Games revenues could surpass music in five years - report

A new report from market analysts DFC Intelligence has concluded that revenue from the videogame industry could bypass the music industry within the next five years, based on projected rates of expansion for the market.

Analysis comparing the values of the music and games industries is fairly common, but it often fails to take into account the full value of the music industry - making DFC's study, which covers the full revenues of the music market, all the more interesting.

"Revenue for the video game industry could pass the music industry in the next five years. More adults are playing games, the industry is expanding on a worldwide basis, and online distribution is becoming a reality," commented DFC president David Cole, who was lead author of the report.

However, Cole also noted the difficulties faced by the industry due to rising development costs. "Production values are starting to compare with those in feature films," he stated. "Increasing consumer expectations, along with other factors - including the rising cost of talent, the need for large-scale marketing campaigns, adding online components, and demand for high profile licensed properties - are substantially increasing costs."

Other interesting statistics in the two recent DFC reports - "The Business of Computer and Video Games in 2004" and "The Impact of Licensing in Interactive Entertainment" - show that the household penetration of game consoles in the USA hasn't actually grown substantially in recent years, remaining fairly steady at 43 per cent.

According to DFC, the large growth in industry revenues in the past few years is as a result of increased usage within households with multiple players and systems, rather than rising penetration levels in other households.

The company's research also highlighted a number of key emerging markets which games companies will have to expand into in order to continue the growth of the industry - with countries such as South Korea, Taiwan, Singapore, mainland Asia, Australia and Eastern Europe all named as important growth areas.

Gamespot