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Games Top Media Growth Segment

14 Oct, 2005 By: Jessica Wolf

The video game market is going to be the fastest-growing entertainment and media segment in the United States over the next five years, according to a new PricewaterhouseCoopers report.

The research firm predicts revenue from the video game industry will increase at a 12.9 percent compound annual growth rate to $15.1 billion in 2009, propelled by next-generation gaming as well as the exploding online and wireless markets.

Online video game subscribers will increase from 4.4 million at the end of 2004 to 28.5 million in 2009, according to the report. That's nearly half of all broadband households.

Wireless gaming is the fastest grower, predicted to swell from $281 million in 2004 to $2.1 billion in 2009. That's a 49.3 percent compound annual growth rate.

Console games will still make up the meatiest part of the U.S. pie, according to the report — with $8.2 billion in 2009, up from $6.2 billion last year.

But higher development costs and more competition from affordable Internet and wireless gaming means console games are going to rely even more heavily on sequels, and movie and sports licensed games, according to Richard Withy, Southern California senior entertainment and media partner for PricewaterhouseCoopers.

The edge for the next-generation consoles will go to the first to market, said Bryan Neider, CFO of worldwide studios for game publisher Electronic Arts, just like PS2 had a leg up on Xbox. Xbox 360 debuts Nov. 22. PlayStation 3 is expected in the spring.

EA remains “platform neutral,” he said. The next-generation platforms, especially if they include online capabilities, will allow EA and other publishers to create a richer, more interactive experience that will “reach to a much broader audience.”

What's clear, and exciting to people in the game industry, is that gamers are spending more time than ever on this form of entertainment, said Greg Ballard, president and CEO of Glu Mobile. “Over the last three years, we've seen a redefinition of what it means to be a gamer,” he said.

These gamers are stealing time from prime-time TV viewing to play an average of eight hours a week, Ballard said. Forty percent of gamers play that many hours. The 18-24 age bracket clocks in at 12 hours per week, and the 25-34 group plays an average of 10 hours a week.

Wireless games can never compete with the “console experience,” said Michael Dowling, GM of Nielsen Interactive Entertainment.

But such “casual content” games as Tetris and Monopoly, which can be easily played on mobile phones, are appealing to the elusive female gamer, Dowling said. In the United States, women make up the majority of users for these kinds of games.

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