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Video Games

MEMO

June 13, 1988

How popular are video games? Last year, Nintendo alone had sales of $750 million--more than Coleco did, when sales of its Cabbage Patch Kid stuffed doll peaked at $600 million in 1984. Nintendo accounted for 70% of video games sales last year, followed by Atari, with about 20%, and Sega of America, with 10%.

Although it is No. 2, Atari likes to point out that more people own Atari video game systems than any other. That is because it sold 28 million video game systems, mostly Atari 2600s, during the earlier boom. The 2600 remains Atari's best-selling model. But since the second video boom took off 2 1/2 years ago, Nintendo has sold 4.1 million game systems, Atari has sold 2 million systems and Sega has sold 500,000 systems.

The best-selling video games are Legend of Zelda and Mike Tyson's Punch-Out. Those Nintendo games have sold more than 1 million copies each. Frequently mentioned by retailers as leading sellers are Konami's Major League Baseball and two games featuring the Air Force's F-14 fighter jet: After Burner by Sega of America and Top Gun by MCA's LJN Toys unit.

New video game system owners usually buy four to six games during the first year of ownership, but fewer each year after that. Sega estimates that veteran video game players purchase three to five games yearly. This year, Americans will buy 6.9 million video game systems and 40 million games, according to Nintendo.

The popularity of video games has hurt sales of a traditional toy for boys: action figures. Mattel's He-Man and other 6 1/2-inch plastic superheroes were no match for the electronic heroes of video games last year. The Toy Manufacturers of America report that action-figure sales dropped 36% last year, to $702 million from $1.105 billion, largely because of competition from video games.

The video game craze has spread to computer games. The Software Publishers Assn. says sales of computer games rose 37% to $62 million during the first three months of this year. Electronic Arts, the largest publisher of entertainment software, says computer game sales could grow by an additional 30% this year. Meanwhile, sales of VCR games fell 12% to $36 million last year, according to the Toy Manufacturers of America.

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