Game Shipments to Reach $12.5 Billion This Year

Next Generation is reporting on numbers from the Consumer Electronics Association, who has projected that game shipments this year will top $12 Billion. With the launches of the Wii and PS3 expected by year's end, and continued brisk 360 sales, the organization expects a near-record breaking year. From the article: "The overall games industry appears to be rebounding quicker than expected, in the midst of the console transition. Combined software, hardware and accessory sales were up 29 percent year-over-year in July, according to the NPD Group. CEA's news release, which was only an excerpt of a complete report, didn't mention thriving handheld sales, most notably of the Nintendo DS, which drove hardware and software sales last month."

Comments

Think of the profit!

[aapold]

lets see, 12.5 Billion in sales, and they make a profit of... um... hang on..... they do make a profit on every sale, don't they?

Subscription Revenue?

[eldavojohn]

I know this is the Consumer Electronics Association and that this article only discusses shipments but what about the subscription fees related to some of those shipments?

MMOGChart says that World of Warcraft has 6.5 million+ users. Since it's a monthly subscription fee of $13, it's around $90 million a month. You can say that Blizzard must rake in a billion or so in subscription fees per year. And that's only Blizzard, isn't this a big part of the gaming industry today?

Re:Subscription Revenue?

[nherc]

Those are sick numbers.

You'd think with almost $100 million/month they'd have a lot less player complaints. I'm willing to bet most of that money goes into the publishers pocket without regard to the state of the game.

Re:Subscription Revenue?

[musikit]

its a blizzard game released by blizzard created from blizzard original content. i'm pretty sure they get 100% of the money after the initial store sale. unless their parent company takes a cut.

Re:Subscription Revenue?

[Swift(void)]

its a blizzard game released by blizzard created from blizzard original content. i'm pretty sure they get 100% of the money after the initial store sale. unless their parent company takes a cut.

The only reason Vivendi Games (Blizzards Parent Company) is currently in the Black is because of World of Warcraft. Full year 2005 saw a $243 million Euro turnaround, from about 200 mil in the hole to 41 mil in the black. They get alot of money. Ontop of that, you have WoW China, which is run by The9. WoW China has something like 2 million+ users, they are the largest WoW market. Rumor has been that Blizzard still have not agreed who will get the rights to The Burning Crusade in China, as they are wanting to get more money from the local operator of the game. It was estimated some months back that about 98% of The9s revenue comes from WoW, and in the last 6 months, they pulled in a touch over $420 million in revenue (overall profit of around just under $124 million). So The9 is doing very well for itself from operating WoW.

Also, China does not have the same subscription based setup that the rest of the world has (or at least, at its launch it didn't, as can be read here. According to that article Chinese players buy Points cards for 30 Yuan (a touch under $4 US), which are used at a rate of 0.45 Yuan per hour played (about 6 cents US), so all up a not quite $4 points card gives you about 66 hours of play time. Also, in China, they only need buy a CD-Key for the game instead of a full priced box copy, so Blizzard arent raking in the cash from Boxed sales over there either.

Suffice to say, the amount of money WoW makes isnt all going to Blizzard, not by a long shot.

Officially No Longer News

[StocDred]

This is officially no longer newsworthy, and I would like to request that slashdot stop posting stories like this.

One week, everyone is panicking over soft sales and lessened interest in video games in general. The next week, sales are booming and we're all expecting the Best Year Evar.

There is nothing of any importance to articles like this. Activate filter, please.

Re:Officially No Longer News

[Anonymous Coward]

There are several important questions to ask about the data first befor you assume that the "industry is fine":

What is included in these sales numbers? Is it only software or does it include hardware as well? If it includes hardware of course revinues are going to be up this year; if 4 million people bought a XBox 360 (~$1.5 Billion), 4 Million bought a Wii (~$1.Billion) and 4 Million bought a PS3 (~$2.5 Billion) you'd have a massive ammount of money (~$5 Billion)added to the system while very little of it demonstrates actual growth in the industry (people who buy systems early tend to have already owned the previous system, so these are not lost previous generation sales or new customers).

On top of that, even if it is only game sales the XBox 360 is selling games for $10 more (a 20% increase in comparison to XBox games), Sony may sell games for $60-$70 (a 20%-40% increase over PS2 games); this means if you're not seeing about a 20% increase in revinues from game sales from these platforms you're actually seeing a decline in game sales.

The problem in the industry is that there are less gamers, which are each spending more money on games; this is a situation which can lead to a large scale collapse.

Bot h Unimportant and Anomalous

[Red Flayer]

Total shipments are not important -- there will be a lot of extra inventory at year-end. I'd rather see sales projections. These numbers also fail to include non-physical distribtuin (eg, downloading) which will continue to account for an increasing proportion of sales.

