Video game score will soar

PwC study projects 10% growth by 2012

The video game industry is expected to shoot from $41.9 billion in global sales last year to $68.3 billion in 2012, a compound annual growth rate of 10.3% and better than all other media sectors except for online advertising and access.

The data comes courtesy of the upcoming "Global Entertainment and Media Outlook: 2008-2012" from PricewaterhouseCoopers.

Console games, the largest category, will grow by 6.9% annually, from $24.9 billion last year to $34.7 billion in 2012.

Online and wireless games will grow the fastest at 16.9% and 19%, respectively. Online will jump from $6.6 billion last year to $14.4 billion in 2012, while wireless games go from $5.6 billion to $13.5 billion in the same frame.

Just behind those is the emerging video game advertising sector, which will go from the $1 billion level last year to $2.3 billion in 2012, a 16.7% annual growth rate.

"That's phenomenal growth," said PwC partner Stefanie Kane, especially considering that in-game advertising only works with certain kinds of games, sports being a primary example.

As has been the case, PC games are the laggards. That sector will fall 1.2% a year from $3.8 billion last year to $3.6 billion in 2012.

The U.S. also will lag a bit compared with global growth, with overall video game revenue growing by 7.9% annually, from $12.1 billion last year to $17.7 billion in 2012.

As of the end of 2007 in the U.S., there was an installed base of 9 million Xbox 360 consoles, which Microsoft launched in November 2005. That was followed in the next-generation category by 7 million for Nintendo's Wii and 3 million for PlayStation 3, both of which were introduced in November 2006.

PwC cites several key factors in growing the video game industry, including:

-- Mobile phones capable of downloading games with sophisticated graphics and displaying them on relatively large screens.

-- An online market driven by the increased penetration of broadband households.

-- The increasing popularity of massively multiplayer online games that earn revenue through subscription fees and microtransactions.

-- While PwC doesn't make projections for specific games, Kane said that historically sequels do extremely well, with top franchises being "Grand Theft Auto," "Halo," "Guitar Hero" and "Spider-Man."
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