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This report covers: console systems, PlayStation, video games, handheld games, Game Boy, PC games, computer games, pokemon, Mario, N64, Gamecube, Dreamcast

Companies covered include: Sony Corporation, Nintendo Company, Sega, Electronic Arts, Eidos,

Executive Summary

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EXECUTIVE SUMMARY

The electronic games market was worth £1.43bn in 2000, an increase of 60.1 percent since 1996. Console games, like Sony’s Playstation, and hand-held games, like Nintendo’s Game Boy, accounted for £775m of this, while £650m of consumer spending was on leisure software for personal computers (PCs).

More UK households have electronic games every year, although the media impression of electronic games being children’s toys is a false one: regular games buyers tend to be in their 20s or even 30s. The subject matter ranges from children’s characters, such as the popular Pokémon series for Game Boy, through sports games to action, driving and other themes.

In console games, over 60 percent of consumer spending goes on software — that is, games bought separately for consoles — but the hardware market will be boosted throughout 2000 and 2001 by the eagerly awaited launch of three new 128-bit consoles, more powerful and versatile than ever seen before.

Sony’s PlayStation, the clear market leader in consoles since 1996, was replaced in November 2000 by Playstation 2 (PS2). In 2001, Nintendo’s latest console, the Gamecube, will launch. The other console company, Sega, which once led the UK market, entered the 128-bit arena at the end of 1999 with Dreamcast. The new generation of consoles offer such superiority for playing games that demand for PC games may suffer, with the home computer increasingly being used for other functions such as education, e-mail (electronic mail) and the Internet.

The software sector is fairly fragmented across small, creative developers and publishers, with the outstanding corporate names including the UK’s Eidos PLC and Electronic Arts (US).

Although the market grows over the long term, it has a volatile pattern. The current period (2000/2001) is one in which industry observers are waiting to see whether the PS2 is as popular as the first PlayStation, or whether the entry of Microsoft (which plans to launch a console called the ‘X-box’ in 2001) will transform the market once more. Whichever brand takes the lead, the consensus is that stand-alone consoles will continue as a major market and will not be incorporated into multifunction home entertainment systems, nor will they lose their market position to games played on home computers.

Key Note estimates that the market for electronic games will increase by 26.6 percent to £2.03bn, between 2001 and 2005.

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Text © 2000Key Note

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Last updated by Jacob van Eldik 09th February 2001