Sega Optimistic

Templehorn · Post by **Templehorn** » Mon Sep 30, 2002 1:36 pm

http://sfgate.com/cgi-bin/article.cgi?f ... U13708.DTL
 
 Sega sports lineup off to weak start
 
 Carrie Kirby, Chronicle Staff Writer Monday, September 30, 2002
 
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 In the world of NFL video games, Sega of America has cast itself as the underdog, determined to pull off an upset against the mighty Electronic Arts.
 
 But despite a $15 million marketing blitz, Sega´s new NFL product has been outsold 10 to 1 by EA´s latest football offering in the first weeks of the season. Although it´s still early in the game, the slow start is worrisome for the San Francisco company, which has pinned its comeback hopes to its sports lineup.
 
 "So far it´s not turning out to be much of a rivalry," said Michael Wallace,
 
 an analyst with investment bank UBS Warburg. "It´s certainly a disappointment for Sega." Wallace does not own EA or Sega shares, but his bank may have done recent business with the firms, he said.
 
 Sports games make up a quarter of all video game sales -- and 35 to 40 percent of those sales are football games, according to NPD Funworld data as analyzed by SoundView Technology Group. Both Sega and EA get about half their sales from sports games.
 
 In January 2001, Sega gave up its technically impressive but struggling Dreamcast game console and remade itself as a software publisher. It turned to its respected sports games studio in San Rafael, Visual Concepts, to lead the turnaround. Last year, rushing to put out games for more than one console for the first time, Sega didn´t release its NFL game until later in the fall. Sega´s NFL 2K2 sold 720,000 copies to EA´s 3.75 million.
 
 But this year, Sega was determined to steal some of EA´s dominance. It pledged $35 million to promote this year´s football, basketball, hockey and baseball games, and released NFL 2K3 on Aug. 12, the same day EA´s Madden Football 2003 came out.
 
 In August, EA sold 1.1 million copies, and Sega sold 142,000, according to research firm NPD Funworld. In terms of market share, Sega didn´t gain any ground; last year´s game held 11.3 percent of the NFL market as of June 2002, and this year´s game has only 10.3 percent, as of the end of August, according to NPD Funworld. Both games are available on the PlayStation 2, Xbox and GameCube; Madden 2003 is also available on the original PlayStation.
 
 "In a decisive first round, it was a knockout," said EA spokesman Jeff Brown.
 
 But Sega says it sees progress. Reviewers have called both 2K3 and Madden the best football games ever. And, says Peter Moore, Sega president and chief operating officer, Sega has put distance between itself and the football games in third and fourth place, by Microsoft and Midway.
 
 "One of our strategies is to turn this into a two-horse race and go head to head against EA," Moore said.
 
 The first weeks after a game´s release are usually when the most sales take place, but the Christmas season is also very important. Moore said he believes Sega´s game will rally in the middle and late season.
 
 "I would be disappointed if we don´t come out with close to a 20 percent market share," he said. The selling season for NFL games usually wraps up shortly after the Super Bowl.
 
 Attacking the 13-year-old Madden franchise was extremely ambitious. The game has become so ingrained in NFL culture that players often approach its namesake, Monday Night Football announcer John Madden, to ask why their skills weren´t portrayed better in the game, EA staffers say.
 
 "They (Sega) picked the wrong battle to make a stand on," said Wallace, the analyst.
 
 Sega´s basketball game, NBA 2K3, expected to be released Oct. 8, might fare better, since EA´s NBA Live 2003 doesn´t have the cultural icon status that Madden does. At least one retailer, the 1,000-store chain Electronics Boutique,
 
 said more customers have pre-ordered the Sega game than the EA game.
 
 While sports are important, they´re not the whole ballgame. Wallace acknowledges that Sega has succeeded in establishing itself as an important software publisher overall. Sega held a 5 percent share of the U.S. game market in August, putting it in fifth place among gamemakers, according to Credit Suisse First Boston estimates based on NPD Funworld data.
 
 "The bigger problem is EA has a lot more mainstream titles than Sega -- James Bond, Harry Potter, Lord of the Rings -- and a lot of Sega´s titles are more geared toward hard-core gamers," said Dan "Shoe" Hsu, editor in chief of Electronic Gaming Monthly magazine.
 
 Sega´s working on that.
 
 "We´re in a position to make an acquisition," Moore said. A year and a half ago, rumor had it that Microsoft might snap up Sega to fill out its line of titles for its Xbox. That´s not in the cards anymore, Moore said.
 
 "We´re in the role of predator rather than the prey right now," he said.
 
 E-mail Carrie Kirby at <a href="mailto:ckirby@sfchronicle.com" target="_new">ckirby@sfchronicle.com</a>.

grtwhtsk · Post by **grtwhtsk** » Mon Sep 30, 2002 2:17 pm

I have to say that the numbers have shocked me quite a bit. I didn´t doubt that Madden would outsell 2K3, but stunned by the margin. I´m very happy with 2K3 and feel that I am lucky to have it. I just hope that Sega sticks it out.
 
 GreatWhite

Post by **Jared** » Mon Sep 30, 2002 5:04 pm

I have a feeling that the market share won´t be nearly as lopsided with the competition between NBA games...I´d expect something closer to 50-50 (though I have a feeling that Live will come out on top).

samuel40 · Post by **samuel40** » Fri Oct 04, 2002 8:31 am

it is going to be hard to take ea down because the only people who will take the time to notice how good the sega games are. are really the hardcore sports nuts like us who get deep into the gameplay,
 
 ea is soo big and markets sooo well that most average gamers haev been happy with the progress of nba live and madden because they are there for the arcade experience and not the simulation.
 
 where we say a rebounding problem in live that made it unplayable they saw extra opportunities to dunk on their friends cause it´s just a game to them and not a simulation. imho

pk500 · Post by **pk500** » Fri Oct 04, 2002 10:04 am

Do you guys think the low sales of NFL 2K3 -- Sega´s flagship sports game -- for the PS2 lends more credence to the rumor that Sega might possibly ally with Microsoft or MS might buy Sega?
 
 Almost seems like Sega has nothing to lose in regards to football, but I think it´s hoop and hockey games will sell better for the PS2.
 
 Still, something to ponder ...
 
 Take care,
 PK [ This message was edited by: pk500 on 04-10-2002 07:05 ]

grtwhtsk · Post by **grtwhtsk** » Fri Oct 04, 2002 1:49 pm

PK,
 
 I don´t think Sega will be sold to MS. EA would love that for sure. Basketball and hockey should do well. Also WSB with some tweaking can definitely hold its own with any baseball game.
 
 Later,
 
 GreatWhite

samuel40 · Post by **samuel40** » Fri Oct 04, 2002 3:55 pm

i just hope they have enough money to wether the storm and people catch on to what they are doing