Videogame Spending May Soon Outweigh Music Spending Globally

Ars Technica reports that, for the first time, spending on videogames is in a position to overtake spending on music worldwide. An analyst report from PricewaterhouseCoopers discussing growth in media shows this being the first year that's a possibility. "The information not only reflects the gaming industry's strong trajectory but also serves as a painful reminder that the music industry continues to suffer. ... The rising penetration of broadband combined with consoles with online capabilities, wireless phones capable of downloading games, and technologically advanced consoles are credited with driving the video game industry's strong growth. PwC says that the gaming industry will see a compound annual growth rate of 9.1 percent between 2007 and 2011, resulting in a $48.9 billion global video game market in 2011, up from $37.5 billion this year."

Comments

NDOY

[AKAImBatman]

resulting in a $48.9 billion global video game market in 2011, up from $37.5 billion this year.

Nintendo has a market cap of 6.4 trillion yen (51.7 billion dollars) up from 2.7 trillion yen (21.8 billion dollars) this time last year. According to their last financial report, their net sales for last year were 966 billion yen (7.8 billion dollars) up 89% from the previous year's 509 billion yen (4.1 billion dollars) in net sales.

I think I know where your massive industry growth is sitting...

Re:Well, that's what you get...

[morari]

Visual quality perhaps (and at what artistic price does so-called "realism" come?). I don't think the ratio of truly great games has changed too much in years past. Remember, complexity does not necessarily denote quality.

Re:Well, that's what you get...

[Anonymous Coward]

Hey, I did testing for Ocean, Data East and Lord knows what other shovelware companies back in the late 80s. Back then we got paid for it, too.

I won't say the quality's gone up, but it hasn't gotten worse.

Hell, I remember one time, after extensive diplomatic negotiations, I got patched through directly to the lead programmer on a basketball game, to explain to him what constituted 'offsides'. And this was a week from mastering.

Re:Countdown

[AKAImBatman]

The soft drink industry is a 40 billion dollar a year business. So this means the mainstream media and academia will accept soft drinks as a legitimate culinary art in 3...2...

(Methinks that profits aren't exactly the best way to be judging artistic merit.)

Good thing...

[stmfreak]

Good thing nobody pirates video games or those guys would be going out of business too!

Or is this just another case of the data fitting the conclusion in some cases and being suspiciously absent in all other conversation?

Re:Good thing...

[LithiumX]

It's no secret that copyright violation is always going to be a thorn in the side of all forms of media. The earnings losses will always be exaggerated (and based on the false assumption that every download is equivilant to one lost sale), and media execs who are trying to defend their jobs will gladly roll out the piracy card, but it's been eating away at profits for some time.

The difference is the dvd and video game industries are ramping up. They suffer just as heavily, if not worse, from piracy due to much of their target audience having access to digital copies. On the other hand, the vast majority of general music buyers and movie theater audiences still do not have the bandwidth or the meager technical skill to actually obtain music and movies in any quantity. Regardless, while the most heavily pirated (relative to sales) industries are succeeding by a great margin, the older media formats (music cds and theater releases) are failing, no matter what the causes.

It's very simple. The individuals running the music industry are, on the whole, not incredibly competent. They continue raising the price of music in order to fund increasingly expensive and expansive advertising and marketing targetted at teens and young adults (a major slice of the market), but increasingly ignore the rest of the market. One result of this is that "Independant" labels have begun to surge through the market, being smaller and tighter, and far more efficient. Have you noticed how it's only the largest media corporations who seriously complain about piracy, while the smaller operations (who's music is just as heavily pirated, relatively speaking) are less concerned?

There are two reasons for this: One is that the existing "big business" model of music production has reached a plateau and can only maintain itself through the aggressive marketing of short-lived quickly-produced consumer music - music that you'd play at a party, but lose interest in towards your mid 20's (right around the time you actually have money to spend). The natural inclination of the stockholders involved is to require the executives to adapt and continue growth, or replace them with fresh blood. Since the current batch of executives cannot produce any serious growth, only slowly dwindling profit, they are forced to cover themselves by finding a scapegoat - an actual but minor threat that they can blow out of proportion.

The other reason is that there are new ways to distribute music, and that major marketing campaigns are losing their power, relative to more meager methods available to small production houses and individual artists. Good quality studio equipment is now readily available to any individual, as are means of exposure. They can also sell their work via Amazon and a variety of other channels. The only audience they can't reach easily are those who are not very computer literate - and that audience is shrinking at a rate that frankly scares the music executives who rely on them. Again, music industry executives do not want to publicize that, even though it's not a secret anymore. Thus, as before, they need a scapegoat.

Compounding this, in order to compensate for increasing difficulty generating a profit, they continue to raise the price of music. I used to buy cd's regularly, but once the price of a cd came to mach the price of a dvd, the music simply lost out to the movies.

