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World Video Game Market

29/12/2009
Promising results, even in this bleak economy
World Video Game Market


In the latest edition of its report “The World Video Game market”, it appears this market continues to report promising results, even in this bleak economy – and even enjoyed record-breaking video game and console sales at Christmastime in 2008. Hardware sales (home and handheld consoles) totalled 14.7 billion EUR in 2008, while software sales (PC, home and handheld console, mobile phone and online) totalled 36.6 billion EUR.

According to Laurent Michaud, head of the Digital Entertainment Practice, “the sector will continue to enjoy solid earnings, albeit with some nuances depending on the market segment. In 2010-2012, the hardware sector will experience a downturn in sales as households reach optimum equipment levels, with growth picking up again starting in 2013 thanks to the launch of new gen consoles. The increased revenue generated by software sales will not be enough to offset losses up to 2012”.

By late 2009, home console games could account for 30% of the sector’s revenue. It should nevertheless be pointed out that this segment is expected to have flat growth at best in 2009, due to a combination of reduced household budgets, a selection of games that has not lived up to gamers’ expectations, and competition from other platforms. This percentage is expected to drop to 24% between now and 2013, notably due to the growth of online gaming which is expected to be generating more revenue than home console games in five years’ time. More significant still, games on handheld devices, including phones and consoles, could become the largest segment, generating 15 billion EUR in revenue in 2013, on the eve of the launch of the next generation of home consoles.

Industry trends: a constant state of renewal

For the video game sector, 2008 and 2009 were marked by a resurgence in competition which is now livelier than ever. It extends to all platforms, all networks and all genres. But is that not a sign that this industry is in good shape?

The video game sector is attracting a host of newcomers and is regularly held up as an example, notably for its ability to adapt to the challenges of the digital era.
• It is the only digital entertainment sector to have successfully negotiated the switch to digital distribution and the digital revolution, even if a certain degree of resistance remains.
• Sales continue to rise steadily, despite the impact of certain cyclical effects, notably the drop in console sales in the latter part of their lifecycle.

The sector is being shaped by several events which will mark 2008-2009 as a turning point in its development.

1. Digital distribution is continues to make strides. It is making its way to all platforms and becoming increasingly popular with consumers. Everybody appears to have accepted digital distribution as inexorable, from developers to retailers, by way of game publishers – and it started with gamers themselves.

2. With the ecosystem it has structured around the iPhone and its app store, Apple is transforming portable platform games. The American firm has adopted a business model that challenges console makers’ brick-and-mortar models.

3. Online gaming will be the most dynamic segment between now and 2013. It will continue to develop thanks to Internet-ready TV sets, to the growing array of gaming offers, the cohabitation of business models which is stimulating competition and to a number of aggressive pricing strategies, ranging from Free-To-Play to Premium subscription.

4. The sector is opening up to new forms of gaming, sometimes going beyond the game. Casual gaming – which requires no learning curve, offering short games in what is sometimes a very basic graphic environment – has the potential to open the doors to a mass market. Serious gaming, which involves taking gaming technologies to other sectors, will find applications in all sectors of the economy, starting with healthcare, defence, training, emergency services, tourism, etc.

5. Video games are at the heart of the communal and social Web, and will be one of the driving forces of the intelligent Web. The integration of data mining techniques into online gaming services will help create predictive models for games by building an individual, behaviour-based player profiles.

6. Video games will benefit from the technological developments made by networks. The deployment of optical fibre will give a boost to steaming games which require neither machine nor game, or even a gaming platform, only a device to interact with such as a TV.


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Contact

Laurent MICHAUD
Head of the Digital Entertainment Practice
P: +33 (0)467 144 439
E-mail

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