IWedia: \\ nter::. s t n "r nta) m ea!, nrun::., non unwn sen pi:>, Pagt> 40. Currencies: Bntrsh pound surges as Bank of England chane-es t.tr k. 60. OTC Focus: Technology issues sustain the market"s upward swmg. 54. ~AL. Campaign '88: TV's use of part1san consultants raises questions, 74. I _ ___,I Video Games Revive and Makers 1- e~ Pach year ~centages of Hope This Timethe Fad Will Last I Once -135'\, By .h FFHE) A. TAN!'-iEI"HAll;\1 rated, " says Norman Rieken. president of JTwiee Top-Selling Video Games Rochelle Park, N.J.·based Toys '"R" Us 116'\, Home video games-a spectacular but Based on sales during the last week of Inc .. U1e largest U.S. specialty-toy retailer. "SO 1988 '1\iJJ be another big year.'" I Three or morE> short-lived fad of the early 1980s-are mak· February at a nationwide chain selling l 23% ing a comeback all mpjor brands Meanwhile. despite increases in factory After going bust just six years ago, capacity, production hasn't kept up with J Never Mike 'l)Jon'a Punch-Out!! (Nintendo Co.) demand for some of the hardware used 1 13~ video-game sales are agam soaring, thanks to smarter marketmg. improved techn(ll· The Lecend of Zelda (Nintendo) with the games, such as the limited-use computers that display the games on a -l No responSl' ogy and the coming of age of a new gener· IUrnov (Data Eaat USA lne.) 113% ation of players. And this time around. the player's TV set. SOme of the video games industry is taking steps to make sure that Super Mario Brothel'l (Nintendo) themsE'Ives, which generally sell for $20 to the boom lasts a bit longer. Double Dribble (Konami Inc.) $60 each, are in short supply at some stores because of distribution and produc· Sales began to revive in 1986, climbing Goonies II (Konami) to $430 million from $100 million a year tion problems. earlier. And last year. they more than dou Castlevania (Konami) Avoi ding P ast MistakE's bled to $1.1 billion. Industry leader Nm· Wizards & Warriors (Acdaim On top of the strong sales. the industry tendo of America Inc., the U.S. unit of Nin Entertainment Inc.) IS trying to avoid some of the mistakes It tendo Co. of Japan, estimates that the Winter Games (Acclaim) made in the early 1980s. In the pre\ious field's tot al U.S. sales in 1988 Wlll reach boom. game titles proliferated so fast that $1.9 bil!Jon . Rusb'N Attack (Konami) the market became glutted. And many cus· The home video-game market "has tomers were disappointed by a rash of low· gone from being dead to being extremely Even if the revival 1sn't as big as the quality and look·aJike products. Even de· lively and growmg, .. says Don Reisinger, previous boom, though, it's likely to be voted players finally grew bored as the marketing vice president of Sega of Amer· more endunng. retailers say. "This time, latest games stopped offering anything ica Inc .. a U.S. subsidiary of Tokyo-based there will be a more permanent. lasting new. Sega Enterprises Ltd. market for electronic games." says Peter Nowadays, marketers are working to Harris, president of FAO Schwarz, a toy· Lust for Zapping prevent a glut by pulling older lines off the store chain based in New York. "Today·s shelf as more games are mtroduced. Nin· , l;"\ OLFI Still, many retailers doubt that the in· games have higher quality ... tendo. for instance. is withdrawing 18 of its STilEET J O lii\NAI dustry Wlll see a replay of its previous Home video games were among the top 36 games to make room for new offerings •ght his first mu· boom. when the technology was new to sellers at toy stores during last year'1 Nintendo dominates the U.S. market wnh most Americans. At the industry's peak in ~o . he did it for Christmas rush and have continued to be an estimated 707c share, followed by Atari lawyer, Mr. Sa· 1982, Americans shelled out $:1 billion to in· best sellers in the stores' post·holiday dol· Corp., with 16'ir. and Sega with 10c:•. fund s' profes· dulge their lust for zapping Space In· drums. For instance, Mike Tyson's Punch· Improvements in technology also have iversificatwn. vaders. competing m a variety of elec· Out! ~ . a boxing game introduced last Octo­ helped the re\ivaJ, making the games I tronic sports, and otherwise enjoying the ber by