"Video games: Big Business in 79?"
"Sight & Sound Marketing," 1979, Page 58.


If leading video game producers are right, then 1979 will be the year that game 
software will become a "giant" business, rounding out what has traditionally 
been a seasonal business.

"Now that the console base has expanded, I think the games business will be a 
365-day-a-year business, with software comprising 90 percent of it," said John 
Donatoni of Fairchild Camera and Instrument Corp., maker of the Channel F video 
game. "For hardware, the market will continue to be seasonal," he added.

Fairchild is predicting that there will be between 700,000 and one million 
video games sold in 1979, while Magnavox (maker of Odyssey 2) is projecting 
sales of 850,000 to 900,000. Both manufacturers agree, however, that pricing 
for the $100 and up video game market should remain stable in 1979.

Atari, too, expects that the software business will become increasingly 
important in 1979.

"It's similar to the relationship of the record industry to stereo components. 
Once the hardware base is there, there is a tremendous opportunity to sell 
software," explained Shirlene Foydl, manager of marketing administration of 
Atari.

Atari is introducing eight new cartridges this month, to retail at $19.95. They 
include bowling; miniature golf, a "human cannonball," Casino (which will offer 
such games as blackjack, poker and solitaire), and other action-oriented games.

For Fairchild, best sellers have been bowling, baseball, a maze game and a 
"torpedo alley."

Fairchild expects that the bulk of its business will continue to be sold 
through chain stores, department stores, mass merchandisers and some drug 
chains. The firm sells 100 percent direct to dealers, and has no plans for 
changing its distribution system.

Who will be the ultimate consumers for programmable video games in 1979? 
Manufacturers guess that the "typical" buyer will continue to be one with 
discretionary income, perhaps in the $15,000 to $20,000+ category, better 
educated, and male.

And, manufacturers feel that should there be a recession, the video game 
business will be pretty well insulated from it.

"Software particularly won't be affected, much as sales of items like razor 
blades or camera film won't be affected," observed John Donatoni.

Besides, they say, should American consumers feel the need to tighten their 
belts, they will look more toward products that will provide entertainment in 
the home.

Edging into Personal Computers

"People want to be able to expand use of their programmable video games into a 
'home computer,'" asserts Bally's Bob Wiles. "They want software that presents 
a challenge in terms of complexity and strategy."

This said, Wiles expects that 1979 will witness sales of up to a million video 
games with pricing remaining stable.

"The high-end programmable games will shift more into the arena of low-end 
computers," he said, adding that "software will be stressed heavily in 1979."

Bally will be showing at least a half dozen new game programs at the CES 
(including football), and notes that consumers have been purchasing more than 
the four to five cassettes per console that they had originally anticipated.

But won't the consumer become increasingly confused about the difference 
between high-end programmable games and personal computers such as the Apple, 
and PET?

"The consumer is going to have to do a feature by feature analysis of the 
different types of machines, and will have to determine what's the best buy," 
Wiles said.