Video games industry faces inquiry on prices: Sega and Nintendo find themselves at centre of rising complaints from consumers. Michael Harrison reports

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The Independent Online
MOUNTING complaints about the high prices charged for video games yesterday resulted in the Monopolies and Mergers Commission launching a full-scale investigation into the industry.

The games vary in price from pounds 10 to pounds 60, with the most popular costing between pounds 30 and pounds 60 - about double the prices charged in the United States.

The nine-month inquiry will examine not only the cost of the games in the shops, but also the fees charged to companies that publish them or rent them out.

The United Kingdom market is worth about pounds 760m a year and is dominated by Nintendo and Sega, who between them account for 90 per cent of sales with games such as Sonic the Hedgehog, Mortal Kombat, Aladdin and Streetfighter 2.

An estimated 30 per cent of British homes now have a games machine. The hardware varies in price from pounds 50 for a hand-held console to pounds 300 for a CD-based system.

Announcing the investigation, Sir Bryan Carsberg, Director-General of Fair Trading, said: 'I have been getting an increasing number of complaints from the public about the video games industry. Consumers are unhappy about the high prices they are obliged to pay for new games and claim that they are much higher than in the US.

'After reviewing all the available evidence about the operation of the video games market, I have concluded that competition is not working as effectively as it might.'

Sir Bryan said he was therefore calling on the MMC to undertake a full study to examine whether the industry's practices were acting against the public interest.

The OFT said it had also been contacted by software publishers complaining about the licensing arrangements which control production of the games, and by retailers complaining about terms imposed on them by video games companies.

Sega, for instance, charges a pounds 440 licence fee plus VAT to any shop renting out its games, and a pounds 5 surcharge on every game they buy.

A spokesman for the company said it had nothing to fear from the inquiry. 'We will face such an investigation with confidence as trade in the video games market is both fair and extremely competitive,' he said.

Sega defended its prices by saying that thousands of hours of development went into each new game. As they became more complex and sophisticated, it was inevitable that prices would increase. As for the difference in price between the US and Europe, he said: 'It is exactly the same with compact discs, clothing and footwear. It is not just video games.'

Nintendo said the decision to refer the industry to the MMC had ignored the increasing competition the two big players faced. It also pointed to the warning given by Dixons last week that its profits would be affected by the price competition between the major video games suppliers.

Nintendo is the world leader in computer games, but Sega is the biggest supplier in the United States and Europe.

In the UK, Nintendo has 60 per cent of the market for hand-held games software while 60 per cent of all the home consoles bought are Sega.

Other games manufacturers include Atari and Commodore. But Sega said competition was now coming from Sony, Philips, Time Warner and 3DO, a Japanese consortium.

----------------------------------------------------------------- THE 10 TOP GAMES ----------------------------------------------------------------- Title Price Publisher Jurassic Park pounds 49.99 Ocean, for Nintendo Aladdin pounds 49.99 Sega/Nintendo Mortal Kombat pounds 49.99 Acclaim for to pounds 59.99 Sega/Nintendo Sensible Soccer pounds 39.99 Sony for Sega Streetfigher 2 Championship Edition pounds 59.99 Sega Nigel Mansell's World Championship pounds 39.99 Nintendo Sonic 2 pounds 39.99 Sega Cool Spot pounds 44.99 Virgin for Sega/Nintendo Robocop versus Terminator pounds 44.99 Virgin for Sega Sonic Spinball pounds 44.99 Sega ----------------------------------------------------------------- Top ten sellers for the week ending 8 January, compiled by Gallup for the European Leisure Software Publishers Association (ELSPA). -----------------------------------------------------------------

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