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Video Games Poised for Growth

1 Jul, 2006 By: John Gaudiosi

Worldwide video game sales will reach $46.5 billion by 2010, compared to $27.1 billion in 2005, says a new PricewaterhouseCoopers report.

The report, “Global Entertainment and Media Outlook: 2006-2010,” says gaming in the United States is expected to grow from its 2005 total of $8.4 billion in sales to $13 billion by 2010. That makes the United States the second-largest market, behind Asia Pacific ($9.8 billion in 2005).

The introduction of the next-generation consoles will invigorate and dominate the game market in 2006 and 2007, while PC games will continue to decline, the report says. The PC game market will decrease to $784 million in 2010 from $941 million in 2005, while console and handheld games will continue to dominate the market, increasing by a compound annual rate of 5.6%, to $7.9 billion, in 2010 from $6 billion in 2005. The report predicts console game sales will slow between 2008 and 2010 as next-generation consoles Xbox 360, PlayStation 3 and Wii approach maturity. The number of consoles sold (excluding handheld devices) is expected to increase from 10 million in 2005 to 17.5 million in 2007 before declining to 15 million in 2010.

The report asserts that the $600 price for PlayStation 3 will not have a significant impact on the success of Sony's new console.

The migration to broadband, as well as to the next generation of consoles that are geared to online playing, will spur the growth of online games. Online games will grow by 19.1% on a compound annual basis, from $835 million in 2005 to $2 billion in 2010.

The use of in-game advertising — which will be geared to online gaming — will also grow significantly.

According to the report, there were 5.8 million online video game subscribers in 2005, representing 14.6% of the broadband universe.

The report estimates there will be 15.5 million people playing games online by 2010, representing 21.1% of all broadband households. Online game playing is an important factor for many people when they subscribe to a broadband service, the report says.

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