IDG Entertainment Study Finds Devoted Video Gamers Key to Industry Profits in 2006

IDG Entertainment Study Finds Devoted Video Gamers Key to Industry Profits in 2006

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9/13/2005 10:58:14 PM | Research |
IDG Entertainment Study Finds Devoted Video Gamers Key to Industry Profits in 2006


At a time when the games industry is spending millions of marketing dollars to attract casual gamers, as opposed to their social and devoted gaming counterparts, IDG Entertainment's (IDGE) annual industry white paper reveals that devoted gamers are responsible for the majority of the dollars spent on video games and systems in the first six months of 2005.

According to IDGE's 2005 Industry White Paper, active gamers can be segmented into three categories: devoted, social and casual gamers. Devoted gamers, who count game-playing as their primary activity, make up 41% of the total gaming audience and are responsible for 52% of the dollars spent on video games and systems. Social gamers represent 35% of spending while casual gamers represent 28% of the gaming audience but only 13% of dollars spent.

Devoted gamers will drive sales of new systems in 2005 and 2006 with more than half of them likely to buy a PlayStation 3 and over 45% planning to buy the Xbox 360 within the first year of release for each system. According to the White Paper, while executives believe that enticing casual gamers to new machines is the secret to industry profit and market-share gains, few expect widespread consumer adoption of new platforms until 2007.

As a result, industry executives predict 2006 is yet another transitional year - with some unique characteristics. The continued availability of at least two current generation platforms, and the presence of a vibrant and competitive handheld market, will likely soften the decline in revenue typically seen in life cycle transition years. Most executives predict that revenues will be driven by devoted gamers' move to the new consoles, and the strength of handhelds, although industry revenues will remain relatively flat overall for 2006.

"This console cycle will be distinctively different from previous transitions," said Daniel Orum, President, IDGE. "Our research indicates that dual console ownership is much more prevalent for the devoted and social gamer segments which means the real hardware transition won't occur until PS3 launches next year. That said, with over 50 million current generation consoles in the market, a very robust environment exists for ongoing development of software titles, which was not the case in previous hardware transitions."

For its 2005 Industry White Paper, IDGE staff interviewed nearly 30 industry executives -from companies such as EA, Microsoft and Sony as well as market analysts and investment bankers - on the current state and future outlook for video games and systems. Additionally, IDGE commissioned independent third-party research on the attitudes and motives of active gamers. This gaming segmentation research provides insight into active gamers' buying behavior, gaming preferences and their associated lifestyle demographics.

Xbox 360 Poised for Strong Debut

With the Xbox 360 the only next-generation console available before year's end, interviewees say the field is wide-open with room for market share movement among consoles. Unlike last year, interviewees don't see a commanding group of software hits, like Halo2 and San Andreas, dominating the market. As a result, there's the potential for unexpected software hits to emerge as publishers continue to support the current systems.

"By launching first, Microsoft will have first crack at appealing to devoted gamers who make up over 40% of the total video game audience," said Francis Mao, Senior Vice President at IDGE. "And our findings indicate over 45% of this hardcore group likely to buy an Xbox 360 in the first year. That could add up to a great launch for the 360 system."

"Saint's row from THQ and Bethesda Softworks' Elder Scrolls IV: Oblivion look to be two ground-breaking titles that could help spur Xbox 360 adoption with hardcore gamers also," said Wes Nihei, Editor, IDGE.

Handheld Market Now Competitive

For the first time in an Industry White Paper, interviewees are predicting a competitive market for handhelds this year. With Sony's PSP, and the development of the cell-phone gaming market, particularly overseas, the handheld sector is now positioned for competition and growth.

"When the Nintendo DS debuted last holiday season and Sony's PSP in March, everyone expected to see a big decline in Gameboy Advance sales and that didn't happen," said Daniel Orum, President at IDGE. "The handheld market is poised for growth and our White Paper findings suggest nearly 25% of devoted and social gamer segments of the market will purchase a DS or PSP system within the next year."

The 2005 Industry White Paper

For over 13 years, IDG Entertainment's annual Industry White Paper has become an essential resource for decision-makers in the interactive entertainment industry. In addition to 25 integrated interviews with top executives, publishers, retailers, analysts and key industry experts, the 2005 Industry White Paper includes exclusive data from NPD and key third-party research from IDG Entertainment's 2005 Gamer Segmentation Study - conducted by Boston Research Group.

IDG Entertainment's 2005 Industry White Paper is the only industry study to combine in-depth interviews of senior executives with independent research of active gamers' motivation and behavior. It is designed for industry professionals who need a candid, yet data rich, insight into trends for the year ahead.

The companion Gamer Segmentation Research study is based on an online survey conducted by the Boston Research Group and is valued at over $50,000 for the complete study.

The 2005 Industry White Paper and companion Gamer Segmentation Research Study ($750.00) is available for preview or purchase at (http://www.idg-entertainment.com/whitepaper/).


IDG Entertainment Study Finds Devoted Video Gamers Key to Industry Profits in 2006

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