Video Game Market Thriving Despite Economic Slowdown
Despite tough economic times, America’s growing appetite for digital entertainment fueled a 34% surge in video game sales over the first nine months of the year, according to a market study released Monday.
Video and computer game sales in the United States total nearly $8.5 billion, rivaling box-office receipts. Worldwide, the industry generates $20 billion in annual revenue.
Meanwhile, another study released Monday showed that one in three U.S. households owns a game console.
The industry’s robust performance is partly driven by the introduction of powerful new game consoles capable of generating increasingly realistic graphics and sophisticated play, drawing in more mainstream consumers.
Sales of video game consoles, software and peripherals totaled $4.3 billion in the first nine months of this year, up 34% from $3.2 billion in the same period last year, according to the NPD Group Inc., a market research firm in Port Washington, N.Y.
With holiday sales historically kicking in half of the industry’s annual revenues, the video game sector is poised to reach well over $7 billion, up from $6.5 billion in 2000. Add $1.3 billion in estimated sales of personal computer games and the overall U.S. games industry approaches $8.5billion.
“When you add the launch of two new console systems this month--the Microsoft Xbox and the Nintendo GameCube--the video game industry is on track to hit record revenues this year,” NPD analyst Richard Ow said. Ow added that game sales “thrived.”
“Due to recent national events, Americans may be spending more time at home,” he said, “which bodes well for video game sales this holiday.”
That games rival Hollywood was evident last week, when Konami Inc. released “Metal Gear Solid 2: Sons of Liberty” for Sony PlayStation 2. The game generated $25 million in sales in a single day, putting it within a stone’s throw of the “Harry Potter: The Sorcerer’s Stone” movie, which took in a record-breaking $31.6 million its first day in theaters.
Fueling software sales is the fact that more households now have game consoles. About 33.8% of 106 million U.S. households have game consoles this year, up from 32.3% last year, according to an annual survey by the Yankee Group, a Boston-based technology consulting firm.
“It’s going to be particularly interesting to see how much higher the rates will go this year as we head into this holiday season,” said Steve Vonder Haar, director of the Yankee Group’s media and entertainment practice. “What happens this holiday will go a long way in telling the tale of just how broadly video games are going to be woven into the American lifestyle.”
Nudging sales over the next few months is $1 billion spent on marketing by Nintendo Co., Sony Corp. and Microsoft Corp. All three are betting that games will grow significantly over the next few years, enough to support three consoles. In the past, only two--Sony and Nintendo--have succeeded. For Sony and Microsoft, consoles are also a way to gain access to people’s living rooms, where the companies can begin selling other forms of digital entertainment, from movies to music.
“The question is whether consoles bust past 34% of households and go into the mainstream, or whether you have three well-heeled hardware manufacturers fighting over a stagnant market,” Vonder Haar said.
Stock of major game companies gained Monday with Activision Inc., THQ Inc. and Electronic Arts Inc. rising 2.9% to 4.9%, outperforming the Nasdaq composite index growth of 1.89%.
