Video Game and Software IndustryEssay Preview: Video Game and Software IndustryReport this essayIntroductionThe video game industry is very broad in scope and continuously growing at a rapid pace (Exhibit 1) with billions of dollars to be made. Although the large potential for growth cushions rivalry amongst the existing competitors in this industry, video game companies constantly focus on differentiating their products and seize new opportunities to gain and secure their customers loyalty in order to continue in the business. Most of these new opportunities are created through advancements in technology which have a huge impact on the video game industry by enforcing constant growth. Aside, threats like new competitors, substitutes, and regulation influence the video gaming and software industry every day, making the market even more competitive, while an increasing desire for fun and unique products on the customer side force companies to steadily create new and innovative technology. Therefore, competition among companies in this industry can be fierce, with each video game company struggling against the others for market share.
SalesAccording to the Entertainment Software Association (ESA) (Exhibit 2) game sales hit $7.0 billion in 2005 for total sales in the U.S. game software market for game consoles (PlayStation, XBOX, etc.) and PC games. With $6.06 billion, the lions share of the overall sales came from console game sales, while $.953 billion were cumulated through PC game sales. Expressed in units of games sold, in 2005 190.5 million units were sold for console systems compared to 38 million units for PC games. Historically sales of video games have grown in almost every year since 1996. US based sales (Exhibit 1) in 1996 were $2.6 billion (74.1 million units) and rose to $7.4 billion in 2004 (250 million units), which was an increase about roughly 300%. For 2006, statistics show that 42% of the target audience purchased or planned to purchase one or more games. The following games are the top selling game titles for 2005 (Exhibit 3):
The first 3 games will be released exclusively on the new XBOX 360 (exhibit 4) and other game systems. The first 3 new games for the PlayStation® 3 System will be produced in the next two weeks as part of the PlayStation® Entertainment System Bundle. The Xbox 360 System includes a 4 GB digital disc and the Xbox 360 System also allows customers to download downloadable content in-game. The PlayStation® 3 System includes free digital downloads throughout the year in addition to the PlayStation™ Entertainment System. The new console systems will not operate in the same way as the PlayStation® system. It will be available for purchase only for Xbox One systems. It will be available for purchase exclusively for the PlayStation® 3® system. • PlayStation®® 4 Console Edition in Europe • PlayStation® 5 Console Edition in North America • PlayStation® 6 Console Edition in Australia • Xbox Live Gold • Xbox LIVE Gold for Xbox One • PlayStation® 5 for PlayStation® 4 • Xbox LIVE Gold for Xbox 360 • Xbox One™ for PlayStation® 3, PS4® game consoles, and PS4 Game consoles. Game publishers will be able to offer a set of downloadable and online for PS3, PlayStation®4 home computers, PlayStation® Online, and PlayStation® Pro. The Xbox Live Gold package is offered only for Xbox One, Xbox Live Gold, PlayStation® Store, Xbox Live Gold, PlayStation 4, Xbox Live Gold, PlayStation® 6, Xbox One Home, PlayStation 4 Pro, Xbox One Black, Xbox One S for PlayStation® 3 and Xbox One S for Xbox One and Black.
Sales According to the Entertainment Software Association (Exhibit 4) game sales hit $7.0 billion in 2005 for total sales in the U.S. game software market for game consoles (PlayStation, XBOX, etc.) and PC games. With $6.06 billion, the lions share of the overall sales came from console game sales, while $.953 billion were cumulated through PC game sales. Expressed in units of games sold, in 2005 190.5 million units were sold for console systems compared to 38 million units for PC games. Historically sales of video games have grown in almost every year since 1996. US based sales (Exhibit 1) in 1996 were $2.6 billion (74.1 million units) and rose to $7.4 billion in 2004 (250 million units), which was an increase about roughly 300%. For 2006, statistics show that 42% of the target audience purchased or planned to purchase one or more games. The following games are the top selling game titles for 2005 (Exhibit 3):
The first 3 new games for the PlayStation® 3 System will be produced in the next two weeks as part of the PlayStation® Entertainment System Bundle. In its early stages, the PlayStation® Entertainment System Bundle had limited distribution, but that was about to change. Since June of 2008, sales of digital discs, mobile games, and other digital content in the US expanded by 15 % to 9.2 million units. That was a 12 % increase over the prior year. Nintendo Entertainment System™, the popular Wii U console, and the Xbox One system will distribute a total of 4,053 million units in 2005, the most in U.S. history, primarily for the PlayStation® 3 system ($1.9 on Windows system). It is expected that in April of 2009, sales of digital discs will increase, though in a limited way. It has been possible to get the retail release of the Xbox 360 System to Xbox
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Battlefield 4
The Division
FIFA 16
Call of Duty Ultimate Team: Miami
Cultural Differences and Growth in Game Sales
According to the data from EEA, Game Sales Growth In 2006 were the highest for any country in the world. Based on data compiled by Nielsen Media Group, growth in sales was the largest for any country in the world. Games grew at a higher rate than all other major categories, including online video games and mobile video game systems. Sales grew in all major subchannels, including home and office, and online.
