As recession bites, video gamers turn to downloads

RALEIGH, North Carolina (Reuters Life!) - As the recession takes a bite out of video games sales in the stores, consumers are opting to download more games to save money while keeping themselves entertained.

Video game sales slid 14 percent in the United States in the first eight months of 2009, according to The NPD Group, as consumers downloaded more videogames on PCs, consoles and mobile devices like PSP, Nintendo DSi and iPod Touch and iPhone.

"The number of casual games available for download has grown exponentially and the number of premium downloads appears to be growing by 50 to 100 percent annually," said Michael Pachter, videogame analyst, Wedbush Morgan Securities.

Nintendo, which has been at the forefront of attracting new consumers to games, has made it simple for Wii and Nintendo DSi owners to download WiiWare games like "Tetris Party" and DSiWare games like "A Little Bit of Dr. Mario."

On October 1. Sony Computer Entertainment shipped its new PSPgo, which eliminates the UMD (Universal Media Disc) drive of previous PSPs in favor of digital downloads.

In addition to offering full gameplay experiences like Sony's "Gran Turismo," and Namco Bandai's "Soulcalibur: Broken Destiny," players can download "mini" games like Electronic Arts' "Sudoku" and Subatomic Studios' "Fieldrunners" for $5 to $9.

Pachter believes that the biggest download threat to games is the iPod Touch. Although the device costs more than a Nintendo DS, and the quality of the games is generally very poor, he said the value proposition is incredible.

"The iPod Touch is beginning to be advertised as a gaming device, and cost-conscious consumers will ultimately appreciate the savings over time," said Pachter.

The music rhythm game genre created by Activision Blizzard's "Guitar Hero" has opened up a steady stream of revenue for game publishers11.

AFFORDABLE GAMING OPTIONS

Pachter believes MTV Games will sell 5 million Beatles song downloads for its recently-released "The Beatles: Rock Band."

On the heels of "Guitar Hero 5," Activision Blizzard will add hip-hop music to its downloadable content with the October 27 launch of "DJ Hero."

"Digital downloads are likely to become an ever increasing component of the business," said John Taylor, videogame analyst, Arcade Research.

"What is exciting about this channel, however, is that downloads provide Activision Blizzard and MTV Games the opportunity to keep interest in these games current and active, thereby extending product lives and allowing the audience to broaden over time."

Sports fans have more choices when it comes to gaming this year. This December, Electronic Arts will offer "Madden NFL Arcade" on Xbox Live Arcade and PlayStation Network.

This exclusive downloadable five-on-five football game offers a $15 casual alternative to the fully-packed "Madden NFL 10" console games, which retail for $40 to $60. It's not just the mainstream audience that's migrating to downloads. Chris Buffa, editor-in-chief of AOL's GameDaily.com, said as hardcore gamers have tightened their belts during the recession, they've opted for more affordable gaming options.

"Instead of going to the store and picking up three or four games, they're buying that one big game each week," said Buffa. "Personally, I opt for more downloadable content over retail releases because I get more for my dollar."

Pete Hines, vice president of marketing at Bethesda Softworks, added that downloadable content for games like "Fallout 3," which has had five expansions for PC, Xbox 360 and PlayStation 3, extend the life of the original product.

"We aim to offer four to five hours of new content with each expansion, which sustains gamers' existing adventures," said Hines.

Cliff Bleszinski, design director at Epic Games, said the recently-released "Dark Corners" expansion pack for Microsoft's "Gears of War 2" offers a 90-minute sequence featuring heroes Dom and Marcus that was originally cut from the game due to time constraints.

Chair Entertainment was able to create a 12-hour gameplay experience with its side-scrolling shooter, "Shadow Complex," and offer it to Xbox 360 and PlayStation 3 gamers for a fraction of the cost by bypassing retailers.

The game, which was created with best-selling author Orson Scott Card, serves as a prequel to his best-selling novel, "Empire."

Even Hollywood has jumped on the downloadable game bandwagon. The upcoming Paramount Pictures Home Entertainment release of "Star Trek" will include an Xbox 360 and PC trial of the Naked Sky Entertainment's downloadable space combat game "Star Trek: D-A-C" on every DVD and Blu-ray Disc.

(Editing by Belinda Goldsmith)