Trends

•  Video game console sales dip because of hardware inventory shortages during the holiday season and the aging of the current generation of console machines.

•  Software sales hit a new record, thanks in large part to the popularity of two hot titles, “Grand Theft Auto: San Andreas” and “Halo 2.”

•  The portable game market heats up as Nintendo introduces the double-screen Nintendo DS and Sony launches its PlayStation Portable (PSP).

•  Console makers and game designers target more young adults, women and older consumers as the prime gaming population ages.

•  Online gaming takes off as growing hordes of players flock to the Internet for such casual, low-tech games as bingo, poker, puzzles and trivia.

Overview

Americans take their electronic games very seriously. Over the past decade, gaming has morphed into an $11 billion entertainment business in the U.S., making it bigger than the Hollywood film industry. Video and computer game software sales alone hit a record $7.3 billion in 2004, according to the Entertainment Software Association (ESA). CEA estimates that 45 million homes, or 42 percent of all U.S. households, now own at least one video game system. Half of all Americans over the age of six play computer and/or video games these days, according to ESA. Plus, Nielsen Entertainment reports that American men spend more money on video games than they do on all forms of music.

Although the industry is not totally immune to economic cycles, gaming seems pretty close to recession-proof. Despite periods of stunted economic growth and higher unemployment, electronic game sales have now risen eight out of the last nine years. No matter how strapped for cash they might be, consumers somehow manage to find the money to purchase the latest “Halo,”“Grand Theft Auto,”“Doom” or “Madden NFL” title. In fact, “Halo 2,” one of the best-selling titles of 2004, took in three times more revenue in its first day of sales than any movie has ever taken on its opening day.

Simply put, electronic games can be found almost anywhere you go. Americans play games on just about every communications device and medium imaginable, including TV sets, PCs, laptops, notebook computers, PDAs, cell phones, portable consoles, the Internet, mobile Internet services and electronic devices installed in automobiles. Using such wireless technologies as Wi-Fi and Bluetooth, gamers can play and compete with anyone across the globe. They even can play online against each other while traveling.          In another indication of just how serious Americans are about gaming, the average U.S. game player turns out not to be some male teenage slacker obsessed with blood, guts and gore. Rather, the average computer or video player is actually a far more mature 30-year-old, the ESA found in its latest annual consumer survey. The average game buyer clocks in even older at 36 years of age. Moreover, 94 percent of computer game buyers and 84 percent of console game buyers are over the age of 18.

Thanks to the industry’s long reach and strong appeal, consumer electronics companies increasingly are trying to use their gaming products to test new technology features and sell advanced services to players. Both Sony Corp. and Microsoft Corp., the two leading video game console manufacturers, aim to transform their consoles into digital entertainment wonders delivering everything from downloadable photos to on-demand music to high-definition television (HDTV) to video-on-demand (VOD) to digital video recording (DVR). For example, Sony’s new PlayStation Portable (PSP) gaming device also can play full-length movies, videos and music, display digital photos, plug into computers and connect to the Internet wirelessly.

 

Source: The NPD Group, 1/05

Sony, Microsoft, cable operators, phone companies, software firms and other companies also see gaming as the killer application for high-speed broadband service, the single force that spurs millions of consumers to upgrade to faster Internet access. As a result, they’re increasingly promoting online gaming to lure players to broadband. Once consumers sign up for broadband service, the companies hope to sell them a panoply of advanced video and other entertainment products, including interactive TV.

 

Source: The NPD Group, 1/05