With theatrical movies, it's much simpler. I own a fairly large hi-def tv (1080i 52" rear-projection) with a good surround sound system - and with a little effort I was able to afford that on an average income. I can get almost any movie I want - I just have to wait until it hits dvd. When I go to see a movie at a theater, I'm doing it almost entirely to go out with friends, as the big screen just isn't so impressive anymore. This appears to be common with many people out there. Compounding that is the increasing expense of operating a movie theater, the trend (due to pressure) of creating larger and large

Re:Good thing...

[moderatorrater]

To paraphrase the sibling node, they probably understand the internet a whole lot better and have therefore adapted a lot better to it.

Battle.Net was one of the first really great integrations of games and the internet. The first (and, really, only) great integration of music and the 'net is iTunes, which is making money hand over fist. But the point is that Battle.Net isn't alone in great online gaming, whereas iTunes is. Add Steam and Gametap on top of that and gaming companies are decades ahead of the music industry.

On the other hand you have the people who want to make their games next to impossible to copy. Gaming has done this by releasing consoles that only accept their discs, but it works (nearly) perfectly and gives a hard copy and doesn't restrict the user any more than that. Successful DRM + successful digital integration + successful digital distribute + making a quality product = ridiculous profits. It's that simple.

Re:Countdown

[UbuntuDupe]

Methinks that video game spending is not the same as video game profits.

My point was that, as video games make up a larger market (on par with music, in this case), they become harder to trivialize, not that there is some profit/artistic merit threshold. The same thing happened with cinema, which at one point wasn't considered real art.

That's just because of Piracy

[monopole]

Which costs the music industry $1 Billion per year per person!!! . Once the RIAA can make everyone pay, the music industry will not only exceed the games industry, but the total world economy by several orders of magnitude. It will only be exceeded by the Movie industry which currently loses $2 Billion per year per person!!! due to piracy.

Re:Let me just fix the article

[Stormwatch]

I've only noticed that far more games seem to be coming at a $60 price point now, when $50 was more or less the top of the scale for games that didn't come with their own controller in the previous generation.

But there was a time when games cost even more. Chrono Trigger and Final Fantasy III (VI) cost around U$80. Virtua Racing cost $100 (it had a built-in co-processor). I'm not sure about Phantasy Star IV, but it was also something close to that.

Re:Well, that's what you get...

[ben there...]

The quality of video games has been increasing? Since when? It's nothing but boring sequel after boring sequel, and lame franchise-pushing game after lame franchise-pushing game.

Fresh out of a Civ4:Warlords game, I'd have to disagree. That expansion pack improved Civ4 wars immensely. The upcoming Beyond the Sword expansion looks like it will similarly improve the late game, much more than the typical expansion pack. And Civ4 is the best Civ sequel by leaps and bounds. It's the 12th most highly rated game on metacritic for PC. It's definitely just about the best turn-based strategy game ever.

Other games that have improved upon their predecessors: Morrowind for its story and gameplay, Oblivion for its environment and voice acting. Combined, the two games are the best real-time RPG-ish games ever. Counterstrike: Source took an old game and modernized it. The most popular FPS. In the same genre, BF2 is huge right now. ET: Quake Wars, releasing very soon, will likely be the standard bearer in FPS for a while. Again, much improved upon the ET, RTCW, Wolfenstein, and Quake predecessors. A huge FPS fan, I'll probably be dropping all the other games I mention here to play that one for a few months.

I recently played a good norwegian adventure game (for its story), called Dreamfall: The Longest Journey. The story, characters , dialog and voice actors, and environment is probably the best I've seen in a game. Again, it is much, much better than TLJ that I went back to try. TLJ is much closer to the roots of adventure point-and-click games like King's Quest, while Dreamfall is 3-D WASD movement and a much better game because of it.

While not my favorite genre, WoW and Guild Wars have got to be the best MMORPGs ever created. I have little interest in them, but judging by the subscriber numbers and the huge variety of people they've sucked into an online game, they've got to be the best in that genre.

Heck, I even recently picked up the Tomb Raider: Legends and Tomb Raider: Anniversary games and the controls, graphics, and even story are much richer than the old games.

Basically every genre of PC games has a huge blockbuster recently released or about to be released. I'm more into trying out different types of games than I've ever been. Perhaps gaming on a next gen console is boring right now with limited numbers of "franchise-pushing sequels", but definitely not PC gaming. Future classics are being created every year. Every game I've mentioned here has a lot more to offer than older games, and have really gotten me back into gaming. I can't wait to see what comes out next, personally.

Re:Oh, profits?

[hal2814]

It's not the VIAA. It's the Video And Gaming Industry North American Association.

Re:Let me just fix the article

[poot_rootbeer]

video games cost ten to twenty dollars more than they did just one generation ago.

After having stagnant pricing for 10-15 years. In 1990, a premier console title might cost you $50, and a budget title $25. In 2005, same thing. A price hike was overdue.

It's worth considering also that the cost of producing a video game has increased. It's cheaper to make a character out of 32x32 pixel art than it is to build a 3D model and textures that look good at every possible size onscreen.

while they have gone up in resolution, they haven't gone up in fun.

That's debatable. A modern RPG or adventure game is expected to take up to 100 hours to complete. Remember the Legend of Zelda? Speed-runners can blast through the whole game in about half an hour.