Xbox.

All of which makes the grey market very attractive. In 2002, global sales of games and consoles totalled more than US$30 billionmore than Hollywood’s box office receipts that year. About US$650 million of those sales

were in Canada and US$14 billion south of the border. On its own, Grand Theft Auto: Vice City, a violent action title with a retro ’80s theme, sold more than 1.4 million copies at about $60 a pop within three days of its October 2002 release. That helped drive an industry that’s growing 11 per cent a year, reports PricewaterhouseCoopers LLC. And by 2007, the company forecasts, software and hardware for games will be worth about $56 billion in North America alone. Put simply, video gaming is the world’s fastest growing form of entertainment. “Nobody would be in this business if they weren’t making money,” says Lisa Webber, Microsoft Canada’s marketing manager of PC games.

There are more profits on the horizon. Technological advances in computer chip development enable companies to put faster console systems and games with better graphics out year after year, so consumers keep having to upgrade their systems and buy updated titles if they want to enjoy the latest and greatest. Currently, Sony, Microsoft and Nintendo dominate the console industry. They sell their systems at cost or even at a loss, and then make their profits on the games. The business formula for computer gaming differs slightly since, unlike consoles, computers aren’t single-purpose machines built by the game developers. But the goal’s still the same—designing more sophisticated and expensive products to appeal to adults. “They have relatively high disposable incomes,” says Eric Lundgren, product manager of high-end graphics cards for Markham, Ont.-based ATI Technologies Inc., “and are very informed buyers.”

So developers are pumping out titles such as Starsky and Hutch, Tron and several Star Wars titles—all hits from the ’70s and ’80s. Tron 2.0 is published by Buena Vista Interactive, a newly created wing in the Disney empire that targets older gamers. “The adult market is huge,” says Michelle Liem, a Buena Vista marketing manager. “They are people who grew up with Disney. They’re the same guys and girls who played Tron in the arcade

and are now older but are still playing games.” Ubi Soft Entertainment Inc., a Montrealbased video game publisher and developer, even changed its operating strategy in 1999 to focus on older gamers. The company’s first success was a family title called Rayman, but it has since bought the rights to produce a series of action shooters based on popular Tom Clancy novels. In its most recent quar-

ter, having sold 4.5 million copies of Tom Clancy’s Splinter Cell worldwide, Ubi Soft turned a profit of $48 million on revenues of $697 million.

The buyers are guys like Shayne Price. A construction company project manager from Ancaster, Ont., Price is 30, has just bought his first house, and is married but with no kids to dominate his time. He estimates

he plays three hours a night in the winter, somewhat less in the summer. He upgrades his computer every two years or so, and has been buying games since 1996. “I enjoy shooters, mainly,” says Price, referring to sniper-style computer games. “It gets pretty intense. It releases stress, you escape from the workday and, before you know it, three hours have gone by and you’ve

lost yourself in something you like.” Price started playing while in university, where gaming is enormously popular. Recently, the Washington-based Pew Internet & American Life Project conducted a study of university students’ habits. Every single student polled in the study had played a video game. Two-thirds said they were regular or occasional players.

Still, knowing there’s a market out there and getting people to buy a product are two different things. Developing games has its risks—it costs as much as $14 million and takes as long as four years to develop a single game. So companies go all out to jam a product chock full of cinematic scenes, hire famous actors to provide voices for characters, and solicit advertising for in-game product placement. Ubi Soft’s Splinter Cell features Canadian actor Michael Ironside’s voice for its main character. Bruce Boxleitner, who played Alan Bradley in the original Tron movie, makes a comeback in the updated game, and Christopher Walken, Gary Oldman and David Duchovny are among the stars whose voices will be heard in video games scheduled for release this coming fall.

Some titles aimed at adults have become controversial for their graphic sexual and violent content, and for the manner in which female characters are depicted. About eight per cent of the titles released in 2002 carried a “Mature” rating from the Entertainment Software Rating Board, a group established by game-makers to police the industry and warn parents away from material that’s inappropriate for children. Invariably, though, the slash-and-blast first-person shooters and action titles make their way into the hands of kids. Attempts to impose stricter labelling rules have been a failure in Canada. The B.C. legislature passed the Video Games Act in 2001, but it was never enacted—it failed to receive royal assent prior to the election later that year.

Meanwhile, more violent games are on their way. Doom III, Half-Life 2 and CounterStrike: Condition Zero, all expected out this year, are eagerly anticipated. Ubi Soft general manager Olivier Ernst estimates that, at the annual Electronic Entertainment Expo earlier this year in Los Angeles, “70 per cent of the new releases were shooters. That’s the trend right now, for sure.” And it’ll stay that way so long as that’s what the profitable grey market demands. fifl