Nmtendo. aJready has sold more unforeseen tax "more lifelike, more vivid and more de· \ Mr. Saveth has games' space-age sounds and colorful than a million copies, making it one of the tailed," says Mr. Reisinger of Sega. wing his money graphics. But by 1985 the boom was over, biggest-selling video games. The latest video-game hardware in· _, and rethinking and sales had withered to $100 million. "By no means is the market satu· eludes computer chips that provide better I;'I' .l funds. picture resolution, more colors and more 1aking life sim· "sprites," as the independently moving ob­ get hit with tax jects on the screen are known. For in· n almost more stance. the Mike Tyson ~arne has 256,000 says Mr. Sa· Parents Fear Games Turn bytes of computer memory, compared with .t's worth it." 8,000 in Pac Man, the video-game hit of · investors are yPSteryear. have their own Their Kids Into Zombies The new technology has made the .;.rds are unpre· games more challenging, too. ln Super Ma· il By CARRIE DoLAN '1butions and a though. Most of the games cost between no Brothers, for instance. players can Slaff Reporrer ofT•w WALL STR>:ET JounNA L S20 and S60 apiece. David Ross owns 41 ~ he extent and spend months trying to rescue the prin· •1 advisers say Rachel Lamanet is concerned about her games, vaJued at more than S1,000, which cess, the object of the game. And many of Jus load some· son's habit. he keeps in a double-padlocked drawer. the games can be played at dozens of "He told me. 'It's like I want to stop. Working as a grocery-store bag boy to sup­ levels of difficulty. That's a far cry from ~ that mutual· port his hobby. he buys a new game every .t hard lately. but I can't help myself. • I thought, "Oh no. the late 1970s gan1e Pong. in which players is this my 11-year-old?' He's like an addict two weeks. Trevor Moser, a 14·year·old merely batted an electronic pmgpong ball player in Kent. Wash .. says he has bought It's awful. He needs me to help hun control back and forth on the screen. it. .. about STOO worth of games in the past year. rket for stock A New Generation ~n "t a big con· Her son. Christian La.manet. IS a home mamly with tus paper-route earnings . a New York video-game player . Derek JohnstonE', 11, of Cemtos, Calif., No matter the changes in technology. the gains have Currently, the San Mateo, Calif., fifth founded the Electric Rendezvous club, though, much of the industry's audience is ne a major con· grader, Is suspended from playing his which prints Its own newspaper "with too young to remember the earlier games video-gamE' set. made by Nlntendo Co. of s1rategies and tips" for improved playing. anyway. Marketers say most video-game 11 players are between the ages of eight and !! investor scru· Japan. bf>C'ause of "'Nintendo-related" of­ The club's members take an oath prom· , mutual fund!. fenses. hi~ mother says. Christian. who Ising. among other tlllngs. not to ··spill the 14. Some children catch the Vldeo-game m oU1tor Invest· once played at a fnend"s house for about 14 beans on any tricks." and they pool money bug at game arcades. But as the arcades " " dl~tly can hours str.ught. concl'des. ·•J tlllnk 1 should to buy games. have waned m ~?Cent years because of ris· t:ru. Ate' ta.ken. play less. as much as 1 llkP it. 1 tlltnk 1 PlavP""' RI"P 11<:11:11lv lvov" h<>twoon tho ·~,...... ,..~· - - -~· · · ·~~ -- ,. ..I •' ruott llldl'l\L!IlJ!, .n:l iJ '~ " , c , . ica Inc .. a U.S. subsidiary of Tokyo-based there will be a more permanent. la!>tmg new. MONEY Sega E nterprises L td. market for electronic games, .. says Prtt'r ~un Sun Belt Nowadays, marketrrs are work1ng MAnERS Harris, president of F AO Schwarz. a toy· prevent a glut by pulling older lines off Lust for Zapping store chai n based in New York. ''Today·s Other Moves shelf as more games ar~> i ntroduced. l\ Slill. many retailers doubt that the in· ··.games havl' highPr quality .. By MICIIAF.L S ICONOLFI tendo, for instance, is V. lthdrawmg I~ of dustry will see a replay of its previous Home video games wen• among thr top :ES of retirees bask· Staff Reporter o(TIIE WALL STTu:FT J ouRNAL 36 games to make room for nrw offPrir boom, whl'n the technology was new to Sun Belt r etirement When