Video Game Console Systems - US - July 2006

TABLE OF CONTENTS

• Introduction and Abbreviations
• Introduction
• Date of last report
• Definition
• Abbreviations and terms
• Abbreviations
• Terms
• Executive Summary
• Sales slow in transition to next-generation consoles
• Holiday period is critical
• Next-generation consoles arrive
• Product innovation
• Minorities, teens, and higher-income households drive market
• Big names dominate the market
• Adspend to increase in 2006
• Traditional retail distribution prevails; online distribution lurks for software
• Consumers own multiple platforms and use them for multiple purposes
• Future is in the hands of next-generation consoles and games
• Two years of growth ahead
• Market Drivers
• New consoles drive sales
• Game sales slow when consumers wait for new consoles
• Internet subscription services expand product desirability
• New games expand gaming to non-core consumers
• Launch and holiday periods are critical
• Used games/rentals
  • Figure 1: Top video game rentals for week ended 4/23/06
• Synergies between games, movies, and sports drive game sales
• Community-based media outlets promote interest in gaming
• In spite of increasing competition for leisure time, time spent gaming is rising
  • Figure 2: Hours per person per year using consumer media--U.S., 1998-2008
• Demographic influences
• Household income
  • Figure 3: Video game penetration and average amount spent on video games, by household income, January-September 2005
  • Figure 4: Distribution of households, by income, 1999 and 2005
• Age
  • Figure 5: Video game penetration, by age, January-September 2005
  • Figure 6: U.S. population, by age, 2000-10
  • Figure 7: Total number of gamers in the U.S., by age, 2005 and 2010
• Race
  • Figure 8: Video game penetration, by race/ethnicity, January-September 2005
  • Figure 9: U.S. population, by race/ethnicity, 2000 and 2010
  • Figure 10: Total number of gamers in the U.S., by race/ethnicity, 2005 and 2010
• Market Size and Trends
  • Figure 11: Total U.S. retail sales of new video game consoles, games and in-game advertising, at current and constant prices, 2002-05
  • Figure 12: Graph: U.S. retail sales of new video game consoles, games and in-game advertising, at current and constant prices*, 2002-05
• Market Segmentation
• Overview
  • Figure 13: Video game consoles and games and in-game advertising revenue, segmented by type, 2003 and 2005
  • Figure 14: Video game consoles and games and in-game advertising revenue, 2005
• Console games
  • Figure 15: Sales of console game software, at current and constant prices, 2002-05
  • Figure 16: Top-selling console games, by units sold, 2005
• Console hardware
  • Figure 17: Sales of console hardware, at current and constant prices, 2002-05
• In-game advertising
  • Figure 18: Revenue from in-game advertising, at current and constant prices, 2002-05
• Supply Structure
• Overview
• Console hardware
  • Figure 19: Manufacturer unit sales of game consoles in the U.S., 2003 and 2005
  • Figure 20: Graph: Share of console sales, 2003 and 2005
• Console game software
  • Figure 21: U.S. market share of games, by publisher for current-generation consoles--life-to-March 2005*
• Company profiles--console manufacturers
• Microsoft Corporation
• Nintendo of America
• Sony Computer Entertainment America, Inc.
• Company profiles--software developers and publishers
• Activision
• Electronic Arts
• LucasArts Entertainment Company
• Take-Two Interactive
• THQ, Inc.
• Advertising and Promotion
• Introduction
  • Figure 22: Advertising expenditures for selected video game brands, 2003-05*
  • Figure 23: Graph: Advertising expenditures for selected video game brands, 2003 and 2005*
• Companies and brands
• Microsoft
  • Figure 24: Television Spot "Jump Rope" for Xbox 360, 2005
  • Figure 25: Television Spot "FunBox" for Xbox game titles, 2005
• Sony
• Nintendo
  • Figure 26: Television Spot "Sonic Riders" for Nintendo GameCube, 200?
