GAME INDUSTRY PINS Q4 HOPES ON HARDWARE PRICE DROP, SURVEY FINDS CEOS INTERVIEWED EXPECT BIG FRANCHISES TO LEAD SOFTWARE SALES

OAKLAND – Aug. 17, 2004 – Heading into fall, industry CEOs say a price cut in fourth quarter on the Sony PlayStation® 2 and Microsoft® Xbox hardware is key to strong performance of the overall video game market for 2004, according to interviews done by International Data Group (IDG) Entertainment.

In the software area, executives predict the big video game franchises will continue to lead game sales. Electronic Arts is expected to be the big winner, with its sports franchises, but sequels of other licensed titles will be popular with hard core gamers: Doom III, Halo 2, Half-Life 2, Metal Gear Solid 3, The Matrix Online and Grand Theft Auto: San Andreas.

IDG Entertainment, a game industry powerhouse that includes GamePro magazine, which works closely with retail analyst firm NPD Data Group and industry analyst firm IDC, interviewed more than 50 publishers, developers, retailers, market analysts and investment bankers for the company’s 2004 Industry White Paper on the current state and future outlook for video games.

Game industry executives interviewed repeatedly commented that lower pricing for consumers on either or both of the two popular platforms, held firm in 2003, would do much to stimulate the market, jump starting sales of hardware, accessories and software for the year.

“The console segment is at mid cycle, awaiting details on next generation systems expected in 2005,” said Wes Nihei, editor-in-chief and vice president, IDG Entertainment. “Everyone is hoping for price cuts on hardware – and say the health of the industry is tied to both Microsoft and Sony giving in this year.”

Other predictions from the report include:

•In the handheld area, only Sony’s PSP has a chance of stimulating competition with Nintendo. How much PSP will cost and how much content it will have are the key questions

•Next Generation consoles will hit in 2006 and be focused less on the importance of graphical capability and more on functionality and other features of each console

•Interest in direct distribution of games to the casual gamer is hot. Comcast and Yahoo are offering game services, powered by Exent, and Infinium is expected to offer a streaming service to a receiver in the living room stack in November

•The window for full price $49 releases is shrinking. Used game sales is one of the reasons

•With gaming more global than ever before, the industry will continue to focus efforts on developing overseas markets. China, with its gigantic population and PC-based culture, is regarded as having huge opportunity for growth

Industry executives expressed concern over the lack of new Intellectual Property (IP) or original games as a critical factor in the long-term health of the industry.

“Independent developers are getting squeezed out of the market by the rising cost of development, distribution and marketing,” said Nihei. “The shrinking retail hole has made profit difficult for all but the biggest hits. This has reduced the number of independent development studios and caused many developers to increasingly seek buyouts or relationships with more established publishers.”

Skyrocketing costs have affected even the big publishers, causing some to pare down the number of titles being put out, industry executives said IDG’s Annual White Paper is geared to helping its customers get a handle on major trends.

IDG Entertainment’s 2004 Industry White Paper ($249.95) is available for preview or purchase at http://www.idgentertainment.com.

About the White Paper

More than 50 publishers, developers, retailers, market analysts and investment bankers were interviewed for the 2004 Industry White Paper, the 12th annual report from IDG Entertainment. Full of extensive analysis and quotes from industry leaders, the report is an essential resource for decision-makers in the interactive entertainment sector. More than 130 pages in length, the White Paper includes a research appendix providing readers with authoritative industry data from sources including DFC Intelligence, Harris Nesbitt Gerard and The NPD Group. Revenue and unit sales figures, market projections and trend assessments complement the data editorialized in the White Paper.

About IDG Entertainment

For over 15 years, IDG Entertainment (IDGE) has led the industry by providing a portfolio of highly read multiplatform gaming and entertainment editorial products, including: GamePro magazine, Star Wars Insider magazine, the IDGE Online Network, Code Vault magazine, Best Buy game guides, and the IDG Entertainment Industry White Paper. The portfolio provides synergy between print and digital properties, reaching over 8 million consumers every month. With the launch of Gamestar magazine in summer 2004, only IDGE provides advertisers the opportunity to reach the full spectrum of teen and adult gamers, and entertainment enthusiasts.

IDG Entertainment is a wholly owned subsidiary of IDG, the world's leading technology media, research, and event company. A privately held company, IDG publishes more than 300 magazines and newspapers, including Bio-IT World, CIO, CSO, Computerworld, GamePro, InfoWorld, Network World, Macworld and PC World. The company features the largest network of technology-specific websites with more than 400 around the world. IDG is also a leading producer of more than 170 computer-related events worldwide, including LinuxWorld Conference & Expo®, Macworld Conference & Expo®, DEMO, and IDC Directions. IDC provides global market research and advice through offices in 50 countries. Company information is available at idg.com.

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