PWC: Video Game Industry to Drive Entertainment Sector

According to a new report from PriceWaterhouseCoopers, the global entertainment and media industries are expected to see accelerated growth in the second half of this decade and will reach a whopping $1.8 trillion in annual sales by 2009. The current figure from 2004 stands at $1.3 trillion; that means through 2009 we would see an average annual growth rate of 7.3 percent.

Massive Video Game Growth

Interestingly, and perhaps not surprisingly, it's the video game industry that is expected to be the fastest-growing component of the media sector worldwide. Double-digit growth is expected to be propelled by sales of the upcoming next-generation consoles, online and wireless Internet access spending and online advertising.

The global video game market, according to PWC, will increase from $25.4 billion in revenue in 2004 to almost $55 billion in 2009, growing at a 16.5 percent compound annual rate -- and according to how they define the video game category, these figures don't even include the spending on hardware and accessories. PWC believes that the introduction of the next-gen consoles, as well as the continued growth of handheld and mobile gaming, will be key drivers of growth.

PC games in decline, says PWC

The analysts at PWC also think that the PC game market will continue to shrink. In fact, PC game sales are projected to decline from $771 million in 2004 to $655 million in 2009. There is one region, though, where PC games are expected to grow: Latin America. PWC says that limited competition from the new technologies of online and wireless games will enable PC games to flourish there.

"The growth of the console game market, the largest segment of the industry, is dependent on the cycle of new game consoles. The next generation of game consoles should have a major impact on the market in 2006 and 2007. The introduction of handheld game consoles and their associated games will buttress the console game market in 2005. The next generation of consoles, with their embedded online capabilities, will also have a positive effect on the demand for online games. The migration to broadband Internet connections will enhance the online gaming experience, spurring demand. The replacement of current wireless telephone handsets with newer models capable of downloading games will be the major influence on the wireless sector. As consumers shift to newer technologies, the market for PC games will continue to deteriorate," reads the report.

U.S. biggest media market, but slowest growth

While the U.S. is estimated to remain the largest media market at $690 billion by 2009, it will have the slowest average annual growth rate (5.6 percent). By contrast, for the same period the Asia-Pacific region, thanks to gains in China and India, will see the fastest expansion (nearly 12 percent annually) and will reach $432 billion.

The Asia-Pacific video game market, specifically, is also projected to maintain its leadership, growing by 18 percent on a compound annual rate through 2009, reaching $23.1 billion. The U.S. video game market isn't far behind and is estimated to grow by 12.9 percent compounded annually to reach $15.1 billion in 2009. The fastest growing region for video games, however, is believed to be EMEA (Europe, Middle East, Africa), which is expected to increase by a compound annual rate of 19.1 percent from $6.0 billion in 2004 to $14.3 billion in 2009.

The future also appears to be bright for mobile game companies in the U.S., as PWC is predicting that the wireless games market will rise from $281 million in 2004 to $2.1 billion in 2009 -- a 49.3 percent compound annual increase.

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