More Sega development on other consoles

http://www.bloomberg.com/feature/feature982247888.html

Electronic Arts Facing Sega Challenge

By Greg Chang

Redwood City, California, Feb. 15 (Bloomberg) -- Electronic Arts Inc., the No. 1 maker of video-game software, may find that the playing field is finally getting a little more crowded.

The company towers over the game industry, with a market value 10 times greater than the nearest U.S. competitor, largely because of its hammerlock on the lucrative market for sports games. Electronic Arts\' titles, known for their realism, include best-sellers Madden NFL Football and FIFA Soccer.

A new contender is stepping into the ring. Sega Corp. previously made games only for its money-losing Dreamcast console system. Now, Sega is scrapping the machine and plans instead to develop games for other companies\' consoles, including Sony Corp.\'s PlayStation 2, a stronghold market of Electronic Arts. Some of Sega\'s most popular sports games are NFL2K1 and Virtua Tennis.

``Sega produces some very solid sports titles for the Dreamcast, and in our opinion could steal some significant market share from Electronic Arts\' dominant sports titles,\'\' said Miguel Iribarren, an analyst with Wedbush Morgan Securities, in a recent research note.

The outcome could be pivotal for both companies. Sports video games accounted for 54 percent of Sega\'s $190 million in U.S. retail software sales in 2000, according to market researcher NPD Group Inc. For Electronic Arts, they made up 40 percent of $729 million in total revenue.

Industrywide, sports titles generated roughly a fifth of $4.1 billion in U.S. video game sales.

Key Gaming Category

Football, basketball and other sports games are a key category for publishers because users are likely to buy a new version every year to get their favorite team\'s new uniforms or the latest free-agent and rookie players.

Sports fans reward publishers with a steady, predictable stream of sales. That\'s a boon because fickle consumers of other types of games can shift loyalties rapidly.

``Sports attracts an older consumer willing to spend more on their games and buy more of them,\'\' said Peter Moore, president of Sega\'s U.S. unit.

The demands of making sports games are also great. Electronic Arts has largely had the field to itself because most publishers struggle to deliver quality sports titles every year. The development cycle is shorter than for other types of games, which can take 18 months to two years.

After Dreamcast

Tokyo-based Sega is hoping sports games will help it turn around. Sega is on track to lose money for the fourth straight year because of development and marketing costs for Dreamcast, which sold a disappointing 3 million units in the U.S. as of Dec. 31.

Though Dreamcast failed, Sega demonstrated its ability to produce outstanding football games two years in a row for the system. NFL2K sold more than 1 million copies, and some say that NFL2K1 stacks up well against Madden NFL for PlayStation 2.

``NFL2K1 is a better game,\'\' said Joseph Spiegel, an analyst with Spinner Asset Management, which owns Sega shares.

Now, Sega must prove it can bring the same level of quality to basketball, hockey, soccer and other sports games for PlayStation 2 and Microsoft Corp.\'s Xbox, expected to be introduced by year-end. Investors like Sega\'s chances: the company\'s shares traded in Japan have climbed 67 percent this year, after touching an all-time low in October.

Moore said the company may seek to gain sweetheart royalty terms from Sony or Microsoft in exchange for agreeing to publish games exclusive to one or the other console. The company still lacks a formal agreement for making Xbox games.

Sega may only start getting into the ``rhythm\'\' of making sports games annually in 2002, Moore said.

``Most of Sega\'s game developers are very highly regarded,\'\' said Brian Farrell, chief executive of game publisher THQ Inc. ``The question is, can and will they aggressively market and go after Electronic Arts?\'\'

Going One-on-One

Overcoming Redwood City, California-based Electronic Arts won\'t be easy. The company pioneered the practice of using real- life sports stars in video games with titles such as 1984\'s Dr. J and Larry Bird Go One on One.

Now the company\'s stable of celebrity endorsers includes Michael Jordan, Tiger Woods and Muhammad Ali. In 1999, Electronic Arts became the first U.S. games publisher to record more than $1 billion in sales.

Because of the popularity of its sports games, Electronic Arts has created a strong brand name, rare in an industry where most publishers remain little known.

``People might not know the name Electronic Arts, but they definitely know EA Sports,\'\' said Felicia Rae Kantor, an analyst with Lehman Bros.

Electronic Arts also outweighs Sega in the development department. The company has about 400 employees working to create sports games, compared with about 80 for Sega.

Electronic Arts makes 12 sports games for various game systems and personal computers, spokeswoman Trudy Muller said. Workers at the company\'s lavish headquarters can blow off steam by shooting hoops at an indoor basketball arena.

At the least, competition with Sega should keep Electronic Arts on its toes, analysts said.

``I personally welcome them to the fray,\'\' said Electronic Arts Chief Executive Larry Probst, on a recent conference call. ``They\'re a great software development company. Having them available on multiple platforms actually expands the market.\'\'

I want my Virtual Tennis !

Originally posted by courtking23
I want my Virtual Tennis !

Yeah i will use this post as an opening for me to get another post to my total post count! (j/k)

I want MSR!