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Gaming in the Interactive World - US - July 2009

SCOPE AND THEMES
What you need to know
Definition
Data sources
Sales data
Consumer survey data
Advertising creative
Abbreviations and terms
Abbreviations
Terms
EXECUTIVE SUMMARY
Hardware launches drive sales cycle
New competition from the web and multifunction devices
Software to fuel near-term sales
Dedicated stores, web play key roles in sales and marketing
Uncertain economy, aging population could retard sales
PS3 not living up to competing seventh-generation consoles
Gaming is for the young
Purchase model prevails
Gaming as a new way to socialize
INSIGHTS AND OPPORTUNITIES
The media hub for the home?
New realities
Staying in motion—and pushing back
New revenue models
Figure 1: Teen and adult attitudes towards in-game advertising, by age, October 2007-December 2008
Not just for kids
It’s all about the accessories
INSPIRE INSIGHTS
Edutainment
What it means for the market
Medical Wellness
What it means for the market
MARKET SIZE AND FORECAST
Key points
Launches drive sales
Figure 2: Total U.S. sales and forecast of gaming hardware and software, at current prices, 2004-12
Figure 3: Total U.S. sales and forecast of gaming hardware and software, at inflation-adjusted prices, 2004-12
COMPETITIVE CONTEXT
Online games
Figure 4: Online entertainment usage, by age, February 2009
Figure 5: Online, MMORPG, and social networking game usage, by key demographics, March 2008
PCs move from work to play
Figure 6: Use of video games on home PCs vs. consoles, by key demographics, April 2007-June 2008
Gaming on the go
Figure 7: Ownership of handheld gaming devices and game play on MP3 players and cell phones, by age and HH income, October 2007-December 2008
Figure 8: Flight control iPhone game, image
SEGMENT PERFORMANCE
Key points
Software to drive near-term revenues
Figure 9: U.S. sales of gaming products at current prices, by segment, 2006 and 2008
SEGMENT PERFORMANCE—GAMING HARDWARE
Key points
Proprietary model drives prices
Figure 10: Pricing as of launch for major gaming consoles, 2000-06
New functions could help drive sales
Hardware sales and forecast
Figure 11: U.S. sales and forecast of gaming hardware, at current prices, 2004-12
Figure 12: Total U.S. sales and forecast of gaming hardware, at inflation-adjusted prices, 2004-12
New risks for portables
SEGMENT PERFORMANCE—GAMING SOFTWARE
Key points
Software sales roughly track console launches
Figure 13: Top 10 console games, by U.S. sales, 2008
Figure 14: Rockstar Games’ Grand Theft Auto IV image
Secondary market, competing platforms could dampen sales
Software sales and forecast
Figure 15: U.S. sales and forecast of gaming software, at current prices, 2004-12
Figure 16: Total U.S. sales and forecast of gaming software, at inflation-adjusted prices, 2004-13
Growing the audience for gaming
Figure 17: Video games played, by genre, by age, October 2007-December 2008
RETAIL CHANNELS
Gaming benefits from relatively broad distribution
Figure 18: Channels through which video games are purchased, 2008
Secondary market plays an important role
Downloads take hold
MARKET DRIVERS
The recession
Figure 19: U.S. unemployment, October 2008-June 2009
Figure 20: Disposable personal income and personal consumption, October 2009-May 2009
Households with children
Figure 21: Gaming hardware ownership, by children in household, October 2007-December 2008
Empowered consumers seek control over content
Figure 22: Desire for video content storage and recall, by age, November 2008
An aging U.S. population
Figure 23: Population, by age, 2004-14
Health and safety concerns
LEADING COMPANIES
Key points
Three players compete for hardware dominance
Figure 24: Gaming console ownership, by brand, October 2007-December 2008
Software a wider but narrowing field
BRAND QUALITIES
Electronic Arts
Microsoft
Nintendo
Sony Electronics
INNOVATION AND INNOVATORS
Project Natal
Spore
WildTangent
ADVERTISING AND PROMOTION
Traditional advertising
Figure 25: Advertising spending, by leading gaming brands, 2007 and 2008
Figure 26: Advertising spending, by leading gaming software and retailer brands, 2007 and 2008
In-store promotions and bundled/special-edition products
Online marketing
Licensing partnerships
Television advertising
Apple iPod touch
Figure 27: Apple iPod touch television ad, 2009
Nintendo DS
Figure 28: Nintendo DS television ad, 2008
Nintendo Wii Fit
Figure 29: Nintendo Wii Fit television ad, 2008
Sony PlayStation 3
Figure 30: Sony PlayStation 3 television ad, 2008
OWNERSHIP
Age more relevant than income in determining usage
Figure 31: Trended ownership/usage of video game consoles and handheld devices, by key demographics, January 2006-October 2006 and October 2007-December 2008
