There's a saying in Hollywood that French movies may be French and German movies may be German, but American movies are international.
If this has caused resentment among foreign governments and complaints of American media imperialism, the international market is about to face the next generation of American programming burned into a silicon chip: the video game.
U.S. manufacturers of the games and cartridges are looking overseas as domestic competition forces profit margins down--a development analysts cite when trying to explain why many investors have soured on major players in the industry. Sources at Atari--whose parent, Warner Communications, took a drubbing in the stock market late last year--estimate that the bulk of the company's total game sales will be international within the next five years.
Video game cartridge sales are expected to grow at a 55 percent compounded annual rate over the next three years, says Christopher D. Kirby, a securities analyst at Sanford C. Bernstein. International game console revenues should balloon at a 44 percent compounded annual rate, propelling the international market to billion-dollar status by 1985. Kirby and other industry watchers assert that ultimately the game market overseas will prove more lucrative than the domestic market.
"We're viewing our company as a worldwide organization," says Stan Peters, director of international sales for Imagic, a Los Gatos, Calif.-based video games design company.
Imagic shipped its first video game cartridge less than a year ago, but already it sells games in over 40 countries through a network of independent distributors. While Peters declines to reveal specific sales figures, industry analysts guess Imagic is selling millions of cartridges internationally, and Peters asserts, "This year we'll see a tenfold growth in sales."
Video games enjoy some competitive advantages overseas that are absent in the United States. While America has cable television, video-cassette recorders and a plethora of video recreations, viewer options overseas are decidedly more limited. There's simply less television to watch and more time to play video games.
There also is less competition for the manufacturers. In Europe, only Phillips N.V. is aggressively marketing a video game system (Phillips owns Magnavox, which markets the Odyssey game system in America), and the Japanese are conspicuous by their absence from the home video game scene. Most important, no foreign company of any significance is making the games cartridges that play on the machines.
That may be partly due to the comparatively low game-machine population overseas. While analysts estimate that 15 percent of U.S. households own video game units, Tony Bruehl, president of Atari International--the international arm of the Sunnyvale, Calif.-based personal computer and video game company--estimates that in major overseas markets the rate is between 3 percent and 4 percent.
He adds, however, that "the awareness level is growing very, very quickly." He expects sales to follow just as fast, although they may be curtailed by the entry of personal and home computers into the marketplace as competitors to video game consoles. That possibility doesn't really bother the game makers, though. "We think we're producing computer-generated entertainment," says Imagic's Stan Peters. "We can always adapt our games for home computers."
The real challenge may be in adapting the product to foreign tastes. "What we're going to find out," says Tom Lopez, editorial director of Activision, a leading games design company distributing its games to over 38 countries, "is that there are cultural differences from country to country. American products won't necessarily translate overseas."
(Atari, however, reports that its top-selling video games internationally are Pac-Man, Space Invaders and Defender--the games that have done best in the United States. And Activision's Tennis game did far better overseas than its U.S. sales would have led Activision to expect.)
Each company probably could develop hit games in the country where they're sold rather than depend solely on American imports. Lopez hints that Activision may soon set up local game design groups in a few of its prime international markets, and Atari, says Atari International president Bruehl, has already done so. "We have just set up a software development center in London," says Bruehl, "and we already have one in Hamburg Germany ."
Atari is also seeking licenses for European cartoon and comic book characters to fit into European versions of popular Atari games.
There is a certain element of self-defense in these efforts to assimilate the local culture into the games-design process. Many countries--notably France--are openly hostile to media imports. While there has been no effort to restrict the import of video games by any Western European country, the possibility is not dismissed.
The American video games companies are counting on the international market to fuel their growth. "If you don't look at this business as a worldwide business," says Imagic's Peters, "you won't have the economies of scale that let you compete effectively and profitably."