Also, as mentioned in TFS, this is largely due to the release of two new consoles prior to year-end. I don't know how to normalize for that, but it means that these figures cannot be used to analyze trends.

15 billion?

[the_crowing]

"The fourth quarter of this year is when things really heat up in the gaming market, with continued growth expected through 2007, reaching $15 billion."

I can remember back in 2001 when the games industry was exected to bring in approx. $8 billion, surpassing revenues of the Hollywood box office. I thought that was a significant milestone for the games industry and now it's expected to almost double those numbers come the end of next year.

Piracy? Hmm..

[Anonymous Coward]

I thought piracy was killing the Game Industry..

Three things to think about First

[WillAffleckUW]

1. Price increases (retail) in games for xBox360, PS3, and Wii (from say $30 to $50 or more) mean that game shipment revenues will automatically be higher, not that more games are sold.

2. New boxes like the Wii, xBox360, and PS3 mean lots of people buying new games - my son was just playing Psychonauts for the PS2 - he picked up a PS2 new for $50 and got the game from his aunt this past Christmas - most games he plays are used or borrowed ones from friends right now.

3. Expanding gaming universe from casual gamers, more women and girls playing Nintendogs, and old folks playing brain games to fend off Alzheimers.

Everything else is commentary and hype.

Re:Three things to think about First

[caffeine ninja]

4. Emergence of subscription-based games (a la WoW), social-communities, and greater numbers of broadband internet customers. Internet gaming is becoming a more viable option, as well as a more popular one. I'm sure Xbox Live is one of the Xbox group's biggest moneymakers/selling points - not to mention how the same system is used for every 360 game, letting you stay in constant touch with anyone on your "friends list" (Buddy list replacement?). I have no idea how extensive the services being offered by Sony/Nintendo are, but World of Warcraft has shown that people will buy into subscription games/services with the right incentives. And people will continue to spend money on that service, especially if they feel like they've invested too much time in it to let it go to waste.

Re:Three things to think about First

[WillAffleckUW]

good point, but the article specifically didn't count them, thus I didn't include that.

I miss Diablo II myself, and hope they port it to the Wii, quite frankly.

It seems like an artificial bump.

[Traegorn]

For one, this does not include profits, or the fact that we have a new generation of consoles.

These consoles are pricey AND sold at a loss, and will therefore falsely increase revenues while actually DECREASING profits.

At best, misleading numbers

[ThosLives]

Am I the only person that things quoting sales growth in monetary units is, at best, misleading? Because of things like exchange rates and inflation, I really dislike that the media is always posting information about "sales grew by $X from the period last year."

I would *much* rather see things in quantity of units, like the auto industry: they quote sales in number of vehicles, and they quote monetary units separately. This way, it's easy to tell the health of the industry versus the health of the individual companies (if a company sold more cars, but its revenue and/or profit fell, that's a serious issue - where if a company sold fewer cars and profit rose, that is a different story).

So, what about games? The linked article only talks about monetary units, not real goods sold, so it's very difficult to really get a grasp on the point of the article...at least "industry sales were $X on N million units, versus $Y on M million units last year" would be helpful. Just for fun, throw in population growth too...is it just tracking population growth?

And yes, I am in a weird cynical mood today...

Murder? Hmm..

[Anonymous Coward]

I thought killers were decimating society. Oh wait. They're not, so it must be OK to kill people.*

*No murder isn't like downloading, but the OP's unstated premise is likewise false.

Re:Murder? Hmm..

[crabpeople]

"so it must be OK to kill people"

It is, but you have to be in a uniform.

You're forgetting...

[WidescreenFreak]

...that for whatever reason, PCs don't count anymore. Forget that games like WoW are making gobs ot money, regardless of whether it's from sales or from subscription. These idiotic lists of things related to gaming almost always ignore PC gaming sales. Just look at the latest "games list" for whatever topic on Slashdot recently, and rarely are consoles and PCs listed together.

The Sims and its 16 million sales; Myst's 11 million; Half-Life's 8 million ... nah, PCs just can't be counted as gaming systems. No, no, forget that consoles are trying their best to be more like PCs with things like Internet connectivity and the ability to play music and movie files. Hell, some even allow keyboards! But, no, PCs and consoles are separate. No one EVER uses a PC for any kind of serious gaming. Really! That whole WoW thing was fabricated on the same sound stage as that completely fabricated moon landing.

I'm using this dual-core Athlon 64 for OpenOffice and Notepad, not gaming. Nope. And, no, those are not Battlefield 2, Battlefront II, or Ghost Recon CDs for the PC on my desk. Nope. Just your imagination. Now, bugger off while I not use my PC for not gaming. I still not need to get my not "Veteran Knife" badge on my not Battlefield 2 character.

...but I'm not playing a game not against players who are not from around the world. Nope. I'll get a console if I want to do things like that.