Gaming nearly universal among 9-14s
Figure 32: Ownership/usage of video games—kids/teens, by age and age/gender, January 2006-October 2006 and October 2007-December 2008
Figure 33: Ownership of handheld gaming devices—kids/teens, by age and age/gender, October 2007-December 2008
PS2 still the most commonly owned console
Figure 34: Top 10 consoles/portables owned—adults, by gender, October 2007-December 2008
PS2 dominates amongst 18-24s
Figure 35: Top 10 consoles/portables owned or played, by age, October 2007-December 2008
Wii the only console for which penetration increases with household income
Figure 36: Top 10 consoles/portables owned or played, by HH income, October 2007-December 2008
Kids take gaming to go
Figure 37: Top 10 consoles/portables owned or played—kids, by age and age/gender, October 2007-December 2008
Interest in handhelds declines amongst teens
Figure 38: Top 10 consoles/portables owned/played—teens, by age and age/gender, October 2007-December 2008
PURCHASE BEHAVIOR
Average annual spend on video games—$63
Figure 39: Mean annual spend on video games, by gender, age, and HH income, March 2009
Only two games purchased per year on average
Figure 40: Frequency of video game purchase/rental, by gender, age and HH income, October 2007-December 2008
Borrowing and rental rare amongst younger kids
Figure 41: Kids’ attitudes towards purchasing/renting games, by age and age/gender, October 2007-December 2008
Figure 42: Teen attitudes towards purchasing/renting games, by age and age/gender, October 2007-December 2008
Women more likely to buy games as gifts than for themselves
Figure 43: Buying to play vs. gift purchases, by gender, age and HH income, March 2009
Timing of purchase
Figure 44: Timing of new game purchases—adults, by age, October 2007-December 20008
Teens buy early but not on day of release
Figure 45: Timing of new game purchases—teens, by age and gender/age, October 2007-December 20008
USAGE PATTERNS
Xbox 360 owners most engaged
Men play nearly twice as many hours as women
Figure 46: Hours of game play—adults, by gender, October 2007-December 2008
25-34 year olds spend most time gaming
Figure 47: Hours of game play—adults, by age, October 2007-December 2008
Highest-income households spend less time gaming
Figure 48: Hours of game play—adults, by HH income, October 2007-December 2008
Boys aged 9-11 the true gaming champions
Figure 49: Hours of game play—kids, by age and age/gender, October 2007-December 2008
Children graduate from simpler platforms to more complex ones
Games too solitary for teen girls
Figure 50: Hours of game play—teens, by age and age/gender, October 2007-December 2008
GAMES AS SOCIAL MEDIA
Console gaming typically more social than PC gaming
Figure 51: Who adults play games with, by platform, March 2009
Men seeking to connect via gaming
Figure 52: Attitudes towards gaming with others, by gender, March 2009
The younger the gamer, the more social the gamer
Figure 53: Attitudes towards gaming with others, by age, March 2009
Social games for high-income households
Figure 54: Attitudes towards gaming with others, by HH income, March 2009
Kids play alone or with peers—not with older/younger kids
Figure 55: Who kids play games with, by age and gender/age, October 2007-December 2008
It’s a family affair, and especially so for women
Figure 56: Level of game play and social game play, by gender, March 2009
18-34 year olds most likely to game as a social activity
Figure 57: Level of game play and social game play, by age, March 2009
AVATARS AND MICRO-TRANSACTIONS
Women virtually neck and neck with men
Figure 58: Gaming avatar usage and virtual gaming purchases, by gender, March 2009
Youngest adults most keen on avatars and virtual purchases
Figure 59: Gaming avatar usage and virtual gaming purchases, by age, March 2009
GENRES PLAYED
Action/adventure still number one
Figure 60: Game genres played—adults, by gender, October 2007-December 2008
Cards, casino games a good bet for seniors
Figure 61: Game genres played—adults, by age, October 2007-December 2008
Action/adventure tops with kids
Figure 62: Game genres played—kids, by age and age/gender, October 2007-December 2008
Interest in most genres declines among older teens
Figure 63: Game genres played—teens, by age and age/gender, October 2007-December 2008
GAMING AND THE WEB
Incidence of game play connected to the web—adults and kids/teens
Figure 64: Incidence of game play while connected to the web—adults, by gender, age and HH income, October 2007-December 2008
Kids and teens more likely to play games connected to the web
Figure 65: Incidence of game play while connected to the web—kids/teens, by age and gender/age, October 2007-December 2008
