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A New Peak for Interactive Entertainment Sales? November 18, 2003 A solid indicator of where the interactive entertainment market is headed is company revenue. The following chart shows the most recently reported revenue for 18 public game companies. Together these companies have over $24 billion in combined annual home video and PC game revenue (for each company’s last fiscal year). There are now 4 companies with over $2 billion in annual revenue from home video games: Sony, Nintendo, Microsoft and Electronic Arts. On the downside there is strong indication that revenue may be peaking. Among the 18 companies tracked, Sony and Nintendo account for nearly 50% of the total revenue. Furthermore, as hardware manufacturers, these companies serve as bellwethers for the game industry. When their revenue peaks that often means that the current cycle is leveling off. The biggest decline has been for Sony who saw game revenue for the six-month period from 4/1/03 to 9/30/03 drop nearly $1 billion to $2.4 billion. While overall PlayStation 2 software sales grew in this period, hardware sales declined and so did sales for Sony’s internally published software. Nintendo sales were more stable and actually showed a slight increase for the latest six-month period. However, this was due to a strong increase for the handheld Game Boy Advance system. Most independent companies will not derive significant income from the Game Boy market. Without Sony’s $1 billion revenue decline, revenue for game companies has remained fairly consistent in the period to 9/30/03. This is quite impressive, considering that the Japanese market continues to struggle, the U.S. was at war with Iraq and Europe saw record heat waves this summer. The game industry still enjoys record high revenues, but sales for this cycle of game systems may have peaked, at least until further price cuts occur. 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. A sample of recent reports on the video game and PC game market include:: Worldwide Market Forecasts for the Video Game and Interactive Entertainment Industry Released April 2003, this 500+ 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. 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 475 page report contains a comprehensive analysis of the online gaming market. Includes current sales trends, market forecast, and in-depth company profiles. Other DFC reports include The Business of Video and Computer Games, The State of Game Technology, The Video Game and PC Game Consumer and The Executive Interview Series.
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