Live from Games Forum: Console Games Make the Mark

Next-gen console costs are
taking sales from video games

Video game players are on the hunt for the next best thing in the industry and brand marketers shouldn't expect to see consumers spending big in advance of soon-to-be released next-generation consoles.

As consumers save their dollars for pending video game consoles (PlayStation 3 and Nintendo Revolution are each on delayed schedules), retailers will see a slow down this year in software sales, said Michael Pachter, managing director-research, Wedbush Morgan Securities. Pachter spoke before attendees at the Game Initiative's Advertising in Games Forum yesterday in New York.

"This is a transition year," Pachter said during a panel on video-game industry trends. "Far and away, the most ubiquitous thing is the video-game console."

Online gaming, although popular with many, doesn't have the same appeal or reach as console programming. Some may say the industry is all about online games, but Pachter argued that's not the case. Hundreds of millions of people play video games, yet only 20 million people play online games, he said.

"The niche is 10%," Pachter said of online gamers. "[Advertisers] will probably care more about console games. It's easier to have an impact."

Pachter was one of the lone speakers who predicted a weak market for mobile game advertising. While the market itself is growing, few advertisers will want to test the waters by inserting brands on such a small screen, he said.

"I don't think it's as robust as people think," Pachter said. "Your cell phone has a dinky little screen. It's too hard, it's too much of an investment."

"You don't want to drain your battery playing Halo," he added. "Publishers don't get this."

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