In the US, average ePV per unit was $11.25 per unit in 2006, above the $14.00 per unit for an industry average. For each unit sold, ePV is $14.60. Thus, ePV in the US was $11.10 in 2004 and $11.09 in 2005.
For the rest of the world, retail PC/Mac sales rose $2.22 billion while PC/Mac sales per unit rose $2.13. The growth in retail PC/Mac sales was greatest for handheld, and the largest growth among handheld video games (PS4, Xbox 360, Linux, iOS, android, and desktop and smartphones have grown a quarter). Mobile is the largest segment of total console sales but also has the highest ePV and console ePV in the World Market. Microsoft’s console sales growth was highest with sales totaling $3.76 billion (3.42 billion games sold).
In the US, on average ePV for all video games grew every year from 2006 (3.3%, 2.3%, and 7.5%) to 2007 (8.5% and 9.5%). It was a 5% increase compared to 2003, which was a 5% increase in the past decade. During this time, ePV fell in every major segment. Microsoft played a small role in keeping ePV down. There was some pushback in 2007 as Windows and Windows Phone introduced a new user interface with a new app.
Gaming Rises in 2002
A few years earlier, Microsoft had moved slowly to change the game consoles business as a whole. In 2003, Nintendo announced the game console game franchise which included new console versions like Super Mario Bros., Mario All-Stars Racing Transformed, Super NES™, Fire Emblem: Awakening®, and PokĂ©mon Red & Blue™. The Nintendo company was the first company to open a business with a Nintendo mobile game development company, which then renamed it Nintendo of America, in 2002. On October 1, 2004, Nintendo was selected by the Entertainment Software Association of America (ESA) to be among the “Major Players in the Game Industry for the Nintendo 3DS, Wii U and XBox 360 Game”. The company added four other top 25 titles a year by 2008. This position was reflected in games that shipped on the Nintendo 3DS, Wii U and PC. The company opened an online game publisher with GameStop, and the Nintendo 3DS launched a spin-off company known as Nintendo Entertainment Center. It became Nintendo Entertainment Center in 2003. During the summer of 2005, Nintendo was the most valuable individual in the games industry with $20.4 billion in revenues in revenues, or $9.5 billion in net income, and the highest ePV per unit and most PC console sales
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Battlefield 4
The Division
FIFA 16
Call of Duty Ultimate Team: Miami
Cultural Differences and Growth in Game Sales
According to the data from EEA, Game Sales Growth In 2006 were the highest for any country in the world. Based on data compiled by Nielsen Media Group, growth in sales was the largest for any country in the world. Games grew at a higher rate than all other major categories, including online video games and mobile video game systems. Sales grew in all major subchannels, including home and office, and online.
In the US, average ePV per unit was $11.25 per unit in 2006, above the $14.00 per unit for an industry average. For each unit sold, ePV is $14.60. Thus, ePV in the US was $11.10 in 2004 and $11.09 in 2005.
For the rest of the world, retail PC/Mac sales rose $2.22 billion while PC/Mac sales per unit rose $2.13. The growth in retail PC/Mac sales was greatest for handheld, and the largest growth among handheld video games (PS4, Xbox 360, Linux, iOS, android, and desktop and smartphones have grown a quarter). Mobile is the largest segment of total console sales but also has the highest ePV and console ePV in the World Market. Microsoft’s console sales growth was highest with sales totaling $3.76 billion (3.42 billion games sold).
In the US, on average ePV for all video games grew every year from 2006 (3.3%, 2.3%, and 7.5%) to 2007 (8.5% and 9.5%). It was a 5% increase compared to 2003, which was a 5% increase in the past decade. During this time, ePV fell in every major segment. Microsoft played a small role in keeping ePV down. There was some pushback in 2007 as Windows and Windows Phone introduced a new user interface with a new app.
Gaming Rises in 2002
A few years earlier, Microsoft had moved slowly to change the game consoles business as a whole. In 2003, Nintendo announced the game console game franchise which included new console versions like Super Mario Bros., Mario All-Stars Racing Transformed, Super NES™, Fire Emblem: Awakening®, and PokĂ©mon Red & Blue™. The Nintendo company was the first company to open a business with a Nintendo mobile game development company, which then renamed it Nintendo of America, in 2002. On October 1, 2004, Nintendo was selected by the Entertainment Software Association of America (ESA) to be among the “Major Players in the Game Industry for the Nintendo 3DS, Wii U and XBox 360 Game”. The company added four other top 25 titles a year by 2008. This position was reflected in games that shipped on the Nintendo 3DS, Wii U and PC. The company opened an online game publisher with GameStop, and the Nintendo 3DS launched a spin-off company known as Nintendo Entertainment Center. It became Nintendo Entertainment Center in 2003. During the summer of 2005, Nintendo was the most valuable individual in the games industry with $20.4 billion in revenues in revenues, or $9.5 billion in net income, and the highest ePV per unit and most PC console sales
\
Battlefield 4
The Division
FIFA 16
Call of Duty Ultimate Team: Miami
Cultural Differences and Growth in Game Sales
According to the data from EEA, Game Sales Growth In 2006 were the highest for any country in the world. Based on data compiled by Nielsen Media Group, growth in sales was the largest for any country in the world. Games grew at a higher rate than all other major categories, including online video games and mobile video game systems. Sales grew in all major subchannels, including home and office, and online.
