Statistics are often misleading but sometimes numbers do not lie. The global video game industry generates $30bn in sales each year, and the average age of a gamer is said to be 28 years old.
In the UK we spend more on computer games than we do on films at the cinema.
According to Screen Digest, more than £1.5bn will be spent on games in 2007, compared with £821m spent at the cinema box office.
Children and adults are playing more games on more platforms than ever before – from games consoles, to set-top boxes, mobile phones, the PC, the web and even the iPod. Yet hardware is not necessarily a money maker in the gaming market. In the console arena, Microsoft has now sold 13.4 million Xbox 360s worldwide, Nintendo has shifted 13.2 million Wii machines and Sony has sold 5.6 million PlayStation 3s, yet both Sony and Microsoft lose money on every console that they sell. For them, consoles are the delivery system through which they deliver the software and services that make the money.
Microsoft has capitalised on its 12-month head start into the market in this round of consoles, but it is Nintendo that is the success story of 2007. It is the only one of the three firms to make money on each console it sells and the Wii has been a runaway success to such an extent that Nintendo is struggling to meet demand.
Targeting family gaming
The company has targeted family gaming and shied away from the hardcore gamer market, focusing on fun, social interactivity and simplicity. Of all the three consoles it is the purest gaming platform – it does not play CDs, or DVDs, let alone high definition movies.
The Wiimote controller, which uses motion sensitivity rather than a plethora of buttons to direct the action has proved a huge hit with gamers of all ages.
Actors Nicole Kidman, Patrick Stewart and Julie Walters are the faces of an advertising campaign for Nintendo’s handheld console, the DS – hardly the stereotype of the friendless, teen gamer.
Nintendo has sold more than 53 million DS consoles worldwide, twice the number that Sony has sold of its PlayStation Portable (PSP). Here too, Nintendo has focused on pure gaming, while Sony’s PSP is also promoted as a media player and web browser.
Long term, it looks certain that all three console firms remain committed to the business. Microsoft has the deepest pockets of all three companies and sees the Xbox as a gateway to the digital living room of the future. It has invested billions of dollars in Xbox over the past decade and has yet to see a single cent in profit. Earlier this year, Microsoft’s Shane Kim predicted that the firm would see its first profit from Xbox before the end of the 2008 financial year.
The Xbox 360 continues to be seen as a console for hardcore gamers, despite attempts to broaden its appeal with arcade games available via its online service Xbox Live. In just five years Xbox Live, has attracted eight million subscribers worldwide and offers not just gaming but also video downloads and voice and video calls over the internet.
Sony has had a sticky 18 months – with delays to the launch of PlayStation 3, a lukewarm response to games on the machine and complaints that the console is too expensive. It has now launched a cut-down, cut-price version of PlayStation 3 and sales have spiked as a result, up 197 per cent in the month following the refinements.
HD movie player
Sony also makes great play of the fact the console can play Blu-ray high-definition movies. But, with the battle of formats between Blu-ray and HD-DVD still aflame, it is too early to know if this is a feature that really sells the console to consumers.
In the US, sales of hardware and software this year are up 50 per cent on 2006 and Christmas holiday sales are yet to be factored in.
The platform that is expected to see the biggest growth in the coming years is mobile gaming. Global mobile gaming revenue is set to skyrocket from $2.9bn in 2006 to $9.6bn in 2011, according to analysts Gartner.
Mobile phones like the iPhone, LG Viewty and Nokia N95 are now powerful enough to offer 3D gaming experiences.
The inclusion of global positioning satellite technology in phones could also lead to a rise in location-based games, with real-time action dependent on the gamers’ physical location in the world.
The other growth area for gaming is among casual gamers, with an estimated 56 million people worldwide who play games on their PC regularly – everything from online chess and card games to puzzle titles.
Common games platform
The industry is expected to be worth $1bn in 2008 and encompass 80 million players within three years. Long term, some in the industry have predicted that the hardware wars could become irrelevant. Gerhard Florin, a senior executive at giant games publisher Electronic Arts, said the industry would benefit from a common games platform, instead of competing, and incompatible, systems.
Games hardware manufacturers could perhaps one day be competing services, or channels. Your gaming device of choice – be it console, PC phone, or set-top box – could be your conduit to Xbox Live or PlayStation World or Nintendo Land.
Whatever the future holds for the manufacturers of hardware, one thing is certain – the popularity of gaming shows no signs of diminishing.
One day it might not matter what hardware you play your games on.
Darren Waters is technology editor, for the BBC News website