Industry Trends

Software drives growth in interactive entertainment market

Sales of PC and console games are proving to be the driving force behind the current growth in the interactive entertainment market, with sales of the actual console hardware dropping off.

In the first five months of 2004 sales of console games increased by 26% compared to the same period in 2003, while PC games sales rose by 6%. The combined growth of these two market segments equated to an extra A$29million in revenue.

Console games have become increasing popular within the Australian gaming community in recent years, with PC games suffering with a declining share of sales. From January to May 2002, PC games accounted for 28% of all revenue generated from interactive games software. This then fell to 24% in 2003, and now the sector only represents 20% of sales.

The success of the console games goes hand in hand with the mounting number of consoles in homes across Australia, but is also affected greatly by the quality of individual titles. Of the 2,665 console games tracked so far in 2004, just 24 titles represented 25% of the market's value.

While the installed base of games consoles such as Sony's PlayStation 2, Microsoft's Xbox and Nintendo's Game Boy Advance continues to grow, there has been a marked decline in sales since December's holiday season. Year-to-date the market has experienced a 20% drop in demand for games consoles, accompanied by a 28% drop in revenue as rivals reposition their products at ever decreasing prices. There is no doubt that price drops and key titles do have a positive influence on hardware sales, but the currently available consoles have already progressed quite far into their lifecycles. Although there are no signs of a slow-down in console games sales, the console hardware market will struggle to reach the dizzy heights it reached in 2002 and 2003 until the next generation of hardware appears.

Contact: Phil Burnham, Account Director, +61 (0)2 9900 2838 (direct)