• Electronic Arts
• Take-Two
• Retail Distribution
• Introduction
  • Figure 27: Retail channel preferences for console hardware and game purchases, June 2006
  • Figure 28: Retail outlet used for most recent console or game purchase, June 2006
  • Figure 29: Graph: Retail outlet used for most recent console or game purchase, June 2006
• Retailer profiles
• Wal-Mart
• Best Buy
• GameStop
• Target
• eBay
• Amazon
• The Consumer
• Introduction
• Summary
• Adults
• Video console penetration
  • Figure 30: Video game console ownership, by selected demographics, January-September 2005
  • Figure 31: Married couples cohorts
• Platform ownership trends and preferences
  • Figure 32: Selected video game console ownership, 2002-05
  • Figure 33: Types of video game consoles owned, by age, January-September 2005
• Purchase plans for next-generation offerings
• Primary gamer
  • Figure 34: Primary gamer, by gender, June 2006
• Genre of games preferred
  • Figure 35: Game genre preferences, by age, January-September 2005
• Game purchases
  • Figure 36: Number of games purchased per year, demographic profile, January-September 2005
  • Figure 37: Graph: Incidence of console ownership and software purchase rate, by age, January-September 2005
  • Figure 38: Number of games purchased in last year, by console platform, June 2006
• Trusted sources for learning about new games
  • Figure 39: Influencers of the buying decision, by age, June 2006
  • Figure 40: Influencers of the buying decision, by relationship to the gaming console, June 2006
  • Figure 41: Influencers of the buying decision, by household income, June 2006
• Uses and desires for game consoles
  • Figure 42: Current and future uses of the video console, June 2006
• Gamer beliefs and behaviors
  • Figure 43: Perceptions of product scope and diversity, by age, June 2006
  • Figure 44: Buying behavior, by age, June 2006
  • Figure 45: Attitudes toward games and consoles, by age, June 2006
  • Figure 46: Attitudes and awareness of in-game advertising and related marketing offerings, by age, June 2006
• Teens
• Video game usage
  • Figure 47: Teen video game usage, by selected demographics, January-September 2005
• Platform experience
  • Figure 48: Platform experience and location of game play, June 2006
• Genre of games preferred
  • Figure 49: Game genre preferences, by gender and age, January-September 2005
• Hours played
  • Figure 50: Hours played by teens, by gender and age, January-September 2005
• Number of games purchased
  • Figure 51: Number of games purchased in last year by teens, by selected demographics, June 2006
• How game machines are/could be used
  • Figure 52: Teen current and future uses of the video console, June 2006
• Teen opinions and behaviors
  • Figure 53: Teen game beliefs and behaviors, by gender, June 2006
• Sources of game recommendations
  • Figure 54: Sources of information about new games, by gender, June 2006
• Game perceptions
  • Figure 55: Teen gaming perceptions, by gender, June 2006
• Interest in next-generation products
  • Figure 56: Teen purchase intent for next-generation products, by gender, June 2006
• Kids
  • Figure 57: Genre preferences of kids, by gender, January-September 2005
• Race/ethnicity
• Video game ownership
  • Figure 58: Video game console ownership, by race/ethnicity, January-September 2005
  • Figure 59: Types of video game consoles owned, by race/ethnicity, January-September 2005
  • Figure 60: Types of video game consoles owned, by race/ethnicity, January-September 2005
• Genre of games preferred
  • Figure 61: Game genre preferences, by race/ethnicity, January-September 2005
• Purchase frequency
• Sources for learning about new games
  • Figure 62: Influencers of the buying decision, by race/ethnicity, June 2006
• How consoles are used
  • Figure 63: Current and future uses of the video console, by race/ethnicity, June 2006
• Gaming opinions
  • Figure 64: Perceptions of product scope and diversity, by race/ethnicity, June 2006
  • Figure 65: Buying behavior, by race/ethnicity, June 2006
  • Figure 66: Attitudes toward games and consoles, by race/ethnicity, June 2006
  • Figure 67: Attitudes and awareness of in-game advertising and related marketing offerings, by race/ethnicity, June 2006
• Hours played by teens and kids, by race/ethnicity
• Future and Forecast
• Future trends
• Industry strength depends on smoothness of transition
• Higher prices for consoles and games could constrain unit sales
  • Figure 68: Next-generation console and games launch prices, 2006
• Here comes Microsoft
• Game consoles are not just for gaming anymore
• In-game advertising will reach the console
• Online gaming services become a greater part of console gaming
• Lower-priced, shorter-format games
• Market forecast
• Video game consoles, games, and in-game advertising
  • Figure 69: Forecast of total U.S. sales of video game consoles, games, and in-game advertising, at current and constant prices, 2005-07
  • Figure 70: Forecast of total U.S. sales of video game consoles, games, and in-game advertising, at current prices 2005-07
• Forecast factors
• Appendix: Trade Associations
• Appendix: Simmons Cohorts
  • Figure 71: Married couples cohorts
  • Figure 72: Single women cohorts
  • Figure 73: Single men cohorts