NPD Reports Video Games Industry Poised For A Strong Holiday Season

NPD Reports Video Games Industry Poised For A Strong Holiday Season

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10/5/2003 7:54:26 AM | Sales |
NPD Reports Video Games Industry Poised For A Strong Holiday Season


Despite dollar declines for the total video games industry in the first eight months of 2003, NPD analysts suggest a strong holiday season. According to leading market information company The NPD Group, the total video games industry experienced a 3.4 percent decline in dollar volume January to August 2003 versus January to August 2002. The good news is unit volume for the total video games industry has increased 8.4 percent during the same time period.

NPD reported total console and portable hardware sales declined 5.1 percent in unit volume and 18.5 percent in dollar volume January to August 2003 versus January to August 2002. Console and portable accessory sales declined slightly, two percent in both units and dollars January to August 2003 versus the same time period in 2002. More importantly, console and portable software sales showed increases in units as well as dollars, 14 and 5.7 percent, respectively, January to August 2003 versus January to August 2002. In the first eight months of 2003, the two software categories comprised of more than half of the industry's unit and dollar sales.

"The continuous rise in unit volume is good news for the video games industry," said Richard Ow, video game analyst, The NPD Group. "The most important factor is product is being sold at a faster pace than last year. Dollar decline is to be expected during the current video games cycle. The next couple of months will be critical for the industry, with highly-anticipated releases on the way. Over the next few years, software will be the primary driver for industry growth for the current next generation life cycle."

The rationale behind a strong holiday season lends itself to the following factors:

  • The mass market is making an impact in the video games industry: Growth in particular genres, Action and Family Entertainment have shown the biggest unit growths, 33 percent each.
  • More than 50 percent of software is selling under $40 price points across all console platforms: Over 270 new releases in 2003 are selling under $40 price points.
  • More value through console bundles: Console hardware manufacturers will bring more value to consumers when adding a title or an accessory to the console system.
  • Growth in tie ratio: The software to hardware ratio for each next generation platform has grown significantly. (See chart)

Software to Hardware Tie Ratio

----------------------------------------------------------------------
Video Games Systems Tie Ratio Tie Ratio
(Jan-Aug. 2002) (Jan-Aug. 2003)
----------------------------------------------------------------------
Gamecube 4.6 5.7
----------------------------------------------------------------------
Xbox 4.8 5.8
----------------------------------------------------------------------
PlayStation 2 6.1 7.1
----------------------------------------------------------------------
Game Boy Advance 2.9 3.3
----------------------------------------------------------------------
The NPD Group / NPD Funworld / TRSTS

Based on a recent NPD Cross-Platform Ownership Study, more than half of respondents surveyed are playing games with online features, another factor that bodes well for the upcoming holiday season. The survey also cited the average number of hours each respondent who owns a video game system spent playing each system per week, regardless of how many systems they own. The average Xbox player spends 8.1 hours a week, the average PlayStation 2 player spends 7.9 hours a week and the average Gamecube player spends 7.1 hours a week. The hours spent per system were even higher among kids, teens and young adults.

"Based on NPD point of sale trends and our recent Cross-Platform Ownership study, price may also be a major purchasing driver for this upcoming holiday season, especially among the mass market audience," said Ow. The study revealed less than 30 percent of the respondents felt price was a factor towards purchasing a console system in the past 18 months. "As hardware price points continue to fall, we expect 'price' to be more prevalent as a purchasing motivator among the mass market audience who are more value and price-conscious than the core gaming market."

Top 10 Best Selling Video Game Titles, Ranked by Total U.S. Units January 2003 - August 2003
----------------------------------------------------------------------

Rank Platform / Title Publisher Release ARP
Date
----------------------------------------------------------------------
1 PS2: Madden NFL 2004 Electronic Arts Aug. '03 $49
----------------------------------------------------------------------
2 GBA: Pokemon Ruby Nintendo of America Mar. '03 $31
----------------------------------------------------------------------
3 GCN: Zelda: The Wind Waker Nintendo of America Mar. '03 $47
----------------------------------------------------------------------
4 GBA: Pokemon Sapphire Nintendo of America Mar. '03 $31
----------------------------------------------------------------------
5 PS2: Enter The Matrix Atari May '03 $48
----------------------------------------------------------------------
6 PS2: Grand Theft Auto: Vice City Take Two Interactive Oct. '02 $48
----------------------------------------------------------------------
7 PS2: The Getaway Sony Computer Ent. Jan. '03 $40
----------------------------------------------------------------------
8 PS2: NBA Street Vol. 2 Electronic Arts Apr. '03 $49
----------------------------------------------------------------------
9 PS2: The Sims Electronic Arts Jan. '03 $49
----------------------------------------------------------------------
10 PS2: NCAA Football 2004 Electronic Arts Jul. '03 $50
----------------------------------------------------------------------
The NPD Group / NPD Funworld / TRSTS


NPD Reports Video Games Industry Poised For A Strong Holiday Season

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 Platforms
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- GameCube  
- GBA  
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- Madden NFL 2004  

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