Online console gaming behavior
Figure 66: Online console gaming behavior, by gender, March 2009
Youngest adults most keen on web activities
Figure 67: Online console gaming behavior, by age, March 2009
ATTITUDES AND MOTIVATIONS
Self-perception as “hardcore” vs. “casual” gamers
Figure 68: Perceived game skill level, by age, March 2009
Women want self-improvement, men like advertising
Figure 69: Attitudes toward newer elements of gaming, by gender, March 2009
Improving dexterity and brain fitness popular across age groups
Figure 70: Attitudes toward newer elements of gaming, by age, March 2009
GAMING AND VIRAL MARKETING
Men more invested in viral marketing
Figure 71: Additional attitudes towards gaming—the impact of friends, by gender, March 2009
18-24s keen on spreading the word
Figure 72: Additional attitudes towards gaming—the impact of friends, by age, March 2009
IMPACT OF RACE/HISPANIC ORIGIN
Ownership and usage
Figure 73: Gaming on handheld gaming devices, MP3 players and cell phones, by race/Hispanic origin, March 2009
Asians most keen on Wii
Figure 74: Top 10 gaming consoles/portables owned or played—adults, by race/Hispanic origin, October 2007-December 2008
Blacks spend twice as much as Asians on games
Figure 75: Mean spend on video games, by race/Hispanic origin, March 2009
Blacks and Hispanics buy and rent more games
Figure 76: Frequency of video game purchase/rental, by race/Hispanic origin, October 2007-December 2008
UGC
One in four give thumbs up to UGC gaming
Figure 77: Attitudes towards user-generated content in games, by gender, March 2009
One in three 18-34s like UGC gaming
Figure 78: Attitudes towards user-generated content in games, by age, March 2009
CLUSTER ANALYSIS
Core Gamers
Who they are
Opportunity
Websters
Who they are
Opportunity
Loners
Who they are
Opportunity
Cluster characteristics
Figure 79: Gaming clusters, April 2009
Figure 80: Methods of game play, by gaming clusters, April 2009
Figure 81: Engagement in gaming, by gaming clusters, April 2009
Figure 82: Self-perception of engagement with games, and word-of-mouth marketing, by gaming clusters, April 2009
Figure 83: Interest in UGC, by gaming clusters, April 2009
Figure 84: Spend, by gaming clusters, April 2009
Figure 85: Gaming attitudes and interests, by gaming clusters, April 2009
Cluster demographics
Figure 86: Gaming clusters, by gender, April 2009
Figure 87: Gaming clusters, by age, April 2009
Figure 88: Gaming clusters, by HH income, April 2009
Figure 89: Gaming clusters, by race/Hispanic origin, April 2009
Cluster methodology
CUSTOM CONSUMER GROUPS
How console and handheld gaming hardware use the PC for gaming
Figure 90: Online/offline PC game usage, by dedicated gaming device ownership, October 2007-December 2008
Sony lagging in getting installed base to purchase current console
Figure 91: Current gaming console ownership, by brand ownership, October 2007-December 2008
Stereotypes about gender and age remain largely accurate
Figure 92: Methods and types of game play, by age and age/gender, October 2007-December 20008
Young women play with family, young men on board avatars and connectedness
Figure 93: Attitudes towards game play and social gaming behavior, by age and gender, march 2009
Young Hispanics most keen on mobile gaming
Figure 94: Methods and types of game play, by age and race/Hispanic origin, March 2009
APPENDIX: SURVEY RESULTS FOR ONLINE TEENS
Figure 95: Dedicated gaming device ownership among teens, by age and gender, March 2009
Figure 96: Gaming as a social activity among teens, by age and gender, March 2009
Figure 97: Avatars and micro-transactions among teens, by age and gender, March 2009
Figure 98: PC gaming among teens, by age and gender, March 2009
Figure 99: Dedicated gaming handheld vs. cell phone gaming among teens, by age and gender, March 2009
Figure 100: PC vs. console game play in the past month among teens, by age and gender, March 2009
Figure 101: Purchasing habits and word of mouth marketing among teens, by age and gender, March 2009
Figure 102: Interest in UGC gaming, among teens, by age and gender, March 2009
APPENDIX: OTHER USEFUL CONSUMER TABLES
Gaming and types of games played
Figure 103: Incidence of handheld and cell phone gaming, by age and HH income, March 2009
Figure 104: Game genres played—adults, by HH income, October 2007-December 2008
Genre preferences by race/Hispanic origin
Figure 105: Game genres played—adults, by race/Hispanic origin, October 2007-December 2008
Asians more likely to play video games
Figure 106: Ownership/usage of video games, by race/Hispanic origin, October 2007-December 2008
APPENDIX: TRADE ASSOCIATIONS

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