In the US, average ePV per unit was $11.25 per unit in 2006, above the $14.00 per unit for an industry average. For each unit sold, ePV is $14.60. Thus, ePV in the US was $11.10 in 2004 and $11.09 in 2005.
For the rest of the world, retail PC/Mac sales rose $2.22 billion while PC/Mac sales per unit rose $2.13. The growth in retail PC/Mac sales was greatest for handheld, and the largest growth among handheld video games (PS4, Xbox 360, Linux, iOS, android, and desktop and smartphones have grown a quarter). Mobile is the largest segment of total console sales but also has the highest ePV and console ePV in the World Market. Microsoft’s console sales growth was highest with sales totaling $3.76 billion (3.42 billion games sold).
In the US, on average ePV for all video games grew every year from 2006 (3.3%, 2.3%, and 7.5%) to 2007 (8.5% and 9.5%). It was a 5% increase compared to 2003, which was a 5% increase in the past decade. During this time, ePV fell in every major segment. Microsoft played a small role in keeping ePV down. There was some pushback in 2007 as Windows and Windows Phone introduced a new user interface with a new app.
Gaming Rises in 2002
A few years earlier, Microsoft had moved slowly to change the game consoles business as a whole. In 2003, Nintendo announced the game console game franchise which included new console versions like Super Mario Bros., Mario All-Stars Racing Transformed, Super NES™, Fire Emblem: Awakening®, and PokĂ©mon Red & Blue™. The Nintendo company was the first company to open a business with a Nintendo mobile game development company, which then renamed it Nintendo of America, in 2002. On October 1, 2004, Nintendo was selected by the Entertainment Software Association of America (ESA) to be among the “Major Players in the Game Industry for the Nintendo 3DS, Wii U and XBox 360 Game”. The company added four other top 25 titles a year by 2008. This position was reflected in games that shipped on the Nintendo 3DS, Wii U and PC. The company opened an online game publisher with GameStop, and the Nintendo 3DS launched a spin-off company known as Nintendo Entertainment Center. It became Nintendo Entertainment Center in 2003. During the summer of 2005, Nintendo was the most valuable individual in the games industry with $20.4 billion in revenues in revenues, or $9.5 billion in net income, and the highest ePV per unit and most PC console sales
With the release of the Nintendo Wii, and Sony PlayStation 3 (PS3) (which came out at the end of 2006) industry sales can be expected to increase even more, while overall retail sales of game machines, software and accessories for other system should also see more sales. Although Sonys release of the PlayStation 3 had various initial problems due to supply constraints, the perceived ease of finding the PS3 in online or offline stores is noticeably higher than for Nintendos Wii. On the other hand, with an average of $249.99 per console the Wii has a much more attractive sales price, while the PlayStation 3 is priced at $599.99.
Controversy and RegulationComputer and video games are subject to routine controversy and regulation. While not all games have a dark side, sometimes computer and video games include graphic violence, drug usage and profanity. Due to these and other questionable things being placed in games, the Entertainment Software Rating Board (ESRB) was established to police the games and place a rating on every game dependent upon content, similar to the ratings movies receive. The ESRBs ratings are intended to give truthful and objective information about the substance in computer and video games for consumers to allow them to make a knowledgeable purchase choice more easily. Some challengers of video games include parents groups, politicians, organized religion groups and open lobby for new laws and legislation to be enforced in the United States (U.S.).
CompetitionThe video gaming industry is competing with television, movies and music in an overall crowded entertainment market. The capability to play music and movies with game consoles and handhelds (PSP, Nintendo DS) drives overall industry growth, since consumers intend to see video gaming devices as a “do-it-all” media device platform. The video gaming industry has been growing exponentially in recent years and is expected to continue growing in the future. While the video game market is expected to increase mostly driven by online gaming and the continued development of portable gaming devices, the online console gaming market is primed to explode due to advances in networking and online gaming capability along with the increased availability of broadband to the global market. The ability to download games and to access better-quality content, including high-definition video, has increased and plays a major part in influencing the design and features of subsequent generations of video games and the hardware that supports them.
Demographics and StatisticsAccording to the industry statistics reported by the ESA 69% of heads of American