PLAYMATES AND ROACHES AND HYPE--OH MY! WHAT THEY'RE TALKING ABOUT IN SILLYWOOD
(FORTUNE Magazine) – So I find myself astride a hog-size mechanical cock-roach inside the Los Angeles Convention Center, surrounded by the din of a thousand videogames, reflecting on the growing pains of the $8 billion computer entertainment industry. The cockroach belongs to Viacom, which is promoting a new computer game in which players control a brood of roaches trying to infest an apartment building. The giant arthropod is supposed to catch the eye of important retailers wandering about last month's Electronic Entertainment Expo (E3). But countless other gimmicks--such as endless banks of pulsating videoscreens, Michael Douglas doing a demo for a virtual-reality headset, and a bevy of barely clothed, roaming models--also vie for their attention. "This is the biggest, loudest show I've ever seen," says Greg Fischbach, CEO of Acclaim Entertainment. The reason for all the noise is simple: distribution. Those retailers are trying to decide which games and CD-ROMs to carry in their stores and which they can do without.
Off in a conference room, venture capitalist Ruthann Quindlen warns a group of software entrepreneurs that putting out mind-blowing products is not enough anymore. Retailers want brands. If your marketing is not up to snuff, forget about distribution. And skip CD-ROMs. "Head for the Internet," where shelf space is endless.
Nearly everyone at the show is drooling over the promise of multiplayer online gaming, in which a player in Boise can blast away at players in Schenectady and Beaumont via the Internet. Tom Kalinske, CEO of Sega of America, wants "it to be like the arcade business--dropping quarters every 15 minutes." Another videogame executive plots a similarly sinister billing model: "The first shot is free. After you get addicted, we start charging."
Trip Hawkins, chairman of 3DO, a game company, hopes Internet products will broaden the market to embrace people not traditionally drawn to videogames. "Research suggests that one-third of people online are women," he says. "And, as we all know, another third are guys pretending to be women." This sounds like the perfect audience for the more socially oriented games that are expected to crop up online.
One 3DO game in development, Meridian 59, affords a peek at what Internet gaming may look like. A private demonstration in a suite five minutes away from E3, at the Westin Bonaventure hotel (the same building from which John Malkovich plunges to his death in the movie In the Line of Fire), shows a CD-ROM-quality game complete with 3-D graphics in which players wander around meeting other onliners, killing monsters, etc. Two players I encounter are practicing a ceremony to take place later that night in the game. Their characters, Lady Shandra and Galad, will be getting married online. The two spend hours every day in Meridian 59: One logs in from Georgia, the other from Montreal. Will they be able to stop once they start getting billed?
Earlier at the convention center a bit of drama ensues at a CEO panel discussion when the appropriately named Sony exec Jim Whims announces that his popular Sony PlayStation is now on sale for $199. The Sega and Nintendo chiefs sharing the platform look at him dumbfounded as he chirps, "What is good for the consumer is good for Sony." Nintendo of America Chairman Howard Lincoln mutters back, "I hope it's good for your shareholders too." Whims knows there's no money in hardware but hopes that by making the PlayStation ubiquitous, Sony will score championship profits on its game titles.
The day following Whims's announcement, Sega lowers its price to match Sony's. But the move might not do it much good. Conversation at a dinner party hosted by Jefferies & Co. managing director Lee Isgur in the nearby Wyndham Checkers hotel casts doubt on Sega's hardware prospects. Included among the guests are 3DO's Hawkins and State Street Research media analyst Larry Haverty. The repartee was brutal at times. A typical barb: "Sega is really rudderless right now. They are the only ones that don't have enough money to stay in it."
At another panel discussion, Microsoft "technical evangelist" Alex St. John disparages game consoles as "little pieces of plastic" compared with the mighty PC. In a joint venture with DreamWorks SKG, the new studio founded by Steven Spielberg, Jeffrey Katzenberg, and David Geffen, Microsoft is helping to produce multimedia CD-ROMs that it hopes will keep consumers glued to their computers. One future title, the Neverhood, looks more like a 3-D Claymation film than a game, except you get to control the main character. This mix of high production values and playful exuberance coincides not only in the CD-ROMs but also in Spielberg himself, who's overseeing the creative side of DreamWorks' interactive division. In a back room far from the main floor's sensory bombardment, Katzenberg tells me about Spielberg's fascination with interactive games: "I defy you to name a decent title he has not played."
Fittingly, my E3 adventures wind down at the Playboy mansion, where seducing grown-up boys has been elevated to Welt-anschauung. In the garden, among white-plumed albino peacocks and pink flamingos, a horseshoe of tents is set up showcasing some of the multimedia wares of Sega, Playboy Enterprises, and others. Hugh Hefner makes an appearance in his obligatory smoking jacket. Playmate of the Year Stacy Sanches thinks all this new-fangled technology is neat. "I'll have to get me a computer and get me some of them games," she says. Maybe Hawkins is right--women are the next game junkies.
Reporter Associates Lenore Schiff, Tricia Welsh, Wilton Woods