Topic: Previsioni - Il lustro che verrà

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Hollywood losing sales battle to games
Software sales alone should reign by 2009

Top firms will look like film giants: Forecast


JOHN GAUDIOSI
SPECIAL TO THE STAR

Sales of game hardware and software are expected to continue to beat out Hollywood box office revenue annually, but game software sales alone should be able to outdo movie box office within the next five years, according to forecasts from the International Development Group.

The video game tracking company reported that the video game industry took in $2.94 billion (all figures U.S.) domestically for hardware last year and $6.97 billion domestically for console software. It further predicted that sales of console games will reach $7.07 billion domestically this year and $7.44 billion domestically in 2007.

With the size of this growing pie, it's no wonder so many companies are trying to get a piece.

According to Arcadia Research video-game analyst John Taylor, as of March, the U.S. console landscape has Sony leading the market with PlayStation 2, which has an installed base of 23.3 million units. That's in addition to Sony's original PlayStation, which is at 30 million units and still selling. Microsoft and Nintendo are vying for second place with installed bases of 8.4 million Xboxes and 7.3 million GameCubes, respectively.

"Revenue from games may level over the next three years but should do nothing but grow for the balance of the decade," International Development Group analyst Mike Sabine said. "Today's younger-adult game consumers have been gamers since their childhood. While the older population missed the revolution, games will grow."

He added that the dollar figures for the next few years don't immediately seem that impressive because they factor the recent price drops into the increase in unit sales. "We expect a large growth in 2008 and 2009, after the next cycle of hardware reaches the market during 2007," Sabine said.

Top-tier games average $7 million to create, which seems small compared to films, but the game industry has a single window to make back its money without the bonus income of pay-per-view, home video and TV deals. Looking forward to the next generation of consoles on the horizon, International Development Group believes that game development costs could grow to $12 million or more.

By the end of 2006, when all three major companies are expected to have launched their next-generation consoles, Sony will have a North American installed base of 37.4 million PS2s, Microsoft will have 16.3 million Xboxes and Nintendo will have 13.9 million GameCubes in homes.

Sabine believes that in the next five to 10 years, as the game industry continues to outgrow its infancy, the top-tier companies in games will look much like the major Hollywood studios. He predicts that five or six companies — Microsoft, Sony, Nintendo, Electronic Arts and maybe one or two more, likely through mergers — will hold a huge majority of the market share.