DFC forecasts $8 billion increase in software sales by 2010

Financial analysts at DFC Intelligence have issued a new forecast for the interactive entertainment industry, predicting that the arrival of next-generation consoles will prompt a huge surge in profits.

Under a best case scenario model for each next-gen console, software sales are expected to hit the USD 25 billion mark in 2008, up from USD 18 billion in 2004 - while using more real-world figures, DFC estimates that sales will stand at USD 26 billion by 2010.

"The video game industry continues to exceed our expectations," said DFC president David Cole. "The next generation of console systems will connect to broadband networks right out of the box and this should significantly expand revenue possibilities."

Cole also said there was room in the marketplace for all three next-generation consoles, commenting: "With a true worldwide marketplace and increasing ownership of multiple systems, this is not a winner take all situation."

"Instead it is about how profits can be maximized across the unique installed base of different platforms."

But there is always a market leader, and DFC believes Sony will continue to dominate in the next cycle.

"With the PlayStation 2, Sony raised the bar on what a game system can do in terms of sales," said Cole. "Until Sony makes a major mistake we have no reason to believe they will not continue that success with the PlayStation 3."

However, DFC also predicts that Microsoft and Nintendo will increase their market shares in the next generation.