Henry Saveth bought his first mu· sellers at toy stores during last yrar's Ni ntendo dommatPs the U.S. ma rkrt v. ; are everywhere in tuaHund shares a year ago, he did it for most Amer icans. At the industry's pl'ak in Christmas rush and have continued to be an est1mated 7or;. shar e. followed by At 191\2, Amencans shelled out $:1 billion to m best sellers in the stores· post-holiday dol· 10nths. So it's easy to convenience. A New York laWYer, Mr. Sa· Corp., with lfi"'r, and Sega with tnr·;.. dulge their lust for zapping Space In· drums. For instance, Mike Tyson's Punch· older Americans are veth was attracted by the funds' profes· l mpro,·cmPnts in technolr>gy <~lso h vaders, competing in a variety or elec· Out!!. a boxing game inI roduced last Octo· n masse to warmer sional management and diversification. helped the re\'lval. making thr g:u tronic sports, and otherwise enjoying the her by Nintendo. already has sold morE' That was before some unforeseen tax "morP lifelike. more \'i\'ld and morr •ng. games' space-age sounds and color ful than million copi es, making it one or the complications arose. Now Mr. Saveth has a tailed." says Mr. Reismg<•r or Seg1. :~>d 65 years and older graphics. But by 19R5 the boom was over . biggest-selling vidl'O games. changed his view, withdrawing his money The latrst vicll'o gamr hardwarf' w a marked tendrncy and sa les had withered to $100 million. " By no means is the market satu· Census Bureau fig· from three of four portfolios and rethinking dudes computer rhips that providl' llf' hat fewer than 5% of his commitment to mutual funds. picture resolution. more colors and n mp change their geo· " Funds are billed as making life sim· "sprites," as the independently movinl! j ec ts on the sc reen are known. For ation. pie, but all or a sudden you g-et hit with tax surprises that make them almost more stance. the Mike Tyson a-amp has 2Cl6 It is that the Midwest, Parents Fear Games Turn complicated than stocks," says Mr. Sa· bytes of computer memory. compared'' akes regton, and parts veth. " I j ust don't think it's worth it." ll.OOO in Pac Man. the vidro·!!amr hi 1east are actually get· Like Mr. Saveth, many investors are yesteryrar. •r" than most of the finding that mutual funds have their own Their Kids Into Zombies Thl' new trchnolngy has marl!' Younger are people tax pitfalls. Among the hazards are unpre· g<~mes morr rha11Png1ng. too. I n ~uppr By C ARR IE OOLA'I though. Most of the games cost betwel'n of these states, seek· dictable capital-gains distributions and a rio Brothers, for instancl'. playl'r5 S tu rr R rpnrtcr of Till·: w A LL S·o' REF:T J OllllNAI. $20 and $60 apiece. David Ross owns 41 >pportunlt\es, and older recent tax-law change on the extent and spend months trying lo rescur the p Rachel L amanet is concerned about her games. valued at more than $1.000, whrch staying on. In 1986, 19 timing of payouts. Financial advisers say cess. thr objeci or the g-amr. And man . 07 son ·s habi t. he keeps in a double-padlocked drawer. :tt least 12.5 o of their smar t plannmg can lighten this load somP­ the games ran hP played at dozrn~ " He told me, ' It's like I want to stop. Working as a grocery-store bag boy to sup· aged 65 or older . Only what, but there's no denying that mutual· lrvrls of difficulty. That's a filr cry fr bull can' t help myself.' I thought, 'Oh no, port his hobby, he buys a new garnp every :la. Is a bona fide Sun fund Investors have been hit hard lately. the late 1970s game Pong, in whtch pia~ is this my 11-year·old?' He's like an addict. two weeks. Trevor Moser. a 14 -yrar ·old 'Sentallve. mPrely batt<>d an electronic ping-pong Bigger Bite It's awful. He needs me to help him control player in Kent, Wash., says he has bought is a star k exc£>ptlon to back ami forth on the screen. In the f lvP·year bull market for stock It. .. about $700 worth or games in thE' past year. ng or the Frost Bell. Her son, Christian Lamanet, Is a home mamly with his papt'r·route earnings. A Nl'w G~nf'ration edian agr of :!6, It has and bond funds. taxes weren't a big r on· crrn. says Marlon Martini, :~ Nrw York video-game player. Derek Johnstone. II. of Cerritos. Calif.. No matter the cha ngPs in techno!" r