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Will the videogame market shrink?
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Wed Sep 06, 2006 12:43 pm Reply and quote this post
All console manufacturers are preaching “mass market” and that in this generation they will put a console under every TV. Industry insiders say: "People are waking up to the importance of videogames", "Games are now on a par with films and TV". The 360 is the fastest-selling home console and it has sold 5 million units as of June 30, with a 10m forecast until the end of 2006.The DS dominates the Japanese charts.

So all things are great and the industry is booming, right? It is too early to tell of course, since we are in a transition period, but things aren’t as rosy as they seem.
Atari, one of the major publishers, has been delisted from NASDAQ. Yes, the 360 was the fastest selling home console in the UK, but which record did it break? The Gamecube record; that doesn’t say very much about a console’s success…More importantly, who buys games for the system? This article pretty much proves that the 360 is currently cannibalizing the XBOX crowd and has won some PS2 owners. Although, gains have risen since the XBOX sales, this is mostly because of the higher game prices, not by the number of units sold. Furthermore, the combined totals in profits for all systems has fallen since the appearance of the 360: from $3,014,781(thousands) to $2,795,600.

The DS is supposedly appealing to non gamers and everybody and his mother bought it in Japan; but is this true? Who buys games for the system? The usual Otakus, that’s who. When the FFIII remake launched it sold 500,000 units in its first week. The number two game’s sales (NSMB) fell dramatically to 65,000. Normal people would skip FFIII and continue buying the “non gamers’” games, right? But the facts say otherwise; all other top ten titles dropped dramatically in sales, meaning that most DS owners bought FFIII. This pretty much proves that it is the same old crowd buying DS games.

But the most worrying news come from the Yankee Group. They predict that the PS3 will dominate the North American market by 2011, but this time by a closer margin. The PS3 will sell 30 million units, the 360 27 million and the Wii just over 11 million. But what is more interesting is not who will “win” in this “console war”, but the prediction that the next generation consoles overall sales will fall behind the previous one, because of higher cost.

Instead of expanding the videogames industry is shrinking; at best it will sell as much as the previous one. The prospect of videogames being a mass market entertainment medium looks further and further away.

A different argument :
Hmmm, I don't buy that, I have to say. For several reasons -

- in the really 'old days' you had to use a lot of imagination when it came to playing games; you had to be able to see a few green lines growing bigger on a screen as a road rushing towards you, for example. To a lot of people, that was just too abstract, and therefore they had no interest. But games are getting more and more realistic; when it's getting to the stage that you can not just play a fantastically popular sport like football on a console, but you can tell who the players are by their faces etc, that's got to be appealing to steadily more and more people.

- playing games these days is much more 'acceptable'. 10 years ago, it was still something to gently (or not so gently) mock people for; these days, loads of the people who did the mocking back then now have a PS2 under their telly.

- women are growing up with games, and seem to no longer feel they're 'boys toys'. That's got a potential to hugely inflate the market.

- people are getting more techno savvy. Maybe as a result of carrying around things like mobile phones and mp3 players, or using PCs - but there's not the automatic resistance to technology that there once was.

- the DS is definitely appealing to wider groups of people than existing gamers. My g'f, for example; she's casually played games before, but fell in love with the DS and imported a pink one from Japan. My sister wants a DS, not just for her but for her daughter as well. And once you've got into games on one console, you may well go on to buy others - again, my sister bought a gamecube, and then a few months later an xbox. Which she then had chipped. That sort of thing would have been pretty much unheard of 10 years ago.

Contributed by Editorial Team, Executive Management Team
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Wed Sep 06, 2006 10:15 pm Reply and quote this post
I think video games in general maybe a fad in danger of shrinking. but as long as there are buyers and producers the market should stay pretty strong.
Contributed by Thomas Lohse, iVirtua Ultimate Contributor
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