The growth will be spearheaded by console games. Sony’s PlayStation 2 will dominate the console market, although Microsoft’s Xbox should overtake Nintendo and establish its brand as a serious name in gaming. By 2005, the situation will be tenser. In the new generation of consoles, Microsoft may give Sony a serious run for its money.
A new Datamonitor report reveals games software revenues will rise 22% to 2004.
Datamonitor’s new report, Global Electronic Games, finds that the emergence of new home consoles has revitalised the electronic games market globally and attracted renewed widespread consumer interest. Games software revenues globally are expected to grow from $17.7 billion in 2001 to $21.6 billion in 2004 – a 22% rise.
The industry growth will stem mainly from console gaming. The combination of increasing power, near photo-realistic graphics, and appealing multimedia features such as DVD players, will broaden the penetration of home consoles into homes. Console online gaming may also become a strong sales driver, albeit not in the short term.
Sony will once again dominate the market; neither Xbox nor GameCube will be able to catch up. The strength of the PlayStation brand with the public, combined with a competitive price and a massive games catalogue, will maintain the PS2’s lead.
As recently seen in Europe, the Xbox’s high price tag will hurt its short-term commercial success. However, coming price cuts, combined with the raw power of the console and its built-in Internet capabilities, should let Microsoft overtake Nintendo into second place.
Meanwhile, despite the GameCube’s attractive price and loyal fan base, it will struggle to create a mass market. On the plus side, Nintendo’s Game Boy Advance should establish a quasi-monopoly in the hand-held console market. Combined GameCube and GBA revenues would put Nintendo ahead of Sony, giving Nintendo much flexibility for its long-term strategy.
By the end of 2005, there will be a global installed base of over 90 million for Sony’s latest console, which will dwarf the Xbox total of less than 40 million. However, Sony and Microsoft are likely to launch the successors of their current consoles by this time, which will once again add impetus to the electronic games market.
Microsoft will be better placed to challenge Sony in 2005. The US giant will not allow its main rival to steal the kind of first-to-market advantage it managed with the PS2.
