Tue, Nov 09, 2004 - Page 16 News List

Video games: The big sell and the biggest sellers

The marketing budget for Halo 2 is "tens of millions of dollars", perhaps more than the cost of developing the game itself


A screen shot from Halo 2, the new video game from Microsoft, exclusively for Xbox players. The blockbuster mentality of Hollywood has pervaded the video game industry.


By midnight on Sunday, as many as a hundred fans -- mostly men in their late teens and 20s -- will line up near Union Square in New York, eagerly awaiting their first glimpse of the sequel to a science-fiction blockbuster.

The line won't be in front of a movie theater, but rather at the EB Games outlet on East 14th Street. Those who show up there -- and at more than 6,500 other stores playing host to midnight events across the country -- will be able to buy copies of Halo 2, a video game for the Xbox system published by Microsoft Game Studios.

The anticipated release of Halo 2, the sequel to Microsoft's best-selling 2000 game, is the latest and perhaps the best indication of how the blockbuster mentality of Hollywood has pervaded the video game industry. As development budgets for the most advanced games approach US$20 million, the stakes for producers have risen accordingly. According to Microsoft, the marketing budget for Halo 2 is "tens of millions of dollars," perhaps more than the cost of developing the game itself (which the company will not divulge).

And just as a splashy Hollywood premiere attracts attention for a film, a video game's first-week sales can be critical to winning shelf space and retailer support. More than 1.5 million people preordered a US$50 copy of Halo 2, if all of them pick it up the first few days, the game's opening gross will be US$75 million, almost US$5 million more than the animated film The Incredibles did this weekend.

"For the first 24 hours, Halo 2 will blow past anything Hollywood has put out there," said Peter Moore, a marketing vice president for Microsoft's Xbox division. "I'm eager for the comparison."

For Microsoft, the stakes for Halo 2 are unusually high. The company, which dominates personal computer software, wanted the Xbox to be an entry into the living room and the expanding world of digital entertainment.

But the Xbox console, with sales of about 10 million in the US, is still a distant second to its chief rival, Sony's PlayStation 2, which has sold 25 million, even though Xbox has made some impressive gains recently. Sales of Xbox increased 11 percent by volume last year, but revenue lagged as Microsoft cut the price of consoles and games.

Exclusive games can help sell consoles, and while there are several titles generating interest in PlayStation 2, the first Halo release has been the only exclusive game that has generated enough enthusiasm to result in significant sales of the Xbox. The company also wants to attract more players to Xbox Live, its online playing system, which already has more than 1 million subscriptions.

"The catalog of games definitely plays a role," said Rick Vergara, a merchandise manager for entertainment at Circuit City, the electronics retailer. "On the other hand, a lot of people who are excited about Halo 2 have Xbox already."

Microsoft is hoping for big hit out of the gate. "A significant amount of the life cycle is done in the first couple of weeks," said Vergara. For example, Grand Theft Auto: Vice City, released for the PlayStation 2 in 2002 by Rockstar Games, sold 1.4 million copies its first week, according to data provided by the NPD Group. In the two years since then, it has sold just over three times its first-week total.

A sequel of sorts, Grand Theft Auto: San Andreas, was released Oct. 26 and is expected to do as well as Vice City, although sales numbers are not yet available.

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