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Game Industry Market Forecasts
3/31/03
Next week, DFC Intelligence (www.dfcint.com)
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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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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.
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