The Year of the DVD Game
Imagine a video game category that sells best at retail to women between the ages of 18 and 39, that is selling through all of the major electronics retailers — even other retailers such as Nordstroms — and that markets into an installed hardware base of 150 million households worldwide, which is larger than the PS2. Oh, and did we mention that there is no learning curve attached to playing the games and that they feature some of the most recognizable media licenses on the planet?
The DVD game category has come out of nowhere in the last two years with titles like SceneIt, Trivial Pursuit DVD Edition, and Fact or Fishy. This monstrously popular new genre combines the buzz of electronic gaming with traditional social gaming by using the common DVD player and a supplementary board and tokens for media-based trivia contests. Like the TV games that have also been hot in recent years, DVD games are yet another instance when companies outside of the video game industry are finding and serving the very non-core game audiences that the major console games publishers say they are eager to reach.
Last year, there were about five DVD games in the market that brought in about $50 million in revenues, according to industry executives. “The retail market was 1.5 million [units] and probably $200 million this year with 20 titles in the market,” says Dan Black, CEO of Screenlife, which makes the bestselling SceneIt series of DVD-based movie trivia games. “Year over year growth in 2004 is about 600%,” he says. If DVD games make those numbers, then they will constitute about 10% of all traditional game sales. “You’re looking at a billion dollar category in three to five years,” says Black. “This is an industry that is under the radar. I think this Christmas will change that.”
The sales leader is Hasbro’s DVD version of Trivial Pursuit that sold over 1 million copies, industry figures estimate, although Black’s SceneIt brand is hot on its heels. “Sales passed 1 million units this summer and will be well over 3 million after this Christmas,” he says. He is bringing to market SceneIt sequel packs for James Bond, Disney, and Turner Classic Movies.
And don’t look now, but this family- and female-friendly genre may be on PS2 and Xbox by next Christmas. “We have had preliminary discussions for them to have SceneIt for those platforms,” says Black. Sony and Microsoft see the genre as a way to broaden their demographic for consoles, which currently skews about 80% male and has had little success in the family game category.
“It’s 100% different from the video game business,” says Shane Yeend, CEO of Imagination Entertainment (IE), maker of Nick Trivia Challenge and Screen Test. “The core value is social interaction, not the one-on-one experience.”
While both Screenlife and Imagination claim to have invented the category, they do agree that it is only two or three years old and has already become one of the only signs of growth in the relatively depressed toy and game industry. According to NPD Funworld, dollar sales of games and puzzles in the U.S. are off 13.6% year-to-date.
The Complexity of Low-Tech
Since so many of these games work best when they include media clips, the category relies on licensing. As they battle over licenses, “Mattel and Hasbro pitch very hard, but we’re matching licensing fees with those guys,” says Yeend. He has the lucrative Nickelodeon property as well as many classic TV game shows. Screenlife has locked up many of the movie studios, but the battles are just beginning. “One of the initial land grabs is moving into sports and music next year,” says Black.
While DVD games have a very low learning curve and minimal technology requirements, they actually are very complex to create, both because of the difficulty of making the DVD platform interactive and responsive and the massive licensing requirements for using media clips.
DVD players have no on-board memory, so the games need to trick the technology into common tasks like not repeating recent questions. As well, the platform was not designed to handle hundreds of clips and tracks. “A lot of people think it’s easy,” says Yeend, whose IE has been a video post-production house in Australia for over 20 years. Hasbro (Trivial Pursuit) competitors complain that while its bestseller benefits from great brand recognition, its technical execution is lacking. “The consumer is not buying quality right now, but they will,” insists Yeend.
This category also presents makers with a licensing nightmare because they rely on re-using hundreds of media clips. It took 18 months for Black to get the major film studios on board and, as it is, he has a logo-jam on his boxes to fit in everyone’s brand. Many media companies are touchy about which competitors’ logo they are beside. “The bigger hurdle actually was the actors and actresses. You have to clear with them for every clip and every time you want to use the clip.” The SceneIt series has already generated contracts with 700 performers for more than 5,000 individual clips. Screenlife establishes a royalty pool of licensors where a fixed percentage of the fees are divided according to pro-rated shares of the content used in the game.
As a result of tech and licensing, some DVD game development budgets can approach $1 million, and compared to board games “the break-even point is higher,” says Yeend. “The financial models are just playing out.”
DVD games enjoy much wider retail exposure than video games, which tend to rely on five to seven venues. “In our business it is about 35,” says Yeend. In addition to the explosive growth of the category in the U.S., the speedy proliferation of DVD players worldwide opens up stunning potential for international expansion.
The industry is gearing up to blow the category out in many different directions. Yeend says that IE has 17 titles in development. Screenlife has licensed its technology to Mattel’s Fisher-Price to create an InteracTV edutainment product. Hasbro is DVD-ifying everything it can get its hands on within its massive board game library, including many variations of Trivial Pursuit. We will also be seeing DVD versions of fortune telling, bingo, and even spin the bottle in coming months.
Yeend wants to pepper the market with a lot of different DVD-driven game ideas to diversify the category, while Black wants to build his main SceneIt brand into a media franchise. Black had approached Hasbro to distribute the games, but eventually went with Mattel. “Hasbro saw us as a game; Mattel saw us as a brand. It’s going to evolve into an entertainment brand, a TV show, play per view, on wireless phones soon.”
If SceneIt does make it to the consoles next Christmas, Black is promising a “souped up” version that can take advantage of the memory and additional processing power of the platform. But he also sees the possibility of licensing video game content into the DVD game format. “It is something we are researching right now because the game makers create great characters and these are titles people know. Potentially, it is a very viable approach.
Interestingly, the DVD games category is not interested in porting itself to PC CD-ROMs, even though much of its core demo, adult women, use the PCs to pursue casual online games. “To a certain extent, one of our big advantages over CD-ROMs is we are in the living room not the home office, and we want to be a living room entertainment brand,” says Black. “The numbers aren’t big enough [in the PC market] for us to live with the potential brand confusion.”
Contacts: Dan Black, 206/829-0729; Shane Yeend, 310/948-5861
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