LADYDRAGON.COM - Game Industry Market Forecasts

Monday March 31, 2003

Game Industry Market Forecasts

Next week, DFC Intelligence will publish a 250-page report with complete forecasts for the game industry, Worldwide Market Forecasts for the Video Game and Interactive Entertainment Industry.

In this months industry brief we thought we would provide an overview of some key points of this report. -DFC Intelligence forecasts worldwide industry growth for video games and PC games to be between 37% to 45% from 2002 to 2007. By 2007 we estimate the worldwide market for interactive entertainment software and hardware will be between $28.4 billion and $30.1 billion. Note that this figure does not include consumer spending on accessories, game rentals and used games. It is estimated that these areas will account for another $5 billion+ in annual spending.

-Market growth is forecasted to be strongest in Europe, where spending on video game hardware and software is forecasted to grow by over 50% between 2002 and 2007.

-The PlayStation 2 is far and away the strongest system and is blowing away past industry performance metrics. This system has the chance to be the first console system to sell over 100 million units.

-DFC Intelligence forecasts that as many as 50% of 128-bit game system owners will eventually own 2 or more of the three major game systems (PlayStation 2, Xbox and GameCube). This will give Microsoft and Nintendo an opportunity to build solid installed bases for their systems.

-In our game test labs we are seeing an increase in usage of both the Xbox and the GameCube in recent months, this could bode well for 2003/2004 sales for both systems. In our test lab, GameCube usage has been driven by Super Mario Sunshine, Metroid Prime, Animal Crossing and the newly released Zelda title. With its built-in hard drive and superior graphics, the Xbox is becoming the favorite system for sports games. However, our usage of the PlayStation remains very strong, lead by the Grand Theft Auto games and Kingdom Hearts.

-We do not think that the Xbox will ever have strong sales in Asia. However, we do think Microsoft has the potential to do quite well in North America and Europe.

-The new Game Boy Advance SP system is a major improvement over the original GBA system. Our older testers are now able to see what the kids were excited about. DFC Intelligence also provides forecasts for new portable systems expected to be released in the next several years. With the Game Boy Advance and new portable game systems, we forecast the worldwide portable hardware and software market increasing to over $5 billion by 2005.

-The new DFC Intelligence report contains multiple scenarios for the release of new systems from Sony, Nintendo and Microsoft. Because these new systems have yet to be formally announced these forecasts are speculative. These systems are expected in 2005 or 2006 (the report provides scenarios for both release periods). We believe that all three hardware manufacturers will try and prevent the competition from getting an early start in the market. That being said we do include a scenario where one company (Microsoft) gets a jumpstart by releasing their system a year early.

-By 2007, we expect the new systems to dominate the market. These systems are forecasted to have the fastest sales growth in the history of the video game market.

-While overall sales have been down in the computer game market, it is worth pointing out that with the number of releases down, top individual titles still have very strong sales potential.

As part of our ongoing research efforts DFC Intelligence is delivering free monthly briefs on hot topics in the interactive entertainment and video game industry. You (or a colleague of yours) have signed up to receive these briefs.

DFC Intelligence’s research services provide detailed strategic analysis of the interactive entertainment industry. Reports on the video game and PC game market include: Market Leaders in the Video Game and Interactive Entertainment Industry This 600+ page report profiles major companies in the interactive entertainment industry. Each individual company report is about 15-40 pages and has an historical background, financial overview, product analysis and a frank assessment of the outlook for that company. The Online Game Market This 350-page report contains a comprehensive analysis of the online gaming market. Includes current sales trends, market forecast, and in-depth company profiles.

Worldwide Market Forecasts for the Video Game and Interactive Entertainment Industry To be released on April 15th, 2003, this 250+ page report contains complete forecasts for all individual console and portable game platforms by region (Asia, Europe/PAL, U.S.) through 2007. Also included are PC game forecasts and historical sales figures. The report has several scenarios for future market growth including an analysis and forecasts for new systems from Sony, Microsoft and Nintendo, as well as new portable game systems. The U.S. Market for Video Games and Interactive Electronic Entertainment This 800 page report is designed as a complete guide to the interactive entertainment industry with forecasts to 2006 in multiple scenarios broken down by individual game systems, a detailed historical overview, individual platform analysis, PC game market overview, industry economics, business model breakdowns, industry trends, consumer profiles, game genres, marketing issues, retail profile and online distribution.

The Themis Report on Online and Wireless Gaming 2002 This 150 page report provides an overview of the online and wireless game industries, including market potentials, analysis of the coming console online services, surveys of the leading content and service providers and a section that provides history and analysis of key issues that face the industry in the next five years, including customer service differentiation, the reasons for so many poor product launches in the space and the potential blocks to providing mass-market subscription content.

The State of Game Technology This report examines the critical aspects of the interactive entertainment industry, including PC hardware, video game console systems, 3D graphics, sound, development tools, peripherals, portable systems, online games, wireless gaming and location based entertainment. www.dfcint.com