opula tion of any state. Cfly Jnvf'stor . " Now that the gains h ;~ve Cur rt'ntly, the San Mateo. Calif. , fifth founded the Electric Rf'ndezvous rlub. though, muth of lhl' mrlustry's auclil'nr r a g-limpst• of the U.S. na rrowrd, taxes ha VI' become a major con· grader. is suspended from playing his which prints its ow11 newspaper "with too y oung to rrnwmtwr t ht• P years plus) \s roughly differ In important ways from othPr Invest once played at a friend's house for ahout 14 beans on any tricks,'' and they pool monry bug at gamr arradr s. But as the arc~ J.S. populat\on will look ments. Those who own stocks directly ran hours straight. ronr Nies, " I I hink I should t.o buy g:~mrs. ha\'1' waned in rrcent ye<1rs !}('cause or e year 2020. rontrnl whrn any capital gains arp taken. play less. as murh as I likr it. I think I Playrrs are usually boys bP1WPf'l1 the ing rrnts. many kids are finding that 1 A mutual fund. in contrast. ran reali7e should gct some frl'sh air soml'timPs." ag-Ps of e1gltt and 14. s:~ys Robert Jlnlmrs. havP to play thr gamE' s at homp 1f t r apllal gains anytime and pass them on to Home vldro games have revil·ed with a S~'mor YirP prrsidrnt of Ac-rlaim Entrrtain· want to play them at all. "Lots or tes Gain Bulk holders wlthout notice. therPby r!'durlng vengeancr. to the delight or a frw compa· ment Inc. , a video-game makrr in Oystt'r friends haw• onr." says 10 ypar old III!• fund's nPt asset value and leaving hold· nies and thousands of children, but to the Bay. N.Y. "It's very rompetillve. It trnrls c h ~ el Z. Goldman. of B<>lmont. Mass .. al Immigrants ers with a tax liability. dismay or parents who frar their off· to get almost physical," he s:~ys. " It's the owns a Nintendo system. "We talk al entertainment form for the 'ROs-immrch· thr games a lot at school." ILE ILLEGAL aliens John MarkrsP. rPSParch director for thr springs· zombielike devotion to the games. Americ'an Association of Individual lnvrs· ate. real-time gratifir.ation." Although retailers say girls acrount 1ake the' hradllnes, an While kids who play the games at arcades tors. a Chicago-based nonprofit group. ar e limited by how many quartrr s they Mr. Holmes says technological ad· an inr r!'asing number or vrdPo·game s. · nheralded but steady says, " Evf'n if you understand the tax con· can plunk into the machines, the home sys· vances and improved graphics spu rrPd thl' the markrting is still g!'ared main!} f lawful Immigrants con· srquences, capital-gains payoutc; make mu· terns inspire marathon sessions. Some chll· industry's revival. " Kids play longer hr· ward boys. "Be a hero as you batt' pour Into the U.S. In tual funds less prPdictable" than storks. drr n spend more time playing the games cause the games .. . offer a deeper, richer gang of st•edy punks who try to steal \ arly 602 ,000 foreigners Another diHerence: Any capital losS<'s rach day than they spend at school, as environment" than previous home video girl." says Sega, for instancf', in thr I' anted lrgal immigrant from a fund's transactions aren't passed their grades head south. And many go games. for its My Hero game. "Your in~n·• 1at's the highest figure i n along to Its investors. so Investors can only broke buying the incr easingly expensive Researchers who have studied the rna· Kung Fu training will help you as n 50 years and a total realize the losses-and use thf'm to offset games. nia say it has its pros and cons. Debra match wits with knife throwers, ferOf •ss than the population of bulldogs and the gang's evil lradPr . income for tax purposes-by selling shares Help From the Hot Line Lieberman. an assistant professor in tele· •m, D.C. In the fund at a loss. " It's not symmetri· communications at l ndmna trniversity, Some video-game sortwa re writen; did lhf.'se prople go? cal," Mr. Markesr says. The number of child addicts is legion. says a study of more than ;,oo srhnolrhil trying to attract older players by tak1 igr ation and Naturaliza· Moreov!'r, Investors can receive dlstri· Nintl'ndo, the industry lead!'r , has 32 full· dren in 1983 found that the more vrci Po different tack than the usual act10n-fo •rjce says that nearly butions without having bcnefltrd from the time "game