San Diego, CA -- March 23,  2004

Two new reports from DFC Intelligence, highlight the increasing similarities between the video game and interactive entertainment industries with the music and movie industries. In The Business of Computer and Video Games 2004, lead author and DFC president David Cole notes, “revenue for the video game industry could pass the music industry in the next five years.  More adults are playing games, the industry is expanding on a worldwide basis and online distribution is becoming a reality.”

A companion report, The Impact of Licensing in Interactive Entertainment, discusses the growing importance of licensed brands in the video game industry.  According to lead author Dave Watson, “companies are quickly learning that for certain well-known properties licensed from other media, having the best brand can be better then having the best game play.”

According to DFC, in the U.S., household penetration of console game systems is about 43% and has not substantially grown in recent years.  Market growth has come from increased usage of game systems within households.  More households have several users, own multiple systems and have a tendency to purchase more software per system (higher tie rates).  The industry is also expanding on an international basis.  The next growth challenge for interactive entertainment companies will be to expand into emerging markets while maintaining growth in core markets.  Emerging markets include South Korea, Taiwan, Singapore, mainland Asia, Australia, Eastern Europe and others.

On the downside of industry growth, the report discusses the issue of rising development and marketing costs.  “The interactive entertainment industry is still nowhere near the size of the movie industry,” says Cole.  “However, production values are starting to compare with those in feature films.  Increasing consumer expectations, along with other factors including the rising cost of talent, the need for large-scale marketing campaigns, adding online components and demand for high profile licensed properties are substantially increasing costs.”

The new DFC Intelligence report, The Business of Computer and Video Games 2004, is 590 pages and designed to provide users a comprehensive overview of the latest trends and how the interactive entertainment industry functions.  DFC Intelligence is a market research firm focused on video games, PC games, online games and interactive entertainment.  They offer free monthly research briefs to anyone signing up at http://www.dfcint.com/mailing_signup.html. 

CONTACT:
David Cole
858-780-9680