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Let the Games Begin!

17 Dec, 2001 By: Hive News

Nearly half of all American video game owners will buy a new console or handheld game over the holiday shopping season, says a new report from Jupiter Media Metrix.

The report indicates 45 percent of U.S. consumers who own a video game system intend to purchase a new game console or handheld game device and that connectivity is increasingly important to gamers.

"By the end of 2001, when consoles from all three game system manufacturers are in play, Jupiter forecasts that there will be over 100 million console gamers in the U.S.," says Jupiter analyst Billy Pidgeon. "Even though the new generation of consoles will not deliver the true breakthrough for online functionality, they represent a significant step forward in revenue potential. Publishers and media outlets must prepare for innovative digital marketing possibilities and new revenue opportunities that will stem from broadband connected consoles with hard drives.'"

In contrast to the online PC gamer audience, console gamers will grow 40 percent by 2006 -- increasing from 101.1 million in 2001 to 141.7 million gamers by 2006. Console players expect immediate gratification out of the box -- a responsive and immersive gaming experience with no delays or bugs. According to Jupiter analysts, online console games services due out from Microsoft and Sony Computer Entertainment in 2002 must deliver on consumers' expectations or risk market share downturns in the next console business cycle.

Although the number of households owning a gaming console connected to the Internet will increase to 12.3 million by 2006 (up from 700,000 households in 2000), online PC games will continue to account for the lion's share of gaming subscription revenue, the study indicates. Subscription revenues from online PC games will total $1.5 billion by 2006, Jupiter projects , while subscription revenues from connected console gaming will only reach $250 million in the same period.

``Stakes for the connected console video games market are growing rapidly, but don't signal a goldmine quite yet,'' says Pidgeon. ``While revenues from software for offline consoles remain two to three times higher than offline PC games revenues, subscriptions for online PC games will continue to exceed subscriptions for online console games in the immediate term. "

Jupiter also reported that 46.7 million wired computer users at home in the U.S. played a PC-based game application in October, up 10 percent from 42.4 million users in January.

Additional highlights from the report, ``Connected Consoles: Preparing for the Next Cycle,'' include:

According to a June 2001 Jupiter Consumer Survey, video game system owners look at price (46 percent) and selection of exclusive games (44 percent) when deciding which new console to purchase. Jupiter analysts believe that exclusive software titles, or ``systems sellers,'' will be the main marketing attraction for the three major video game system competitors (Microsoft Xbox, Nintendo GameCube and Sony PlayStation 2).

Jupiter analysts have found that while most PC gamers have connectivity, casual PC gamers (those individuals who play once a week at most and average less than five hours of game play per week) tend to play only low-end Web embedded games online and play high-end games offline.

Jupiter analysts believe the music industry could gain the most in the near-term from steady growth in the connected console market. Dynamic or user selectable music soundtracks will add replay value and excitement to gameplay. Publishers can extend a game's lifespan and gain cross-promotional partnerships by having musicians release special singles and remixes for use as game soundtracks.

``Online game investments will begin to pay off after 2006, when broadband penetration reaches 41 percent of all online households and the current generation of consoles is ready for replacement. Media companies with strong affinity audiences must evaluate developing online games around their genres. Publishers should take advantage of a direct connection to their audience for promoting new titles with video previews, downloadable demos and streaming games for demo and rental,'' Pidgeon said.

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