Special Report on Electronic Gifts: Dearest Santa: video games, not records: Sonic the Hedgehog and his friends have ousted pop music, writes Martin Whitfield

THERE is a top ten which changes weekly. The chart stars appear on television. Huge sums of money are spent on marketing, packaging and associated merchandising. The big names are not pop stars but the cartoon characters of video games. They have displaced the music industry's best as idols for many teenagers. Spending on games for the 12 to 15 age group easily outstrips that spent on records and CDs. It is double that of last year, at least.

The explosion of video games has dominated Christmas shopping - more than half the pounds 1bn spent on toys this year will be dedicated to video games. At present there is no indication that the bubble has burst and that the fashion is moving on. Trying to put the scale of the business in context is difficult because of a lack of obvious comparisons. The Simply Red album, Stars, the biggest selling record of the year, sold 2 million copies in 18 months, grossing pounds 19m. The video, Terminator 2, sold 250,000 copies. Sonic2, starring a cartoon hedgehog, will probably sell about 1 million copies, worth more than pounds 30m, between going on sale at the end of November and Christmas Day.

Video games have displaced other electronic toys, model railways, bicycles, skateboards and even footballs in the toy market. Children, and not a few adults, do not seem able to get enough of Sonic the Hedgehog, Super Mario, Micky Mouse and their friends. Even the price - between pounds 120 and pounds 150 for the playing console and one game, with extra games at pounds 40 a time - does not seem to be a disincentive.

'God knows what would have happened if there hadn't been a recession on,' says Philip Ley, marketing director of Sega Europe. Mr Ley offers part of an explanation for the phenomenon. 'The days of the couch potato are going. People are looking for more involvement and excitement.' You have to have a technology that is interactive, he maintains. Mike Hayes, his opposite number at Bandai, importers of Nintendo, agrees. 'Watching television or listening to music is passive. Kids are more energetic; they like interaction. It's also very sociable: they invite friends round to play the latest game,' he said.

The quality available on a television screen is now comparable to that of video arcades. Stuart Dinsey, editor of Computer Trade Weekly, said 95 per cent of the pounds 500m dedicated video games market is shared by the arch rivals, Sega and Nintendo. Their games are played, via a console, through a standard colour television. A further pounds 190m is spent on software for home computers and video equipment which has an alternative use. 'It's a sign of the market's maturity that it is setting its own icons which capture the kids' imaginations. The technology is now so good that it can offer a different option for different types of user,' he said.

The extent of the penetration of the adult market is hard to know. Sega believes that about half its console sales are to those over 18, while Mr Hayes says an increasing proportion of the 15,000 weekly callers to Nintendo's hotline are mothers and fathers who take to the machine when their children have gone to bed.

Mr Dinsey believes that sports titles, whereby you compete with the world's best golfers, tennis players or football teams, are popular among young men while chess and complex war simulations are played by an older generation. Football-based games are regulars in the Top Ten. Spreading interest among sons and fathers is another piece of successful marketing, as Mr Ley admits.

There is a record of failure in only one market sector - among girls and women. Fewer than 15 per cent of machines are bought for or by girls. The companies refuse to be drawn to market games specifically for girls although they recognise a 'lost generation' of potential customers. 'Girls react badly to any idea of games like Go Shopping. Such games are even more sexist than not introducing them at all. Girls tend to like problem-solving and puzzle games rather than the Beat-'em-up type,' said Mr Hayes.

Maintaining past growth rates is a tall order for any company but the games manufacturers put their faith in technology. Nintendo, the larger of the two companies but with a smaller share of the British market, is to launch a machine with a 32-bit microprocessor next year - the latest generation is based on a 16-bit unit. Sega is offering Mega CD, using compact disc technology. 'Keeping the technology improving will maintain interest in the sector as a whole. With Mega CD we can say we are providing something that is completely different,' said Mr Ley. Sega hopes that Mega CD can transform the image seen on screen. It will become even more like film quality but interactive.

One game already launched in Japan and the United States is Mousetrap, a screen version of Cluedo. Players move between rooms seen on the monitor; how they move alters the sequence of events and the game's outcome. Another game lets players make their own music video to a pre-recorded tape.

The link between film and video games is strong with Nintendo spending pounds 22m on a Super Mario film starring Bob Hoskins. Sega is filming at the same time as a Hollywood producer so that clips can then be incorporated into a video game spin-off. The standard for the target market of 8- to 35-year-olds is Hollywood. If your games look rubbish in comparison, it is going to be noticed, said Mr Ley. There is a further advantage of using the video game stars in new movie versions of their activities. Unlike pop stars, they don't have big egos, don't take drugs and don't smash up hotel rooms.

------------------------------------------------------------------------ CONSOLE VIDEO GAMES ------------------------------------------------------------------------ No Title Publisher ------------------------------------------------------------------------ 1. Sonic the Hedgehog 2 Sega 2. Super Mario Land 2 Nintendo 3. Super Kick Off Various 4. Super Mario Land Nintendo 5. European Club Soccer Virgin 6. Mickey Mouse Various 7. Termiator 2 LJN 8. Tazmania Sega 9. Sonic the Hedgehog Sega 10. Senna Super Monaco Sega ------------------------------------------------------------------------ Source: European Leisure Software Publishers Association. ------------------------------------------------------------------------ Compiled by Gallup. -----------------------------------------------------------------

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