Video Game Software Publishing in the US Industry Market Research Report Now Available from IBISWorld

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Despite a drop in disposable income and other adverse changes in the economy, video game software publishers have experienced strong sales over the five years to 2012. By increasing their investment in marketing and building hype about new releases, demand has risen. Over the next five years, revenue will likely continue rising, with publishers adapting their games to new technologies and consoles. An emphasis on wireless and other emerging platforms is changing how video games are played. Companies are encouraging consumers to buy games directly through the internet, leading to higher industry profit. For these reasons, industry research firm IBISWorld has added a report on the Video Game Software Publishing industry to its growing industry report collection.

IBISWorld Market Research

IBISWorld Market Research

Publishers will capitalize on new technologies and consoles to drive revenue forward

Software publishing operates in a similar manner to book publishing: Developers are like authors, but publishing represents a larger slice of the software pie. Revenue for the Video Game Software Publishing industry is expected to increase in 2012 to $11.2 billion. As gaming becomes more common, the popularity of brand-name games like Halo allows publishers to charge more for games' distribution, because retailers' revenue depends on these high-turnover items. According to IBISWorld industry analyst Dale Schmidt, the appeal to a greater audience has led to robust annualized industry revenue growth of 3.6% over the five years to 2012, despite challenges like the recession-caused dip in disposable income and shifts in sales strategies.

Video game publishers changed how they market major releases in 2008 and 2009. Previously, companies rereleased franchise games without much accompanying marketing. However, a dip in disposable income stimulated publishers to build hype about games prior to release in order to generate sales. Mass participation in social networking, along with marketing directly to gamers via internet-connected consoles, facilitated this strategy.
Internet connectivity via consoles gives Microsoft, Sony and Nintendo an edge in marketing because they produce the consoles that most players use. By selling products through their consoles, these companies have developed a marketplace in which their games are advertised and featured beyond those of the competition. As a result, companies are encouraging consumers to buy games directly through the internet, leading to higher industry profit.

The Video Game Software Publishing industry has a medium level of concentration. Major Players include Activision Blizzard Inc., Electronic Arts Inc, Microsoft Corporation, Nintendo Co. Ltd. and Sony Corporation.
Concentration fluctuates significantly year to year. Each company's market share heavily relies on the popularity of its latest games and the newest consoles. A company's market share is also dependent on partnerships with console developers. Publishers desire to have strong relationships with console manufacturers so that they are able to provide new games for those consoles when they are released. If the company is unable to create these partnerships, its market share will likely decline when new consoles are released and they have no compatible games to offer. Also, market share shifts depending on the number of game releases. Most releases happen during the holiday season, and if publishers miss a release target date around the holidays, their sales (and market share) are expected to decline. Market share concentration is currently in a period of polarization. While the top companies continue to solidify their share of the console and PC market through their blockbuster AAA games, small-scale publishers have flooded the industry. These publishers develop and release games for distribution over the internet (for play on smartphones, tablets, consoles or PCs) for free or a small upfront fee. However, their combined revenue is still dwarfed by the revenue of major players.

The rise of smartphones has opened up a new market for publishers and allowed the number of publishers to expand greatly, says Schmidt. Smartphone game publishers can operate with only a few people, or even just one person, to develop a game for release on Apple iPhones and iPads or Google Android phones and devices. An emphasis on wireless and other emerging platforms is changing how video games are played. As publishers adapt their products to a greater variety of technologies like smartphones, streaming gaming services and interconnected TVs, they will likely appeal to an even greater audience. Sales of games for new platforms, more blockbuster releases and rereleases of previous hits are projected to boost industry revenue in the next five years. IBISWorld forecasts that revenue will grow over the five years to 2017. For more information, visit IBISWorld’s Video Game Software Publishing report in the US industry page.

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IBISWorld industry Report Key Topics

This industry includes establishments that primarily publish video game software. These establishments carry out operations necessary for producing and distributing video games, including design, documentation, installation and support services. These firms may design, develop and publish games, or they may solely be involved in publishing.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.

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Gavin Smith
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