Newspaper article THE JOURNAL RECORD

Video Games Are Back / Rags to Riches to Rags Industry Makes Another Attempt to Hit Gold

Newspaper article THE JOURNAL RECORD

Video Games Are Back / Rags to Riches to Rags Industry Makes Another Attempt to Hit Gold

Article excerpt

SAN FRANCISCO - Don't look now, but here comes Pac-Man.


Video games, the entertainment craze blamed for everything from sore thumbs to the decline of the nation's youth, are making a comeback.

Three companies will be selling home video game machines this Christmas. Retailers that have not sold machines for two years are stocking up again. And television will soon reverberate once more to the zapping and beeping sounds of commercials about invading aliens and missile warfare. ``The fun is back,'' Atari says in the first television commercials it has made in two years.

``It's like back to the future,'' said James H. Levy, president of Activision, a video game cartridge company that went from rags to riches to rags.

No one expects video games to be the fad they were in 1981 and 1982. Manufacturers estimate that 2 million game machines will be sold in the United States this year, far less than the more than 8 million sold when the fad was at its peak in 1982. Some 10 million to 15 million cartridges will be sold, compared with 75 million back in 1983.

Still, manufacturers and retailers hope that improved technology and a new audience will make video games, which are played by plugging them into television sets, a steady business.

``We have kids that are just coming of age who were not around for the first time,'' said Ronald Judy, vice president of marketing for Nintendo of America, which sells game machines.

For those with poor memories of that period, a brief reminder is in order. Atari Inc., a pipsqueak of a company a few years earlier, rose to $2 billion in revenues. Hollywood studios, toy companies and all manner of entrepreneurs rushed to produce game cartridges with names like Demon Attack, Eggomania, Space Vultures and Revenge of the Beefsteak Tomatoes. There were even some X-rated games. For a fleeting moment, game designers became the new rock stars.

But by the end of 1982, the market dried up quickly as consumers were lured to more versatile home computers or simply became bored. Atari shrank to a skeleton and was sold. Most of the other companies left the business. Retailers took a bath as millions of cartridges remained on their shelves. Atari dumped truckloads of unsold cartridges into a landfill in New Mexico.

The comeback involves one battle-scarred old-timer - Atari - and two Japanese companies that were only peripherally involved in the first round. This is ironic because video games had been the only consumer electronics product that the Japanese did not dominate, although they did make some of the most popular software, such as Pac-Man, Donkey Kong and Space Invaders.

Now, by persistence and timing, the Japanese may come to control the video game market after all. The market for home video games developed later in Japan than in the United States, and is still fairly strong. Japanese manufacturers are therefore able to make a run at the American market, whereas most American concerns have left the business.

Leading the way is Nintendo, the Japanese company that developed Donkey Kong and which is by far the video game leader in Japan.

The company, which has its American headquarters in Redmond, Wash., sold about 90,000 machines in a test-marketing last Christmas in New York City. It did another test in Los Angeles starting in February. Now it is going nationwide.

Also entering the market is Sega Enterprises Ltd., an arcade video game company once owned by Gulf and Western Industries and now affiliated with the Computer Services Co., a Japanese software concern.

Both companies boast Japanese-made machines with slick technology. Game cartridges now can have far more electronic memory, and thus far many more levels of play before the game repeats itself. …

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