Local company big player in electronic games InterAct a top maker of accessories for Sega, Nintendo, other games


November 01, 1998|By Kristine Henry | Kristine Henry,SUN STAFF

Video games have evolved to become a staple in the entertainment industry, and the success of Sony and Nintendo has created a feeding frenzy among peripheral producers. InterAct Accessories Inc., a Hunt Valley company that describes itself as parasitic, is taking the biggest bites.

Run by its founder and president, Todd S. Hays, the 7-year-old company makes accessories such as joysticks and controllers for Playstation, Nintendo 64 and Sega game consoles. The company describes its products with such phrases as "infinite health and endless ammo" and "giant fire buttons you can pound on!"

"One of the good things about InterAct is it's always pushing the industry and looking for new things to put out," said David Ward, executive editor of Game Intelligence, a San Diego trade magazine with a circulation of 35,000. "This is not a game, especially for Todd, this is business. I assume he loves what he does, but it's a cutthroat battle."

If noticed by the over-30 set at all, InterAct's products may seem like nebulous gadgets. But with $138 million in sales last year, the company is a major player in the competitive world of gaming manufacturing.

Combined retail sales of hardware and software in the United States reached nearly $7 billion last year, $730 million of which was in the accessory market.

Sales of gaming software alone were $5.1 billion, up 38 percent from 1996. In comparison, movie box office receipts in the U.S. were $6.3 billion last year, and the retail value of music shipped to stores was $10.8 billion.

InterAct has captured more than 70 percent of its market, but the subsidiary of a Florida company is looking for another host on which to feed.

Hays hopes to double InterAct's sales with a new product that will allow players access to the Internet through Nintendo or Playstation consoles, despite others' failures in similar attempts.

In December he'll launch NetShark, as it's tentatively named. About the size of a portable compact disc player and retailing for approximately $95 with a monthly access fee of $9.95, NetShark will include a modem, mouse, keyboard, e-mail account and unlimited time on the Web.

Every time users log on they'll be greeted with InterAct's Web site, which will feature ads, links to other entertainment and gaming sites, as well as links to major retailers where game orders can be played.

Untapped consumers

Hays says about 14 million U.S. households own Playstations and 11 million own Nintendo 64s. About 16 million of those households don't own personal computers, and Hays sees these people as untapped consumers.

"You've already bought this video game machine and you love it. And 75 percent of the time I would like you to use it to play games because that's what you do," he said. "But the other 25 percent of the time, instead of it sitting and not being used for anything, I would like you, instead of investing a couple thousand bucks in a PC and getting you out of the living room and getting you involved in other company purchases, I would like you to buy this."

The product has some potential pitfalls. With its 14.4 kilobyte-per-second modem, NetShark won't be able to support online gaming, a relatively new but increasingly popular way of playing in which participants battle each other over the Web instead of together in a living room.

Sega of America Inc. introduced a similar product, NetLink, two years ago and failed. WebTV, recently purchased by Microsoft, also has had lackluster sales.

Hays argues that Sega's NetLink was a good idea but that the company's lagging popularity -- it's now a distant third in the console market -- doomed it from the start. And the fact that WebTV has sold just 400,000 units since its introduction in 1996 doesn't deter Hays.

"The focus is entirely different. Everything that we're going to do, from the advertising and packaging and marketing perspective, will be focused toward the core gaming demographic," he said.

Nintendo and Sony are rumored to be coming out with their own consoles that will offer Web access, which could cut into NetShark's audience, although officially both companies say nothing is imminent.

Sega to try again

Sega has announced that it is giving Internet access another go with its next console, called Dreamcast, which will make its debut in the fall of 1999.

"Hays is out there in front, a pioneer of sorts," said Ward of Game Intelligence.

"Obviously, people are looking to add the Internet to anything they can, and this is sort of a logical next step."

In the industry, Ward said, Hays has the "grudging respect" of Nintendo of America Inc. and Sony Computer Entertainment of America Inc., companies he competes with but needs for survival.

InterAct's products are considered "third-party" items, meaning they weren't made by either of the gaming giants. Many are licensed by Sony and Nintedo, even as the three compete for shelf space.

Cornering the market

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