counselors" who staff phone games children playrd. the lowl'r lh,.ir fantasy games. GamPTek Inc .. of Pl. rs of the new arrivals capital gains thPy r eflect. Many stock lines solely to help frustrated players; the reading scores. Hl'ili'Y grenr years becaW>f' of ns· s are takrn play les::>. as muciJ ;u; I llkt> it. I th JPk I Players are usually boys between the ing rents. man\ k1ds are fmdmg that they ·an rra!JZf' sho• ld grt some fresh a1r son;etmw:, ages of rJght and H. says Robert Holmes. have to ph!) the games at homr if they ·,s them on to Homt video games ha1·e relivrd wnh a semor \'lCt' presJdPnt of Acclaim Entertain· want to pby them at all. ''Lots of my "b) rt>d unn~ vengc·auce, to the delight of a few compa­ ment lnc , a video-gam<" maker in Oyster friend.,; hal"e one:· says 10-year-old Mi­ , leaving hold· nies aud thousands of children. but to the Bay, NY. "It"s very comfl('tllive. It tends chael Z. Goldman. of Belmont. Mass .. who d1sma~ of parents w1 11 ft:';!r their off· to grt almost phys1cal," he says. "It's thr owns a I\mtendo system. "W(• talk about J. rertor for thP spring!>· zombJelike d<'votion to the gamrs. entertainment form for the '80s -immedi­ the games a Jot at school." "ll\"ldua l Ill l't'S While kids who play th t• games at arcadt'S ate, real·tlme grallfJcauon. " Although retailers say girls account for :.pn fll gmup, are !Jmited by how many quarters they Mr. Holmes says technological ad· an increasmg number of video-game sales, 1d the tax con· can plunk mto the machlilt"!>, the homE> sys­ vances and Improved graphics spurred the the marketmg IS still geared mainly to outsmakr mu tems inspire marathon s<>ss1ons. Some chil­ industry's revival. "Kids play longer be· ward boys. "Be a hero as you battle a than stocks dren Sp<'nd more timl' playlng thr games caus!' the games ... offer a deeper, richer gang of seedy punks who try to steal your capital losses each day than they sprnd at school. as environment" than previous home video girl," says Sega, for instance, in the pitch aren 't passed their grades head south. And many go games. for its My Hero game. "Your incredible ·stors can onlv brokr buying the increRambo and Contra. An ad for one game Ideal Group Inc. of New York will offer the VIew-Master Video System, in which belong to the Big Spenders says· ·'Two a.m. is no time to be alone in ght they had the subway and you're about to find out a processor is wired between a VCR and David Ross, 16, of M1ami Lakes, Fla., why .... They've got clubs, chains, and a TV set. With a remote-control unit. the l.nd losses for often plays from 4 p.m. until midmght or 1 · se. blades. It's three against one-but they've viewer can call for changes in the spe· - are ways to a.m .. averaging more than 20 hours a picked the wrong one." The ad shows the cial videocassette tapes. For example, a week. "I have earned a reputation for child can tell the Sesame Street puppet :t>quences for mastermg games extremely fast," he says. hero kickmg a punk in the face. : ..-d a capital on the screen which Jetter of the alpha· "I hold records for 21 games in Miami In the end, though, parents may find bet to sing a song about. -;1 the timmg Lakes... His 12·member club in Florida that they have no control over the most ef· do so soon, "This is full-motion video that's being holds competitions, and •·we study the fective deterrent against excessive game changed by the child-it's not computer ,, res: he will playing. Trevor Moser, the Washington · sellmg pro­ games as we go along, notice details, and graphics," says David Shap1ro, VIew· take notes." LJke other hard-core fans. Mr. teen-ager, confides there is a stigma at­ Master marketing vice president. The capital gain Ross records hiS gamt>·playing on a v1deo· tached to video-game wizardry: "You If a fund al· product will sell for about Sl20, Includ­ 1 cassette recorder to provide proof of loft) don't want to tell girls you're a video-game ing the first tape. Additional tapes will . I ·cialists say, player. because they'll thmk you're a nerd. gh sharrs to scores cost S20 to $25 each . They want to see you out there doing - JEFFREY A. TANNJ::NBAU"M .n rece1ved. Tht• video thnll doesn't come cheap. sports."