Friday, 7 November 2008

Computer games to out-sell music and video

Source: business.timesonline.co.uk

For years they have been the preserve of spotty teenage boys sitting in darkened rooms, but computer games will this year out-sell music and video in the United Kingdom for the first time, according to a report released today.

As the music industry has been beset by piracy, and the price of DVDs has dwindled, the gaming market will grow by 42 per cent this year, and will be worth £4.6 billion in 2008, compared to £4.5 billion for music and video combined, Verdict Research said.

The industry has been revitalised this year by blockbuster game releases such as Grand Theft Auto IV, which sold over 600,000 copies on its first day alone.

“Whereas music & video has become somewhat stale, video games has enjoyed an array of technological innovation, which has widened the market demographic enormously and driven phenomenal growth,” said Matthew Piner, author of Verdict’s Video Games & Consoles Retailing report. “2008 has seen video games catapulted into the mainstream entertainment market, popular with men, women, children and families alike.”

he major consoles, all of which have lined up major game releases in the run up to Christmas, are gearing up for a fierce battle. Sony free Playstation 3 hope to revive its ailing fortunes with cute-platform game Little Big Planet.

Nintendo intends to release Wii Music, where players use a movement-sensitive control to play instruments, and free XBox 360 will release more traditional games titles such as Fable II, a medieval fantasy-adventure, and Gears of War II, where players blast aliens.

Mr Piner said: “One surprising aspect of the games market over the past year is that the more severe the economic downturn has become, the better the gaming market has performed. Games represent a relatively cheap, but also exciting and innovative, pastime.

“As more people save money by staying in, a video game, although it may cost three or four times as much as a DVD or CD, offers much more longevity and hence better value for money. Moreover, it offers a more involved and interactive form of escapist entertainment when compared to a CD or DVD.”

In 2003 the combined market for music and video was worth double that of computer games. But in the past five years the game industry has seen revenues rise by 113 per cent, as its audio and video rivals have foundered, rising just 0.8 per cent.

The report said: “Music is suffering from piracy, a continual onslaught of price deflation, intensifying competition and the ongoing decline of physical format CDs. While the DVD market has shown robust volume growth, value growth is impaired by falling prices and heavy discounting.

One source of hope for the music industry is the continued growth of Digital Rights Management (DRM)-free files, which can be transferred between devices, unlike previous restrictions imposed by stores like Apple’s iTunes, which limited the tracks to one iPod.

"The embracing of open MP3 format will reignite download sales, as it will remove the issues of interoperability and encourage album sales," said Malcolm Pinkerton, senior retail analyst at Verdict.

High street retailers such as HMV have seen a rise in sales of computer games, and have reconfigured stores so as to give less space to music. Gennaro Castaldo, of HMV, said: “The growth is obviously there. Over the long term you would have to say that growth will be seen in games and that music will fall away, but will hit a threshold that it will stick at.”

Matt Martin, editor of gamesindustry.biz, the leading industry website, said: “It’s great news for the video games industry. Its also a reflection of how badly hit the music industry has been in the past couple of years as it has not kept up with advances in technology.

"Games traditionally miss out on recession, because they have their own cycle based on when games consoles are released and when they become affordable. Just now, consoles and sales are reaching the peak of that cycle.”





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