Vision - January/February 2008 - (Page 31) espite some unexpected setbacks for two of the three leading console makers last year, the video game industry has ample reason to count its blessings as the New Year unfolds. Indeed, CEA and other industry analysts believe that both console manufacturers and video game developers are poised for continuing torrid growth in 2008 as Microsoft Corp.’s Xbox 360, Nintendo Co.’s Wii, and Sony Corp.’s PlayStation 3 systems all hit their sales stride. After winding up their first full combined year on the market in 2007, all three new consoles now are entering what’s likely to be their most popular 12-month stretch on retail shelves, at least judging from past product cycles. “It looks like 2008 is probably the peak year” in this console cycle, observes Steve Koenig, senior manager of industry analysis for CEA. “The pump is primed for another year of strong growth in 2008.” GaminG industry Hits sweet spot by AlAn breznick • illustrAtion by chris lockwood Analysts see growth ahead as software designers churn out fresh, more powerful games for the latest generation of console players. In one prime example, Microsoft introduced Halo 3, the latest installment of its enormously successful Halo franchise, to great acclaim in late September. The popular action game was an immediate hit, racking up more than $300 million in sales globally during its first week on the market and helping to boost Microsoft’s fiscal first quarter 2008 revenues and profits. To cite another example, Nintendo released Super Mario Galaxy, the latest chapter of its Super Mario Bros. saga, for the Wii. In addition, Take-Two Interactive intends to release Grand Theft Auto IV, the new version of its highly popular Grand Theft Auto series, sometime this spring after delaying its planned October debut. “Software development is in full mode,” says Koenig, noting that game designers have now “had a year or more under their belts” to perfect their titles. “There’s a smorgasbord of content ripe for the picking.” As a result, the traditional video game business (TV consoles, handheld players and games) could easily top $18 billion in revenue in 2008, shattering all previous industry records. In fact, CEA projects that the industry’s overall wholesale receipts will reach $18.4 billion in North America, with console sales jumping to $8.5 billion and software sales soaring to $9.9 billion. Throw in another $1 billion to $2 billion for PC and online gaming revenues and the industry’s grand total could surpass $20 billion. Such a record-setting performance would come after equally impressive growth in 2007. While the final figures aren’t in yet, analysts have predicted that combined hardware and software sales would hit at least $15 billion to $16 billion for the year, up from the previous high-water mark of $12.5 billion in 2006. Much, of course, depends upon how strong a holiday season the industry just enjoyed. But, through the end of July, industry sales had already topped $7 billion for the year, up 42.6 percent from slightly under $5 billion for the first seven months of 2006, according to the NPD Group. Analysts expect that feverish growth pace to continue. www.ce.org January/February 2008 31 http://www.ce.org
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