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Game Makers Target a Broad Audience for Growth

Xbox 360
Source: Microsoft
Xbox 360

Video game makers love their core audience — men 18 to 40 who obsessively follow, buy, and play violent action games — but it's a finite one.

Now game makers are looking much broader, to women and kids.

The consoles are already in millions of Americans living rooms: now software makers just need to convince other members of gamers' families to spend on game software.

Games that appeal to the whole family, like Nintendo's Wii fitness, or Activision's Guitar Hero now comprise about a quarter of game sales. Wedbush Morgan analyst Michael Pachter says he expects the casual game market to grow 10 percent to 15 percent annually, while he's looking for just 5 percent growth from the violent shoot-em-up fare targeting traditional gamers.

Electronic Arts is counting on casual gaming to bridge the gap between declining packaged game sales and digital revenues, which are growing, but not fast enough. "EA Sports Active" fitness games have been an overnight success, now a $130 million revenue business. EA Sports President Peter Moore tells us that the key thing is that their interactive fitness business isn't competing for video game dollars, but is going after the business of sports companies like Nike and Adidas. Instead of competing for existing marketshare, EA wants to create a new market.

Warner Brothers Interactive is partnering with Sesame Street to tackle a younger audience than ever before: 3 to 6 year-olds. Forrester's James McQuivey points out that these types of products could face backlash as they introduce kids to the medium of violent games like "Halo." But Warner Brothers says it sees a potential $1 billion business, and that Sesame Street's reputation is an asset they'll handle carefully.

Casual games carry significant financial risk for game makers. Though they may cost a bit less to develop than a super sophisticated shooter game, margins are often lower. They're just as expensive to market, if not more expensive, than violent games. Hard-core gamers usually don't need much marketing--they find out every detail of upcoming products on industry blogs. But to convince a mom to buy a new game, that requires buying ad time on network TV or on the homepage of a major website, which needless to say is expensive.

Plus, game companies often slash prices to draw new customers. Ubisoft charges just $39 for its "Just Dance" game, ten dollars less than Wii games usually cost. It's hoping to make up the difference in volume. The likes of "Modern Warfare" can stick with their $60 price, but casual gamers don't tend to see their purchases as a “must buy,” which mean prices must be lower.

Will cutesy casual games turn off hard-core gamers? The game companies tell us no — their hard-core audience evaluates them on the merits of the violent, sophisticated graphics they deliver. If anything, the game companies say that casual games bring in new players who are sometimes converted to those hard-core games.

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