A Look at the Numbers 

Over the last nine years, U.S. computer and video game software sales have more than doubled from $3.2 billion to $7.3 billion annually. Software developers sold more than 248 million computer and video games in 2004, or nearly two games for every American household, up from 239 million games in 2003. A record dozen console video games sold more than 1 million units apiece, 50 titles sold more than 500,000 units apiece and 197 scaled the 250,000-unit mark. The year’s two best-selling video games – “Grand Theft Auto: San Andreas” and “Halo 2” – sold 9.3 million copies between them.

In addition, sales of portable software titles broke the $1 billion barrier for the first time in 2004, rising from $900 million the year before. Computer game sales also topped the $1 billion mark again last year. Analysts expect sales of handheld games to drive industry growth this year.

CEA projects that total gaming software shipments from factories, a leading indicator of retail sales, will exceed $8 billion in 2005. The Yankee Group forecasts that the video game market, consisting of 108 million players 13 years and older in the U.S., will grow to more than 126 million by 2008. It sees software sales exceeding $8.3 billion by that point.

On the hardware side, total sales of gaming equipment and accessories fell from $3 billion in 2003 to no more than an estimated $2.7 billion last year. Not surprisingly, console hardware took the biggest tumble, declining 27 percent in dollar volume and 16 percent in unit volume. Industry analysts note that all three main living-room console brands, Sony’s PlayStation 2, Microsoft’s Xbox and Nintendo’s GameCube, started showing their relative ages after several years on the market. In addition, console manufacturers cut prices last year in response to drooping sales.

 

Source: CEA Market Research, 1/05

In contrast, portable console hardware posted a 10 percent hike in dollar volume from $751 million to $828 million last year. The increase came as Nokia launched its second N-Gage game phone and Nintendo introduced its new DS model. The dual-screen DS is the successor to Nintendo’s widely popular line of Game Boy portables, which have dominated the handheld market for a generation.

Despite another expected rise in portable console hardware sales in 2005, CEA projects that total electronic gaming equipment sales will fall for the third straight year because of the aging of the three main console products. CEA sees factory shipments sliding from an estimated $3.2 billion in 2004 and a high of $3.8 billion in 2002 to $2.9 billion this year.

 

Source: CEA Market Research, 1/05

Steve Koenig, senior manager of industry analysis for CEA, explains that shipments and sales will fall again because the planned next-generation consoles of Sony, Microsoft and Nintendo probably won’t hit the market in force until next year.