Game Industry Forecast Shows Solid Growth

The spherical mealy industry ordain pay off $60 billion in receipts for 2011, and is ontogeny at 10% yearly concord to a new research report by industry psychoanalyst Colin Sebastian for RW Baird. That growth rate should see general industry revenue hit $80 billion by 2014, but the about aras of the line of merchandise will remain vapid or even decline, while early(a) beas will be growing at an annual rate of 15% to 20%. The growth argonas that Sebastian sees are in online and nomadic plots, driven primarily by download adequate case (DLC) and mobile enliveneds and companion adapted impales to a lesser extent.These areas will be growing e very(prenominal) year at a rate of 15% or more for the beside several(prenominal) years, Sebastian believes. Unfortunately, opposite areas of the venture business wont be faring as well. He sees pack advanced parcel sales staying flat this year, with the growth in Xbox 360 and PS3 sales being commencement exercise by the decline in Wii and handheld halting sales. This quarter will see square sales with many big titles flood tide out, but that positive sales work out will only be copious to pull the sales out of the impairment category for the year.The good news for the feisty business is that its the only media business with a strong positive growth announce for the next several years. Newspapers, magazines, music, TV and other media businesses are struggling with the transition to a digital distribution model, but the in high spirits level of innovation in the game industry has kept the overall see to it positive. Thats not to say at that place are no problems Sebastian sees many video game companies will keep to struggle through and through this transition. Sebastian sees the mobile commercialize as speech in $2 billion in revenue this year, with growth continuing delinquent to rapid adoption of smartphones and tablets.He cites studies limning that games are the leading application s on smartphones, and consumers consumers have been very willing to pay for games or for in-app purchases with freemium hgames, which at a time represent the majority of revenues for mobile games. Sebastian believes tablets basis be the next great merchandise for games, presumption that the form factor is soften than a smartphone for acting games. Studies also show that gaming is the number one usage of tablets, with over 70% of tablet owners operateing games on the devices.The difficult business mode for traditional game companies means there are fewer clear winners to enthrone in right now. Sebastian sees GameStop as a good holiday play given the large number of AAA titles feeler out this quarter, and beyond that he picks Activision and electronic Arts as the best performers for long investors, followed by Take Two. The nature of the game market is changing in the USA, according to studies cited by Sebastian. He points to the Entertainment bundle Association study sho wing 72% of US households play games, with the average age of gamers being 37.Additionally, more than half of gamers play on their phones and other handheld game devices, and women now represent 42% of the gamer population. Its a far cry from the traditional our market is teenage boys of all ages that used to be the only demographic for game companies to bearing about. Sebastian sees hope for the core games segment, in that the extensive appeal of casual games may calculate more people interested in gaming, and eventually looking for the deeper experiences that console games and PC games can offer. He sees the PC game market doing better in 2012, broadly on the strength of hit releases exchangeable Diablo III.Handheld devices, lead by the Nintendo 3DS and the Sony PSP (and soon the PS Vita) will be flat in 2012, with the launch of the PS Vita helping to offset the shift to smartphones, at least for a while. Sebastian believes the PS Vita may be able to take the leading positio n from the 3DS. Finally, Sebastian sees hearty games continuing to grow and develop in depth and richness, eventually being able to appeal more to core gamers. console table games will add more social elements, too, and eventually social games outside of Facebook will become more popular.He sees growth evaluate surpassing 10% annually for the next 3-5 years. The current leaders are Zynga, with 262 meg monthly average users (MAU), followed by electronic Arts with 203 million MAU. Overall, its a labyrinthine portrait of a rapidly growing and changing industry. Clearly there are dangers ahead for many companies as business models are changing, and once-profitable businesses are seeing their audiences fall by the wayside for other types of gaming. Successful companies will be the ones who stay flexible as conditions continue to change rapidly. Whats your opinion on the hereafter of the game industry?