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Game Systems Carve Out Unique Territories

Home video game systems that could play multiple titles have been with us since at least 1973 and the Magnavox Odyssey. Since then, system makers have mostly targeted the same consumer demographic. Yet with the current crop of next-generation consoles, rather than three different horses in the same race, what the video game industry may witness in 2007 is the unveiling of three different races.

Sit all three systems side-by-side and only the Xbox 360 exhibits what consumers commonly expect from a video game console: reasonably priced power, versatility and high-quality HD graphics that evoke hardcore gaming. The Wii is rather like the iPod: with broader appeal; hip, attractive design; easy accessibility. The PS3 is more like a Mac Pro computer: sleek, bold industrial design; ground-breaking HD movie technology; raw power, expensive exclusivity.

It’s still early, but understanding what game makers have wrought with their new systems, and how consumers perceive these game consoles in the months ahead, will go a long way toward suggesting how retailers should merchandize them.

Video game consoles have evolved from toy-like purveyors of youthful fun to technology-driven dispensers of three-dimensional prowess. Along the way, video game consumers have grown from kids to tech-savvy adults, adding millions of people to the ranks of gamers. The business has surpassed $10 billion annually in the United States, and another $25 billion annually worldwide. Video games are a major draw for discretionary income alongside film, sports and television. Yet all indications are that future growth in revenue, and to the ranks of core game consumers, will be incremental at best.