Although the overall video game business was down significantly in 1995, retailers responding to SN's fifth annual State of the Industry Report on Supermarket Video reported only a slight decrease in their game rental revenues.
The video game industry is trying to upgrade consumers from 16-bit platforms like Sega Genesis and Super Nintendo to new, more powerful systems like Sony PlayStation, Sega Saturn and the yet- to-be released Nintendo Ultra 64. But good new game titles for the old systems have become scarce, while the penetration of new systems to mass market levels is taking longer than many expected. The result is a weakening of sales and rentals for the entire category. Overall, video game rentals were down about 25% to 30% last year, according to industry observers.
Yet in 1995, supermarkets responding to SN's survey said that games were 10.3% of their total video business, down from 10.9% in 1994. The retailers expected the business to stay at about the same level in 1996. But at the same time, more than 38% of the survey respondents said they were cutting back on games this year. Many retailers are looking ahead to the new game systems, with 68.6% of respondents saying that they carry the software for rent, 20% saying they carry the software for sale and 22.9% reporting that they have the hardware for rent. A little more than 25% said they would not carry the new games at all this year. The downturn in the game business is the biggest challenge facing retailers this year, said Clifford Feiock, video coordinator at Nash Finch Co., Minneapolis. A year ago, game revenues accounted for about 15% of total rentals, while today they are about 5% to 8%, he said. "It is really a shame that Nintendo and Sega dropped their support for 16-bit games. There are just no new games coming out," said Feiock. Nash Finch is renting the Sony PlayStation hardware at $10 for two days, with two software titles included.
Boogaart Retail division of Fleming Cos./Scrivner Group, Concordia, Kan., is renting and selling the Sony PlayStation, but is hampered by limited availability, said Matt Dillon, video director. "We sell what we can get, but the availability has really held us back," he said.
