Gaming Software Makers Play with the Peripherals

In January, Bill Gates took the stage at the Las Vegas Consumer Electronics Show and for the last time mused on the future of computing. One of three things he predicted was an eventual change in user interfaces. There will be more touch. More motion. More gestures. In the future, he said, we’ll migrate away from our dependence on keyboards, mice and trackballs; we’ll have more natural interfaces.

In the gaming world, that future is already here. It began a decade ago with the introduction of a range of Japanese arcade games – virtual skiing machines and dance pads. These new peripherals then jumped to video game consoles. Now they’ve been carried in a new direction and lifted to new heights with Nintendo’s (NTDOY.PK) motion control systems in the Wii and the introduction of rhythm games like Guitar Hero (Activision (ATVI)) and Rock Band (EA (ERTS)/MTV).

Consumers have voraciously embraced the changes.

Proving that in software: in January, Activision announced that their Guitar Hero franchise set an industry record by surpassing $1b in North American sales in 26 months. More than 14million units were sold. Guitar Hero III: Legends of Rock, they said, was also the #1 title in units and dollars for the calendar year 2007. 

In the first ten weeks after the game was launched, according to NPD Group, consumers downloaded more than five million songs. One report issued near the same time compiled NPD and Nielsen SoundScan data and claimed sales of Guitar Hero and Rock Band brought in more combined revenue in 2007 than digital music downloads from services like iTunes. (ed note: this report appears to be purely North American data but remains compelling nonetheless).  

Other games with attached peripherals have had similar (though not as lofty) success. Konami’s (KNM) Dance Dance Revolution, one of the first, was launched in 1998 in Japan as part of their Bemani series of arcade rhythm games. In 2005, four years after being introduced to consoles, Konami announced North American sales of the game franchises had passed 2.5m. 

This year, DDR celebrates its tenth anniversary. Life to date, as of a year ago, it’s chalked up more than 10m in unit sales (arcade games excluded). It’s been sufficiently popular, and fitness centric, in fact, that it's even been adopted by West Virginia’s public school system as a way of addressing childhood obesity (W. Virginia has the worst childhood obesity problem in the country).

Nintendo’s Wii Fit balance board game is pushing the trend further with impressive results of its own. On January 6th, after just a month on the market in Japan, the bundle had sold more than a million units (via Nikkei). On the day when the game launched in the UK, retailer Woolworths reportedly sold an average of 90 copies a minute. 

The chain’s games buyer Gerry Berkley told UK Internet Magazine Web User: "This is a revolution in computer gaming. For a game not targeted at gamers to sell in numbers like this is unheard of and is genuinely changing the market." 

In the US, May data from NPD showed sales of 687k units, and that was with supply shortages and a shortened month (the game didn’t debut until May 19th).

As Cammie Dunaway, Nintendo of America’s executive vice president of Sales & Marketing, explains it: “The Wii Wheel and Wii Balance Board accessories make game play fun for new gamers while presenting new challenges for those who have been playing a long time.”  

It’s the balance of low cost, ease of use, along with fun new activities that is winning consumers over. The industry is paying attention to the trend. Already, Sony (SNE) is expected to make some headlines soon, with rumors a motion sensing controller for the PS3 is nearing completion.

Electronic Arts is set to explore the opportunity too. So far they’re coding titles to work with the Wii Fit system but they’re also looking at other options. Tuesday, speaking at the Paris Game Developers Conference, EA Sports Executive Producer David McCarthy said peripherals are a sure part of their strategy.

He noted, “You want to do a peripheral if it real does enrich the game play. And that it doesn’t create a barrier to entry for your consumers.”  Adding, “You will see EA Sports, over the course of the next twelve months, I would think, use the peripheral strategy to some extent.”

The E3 conference, the gaming equivalent of the Consumer Electronics Show, starts July 16. It’s almost certain some interesting new products and titles will be revealed. 

Comments

[Brian Bober]

I think gaming piracy is underestimated. Requiring and selling peripherals with a game is a great way to reduce piracy. That certainly helps sales.