Revenue growth remained fairly flat over the last five years, as consumers tightened wallets
Los Angeles, CA (PRWEB) March 31, 2012
Following a dramatic pullback in consumer spending after the financial crisis of 2008, the Video Games industry is slowly beginning to recover some of the momentum it had built up earlier in the decade. However, the emergence of low-cost games for mobile devices has chilled demand for other games and may continue to temper growth opportunities for the foreseeable future. In the five years to 2012, industry revenue averaged an annual decline of 1.7%. Revenue in 2012 is expected to total $34.2 billion, well below the 2008 peak of $41.2 billion. According to IBISWorld industry analyst Dale Schmidt, with no major console releases since 2006, the industry has been dependent on add-ons and accoutrement to retain consumer interest. The release of Kinect, a motion sensor for the Xbox 360, partially offset significant declines in revenue from Nintendo and smaller declines among most game publishers.
Future growth expectations for the video game industry have been moderated significantly due to a clearer picture of the market for gaming on mobile platforms. Because mobile games are sold at a significant discount compared to traditional console and computer games, their rise may foretell a slowdown of the video game market in the United States. “While the releases of next-generation video game consoles, expected in late 2012 and 2013, should rekindle interest in the more expensive console gaming market, the rise of the low-cost, low-margin mobile gaming market may act as a weight on the overall gaming market, pulling revenue downward as consumers pay, in aggregate, less per hour of gaming entertainment,” said Schmidt. Nonetheless, IBISWorld expects growth in the future due to an expanding population and an increase in the percentage of Americans who play video games as game-playing generations age and new generations are introduced to them.
The Video Games industry experiences moderate market share concentration, with the top four firms contributing 46.2% of total industry revenue. When it comes to producing and selling video games and consoles, reputation and brand recognition are essential (see Barriers to Entry). Breaking into the industry is extremely challenging when faced with some of the behemoths that sit astride the peak of the video games world. Sony, Microsoft and Nintendo dominate the consoles and software publishing segments of the industry. Activision Blizzard, the fourth-largest major player, exemplifies the value and importance of reputation; the Blizzard division created and publishes the World of Warcraft, Diablo and StarCraft game franchises, which have consistently received top marks from critics and consumers in every version to date. For more information, visit IBISWorld’s Video Games in the US report in the US industry page.
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IBISWorld industry Report Key Topics
The Video Games industry includes the broader operations of all aspects of video games in the United States. Gaming consoles, games made for those consoles and games produced specifically for personal computers make up the retail segment. The development and manufacturing of games, consoles and accessories also constitute a notable share of the market. Finally, growing revenue from online gaming subscriptions complements industry products.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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