Report: Video Game Spending to Surpass Music Spending this Year

[FoolKiller]

http://arstechnica.com/news.ars/pos...ding-to-surpass-music-spending-this-year.html

Report: Video game spending to surpass music spending this year
By Jacqui Cheng | Published: June 23, 2007 - 09:35AM CT

The video gaming industry is poised to overtake the music industry in the US, with global spending on video games surpassing music spending as soon as this year, according to consulting firm PricewaterhouseCoopers. PwC released the data in its annual "Global Entertainment and Media Outlook" report covering 2007 through 2011, which outlines expected growth in the entertainment, film, music, and video game industries, among others.

The information not only reflects the gaming industry's strong trajectory but also serves as a painful reminder that the music industry continues to suffer. EMI recently reported, however, that sales of its DRM-free songs and albums have been good since the launch of iTunes Plus, with CD sales of those same albums dropping during that time. If the gains made by selling DRM-free music online outpace the losses from CD sales, EMI's decision to go DRM-free will prove to be a good one, and the rest of the industry may follow suit.

The rising penetration of broadband combined with consoles with online capabilities, wireless phones capable of downloading games, and technologically advanced consoles are credited with driving the video game industry's strong growth. PwC says that the gaming industry will see a compound annual growth rate of 9.1 percent between 2007 and 2011, resulting in a $48.9 billion global video game market in 2011, up from $37.5 billion this year.

The US market will grow much more slowly than that, though, going from $10.4 billion to $12.5 billion over the same period (a 6.7 percent CAGR). PwC says that Asia will see the greatest growth during that time and see the largest amount of spending, topping out at $18.8 billion in 2011 with a CAGR of 10 percent. The report also makes note that global spending on console and handheld games will go up from $6.5 billion in 2006 to $7.9 in 2011.

PwC sees in-game advertising as a prime area for growth. While in-game advertising generated $80 million in 2006, the firm estimates that it could grow as high as $950 million in 2011. PwC's Marcel Fenez noted, however, that the $950 million estimate could in fact be a conservative one and that growth in the area could produce even larger revenues in the future due to the changing audience of the gaming industry.

And the Geek shall inherit the Earth.


Of course, I do wonder how much of this is due to much more expensive products in the gaming industry vs much cheaper products in eth music industry. And then I am sure the $5-$10 downloads and upgrades that are now part of the console market is helping to spur that growth as well.


The question is: If music purchases over PSN and XBL (I'm not holding my breath for the Wii) become a popular thing could that help to spread the money around a bit?

Anyway, I found this interesting myself and thought I would share.

 

[3-Wheel Drive]

This comes at absolutely no surprise to me. I mean when these days, $25 can get you (not new) a 5/5 star game that has been proven and reviewed as great by everybody, or a brand new album with 10-15 tracks that may or may not even be good, I'd buy the older video game.

Combined with the rising prices of video games/systems, and the rising quality that makes people willing to spend said money, of course music spending is dropping. Unlike video games, music quality hasn't really continued to increase. The prices still do, so why buy something that may be crap when I can download it for free?

Screw the music industry, let's game on.

 

[Tornado]

I suspect much of this has to do with the various DRM fiascos, such as the Sony rootkit crap and the like. EMI offering DRM-free music was a godsend both for them and for consumers (why buy music that may screw up your computer or that you have to convert?), so I'd say that the music industry may rebound if other record companies follow suit.

 

[niky]

While I'm not of the "screw the music industry" persuasion... there is a good point in that rant. Basically... it's too much money to pay for too little product. It still boggles my mind as to why we, as the consumer, are forced to pay a price premium for a technology that's already outdated (CDs, I mean), pay for ridiculous marketing costs (even when we download off the net) and for some rapper's third or fourth Bentley, when a lot of that content is plain ****.

Point me at the indies on youtube or myspace. There are some extremely talented people making much better music out there, working in obscurity, than the who's who in the Top Forty. Maybe if some realistic pricing system gets worked out, the industry will survive. If not... ah... whatever.

 

[Small_Fryz]

Having never bought a CD in my life yet owned PS1,2,3 SNES and a high quality gaming computer, steering wheels, joysticks etc etc I can see why gaming is booming.

 

[FoolKiller]

Point me at the indies on youtube or myspace. There are some extremely talented people making much better music out there, working in obscurity, than the who's who in the Top Forty. Maybe if some realistic pricing system gets worked out, the industry will survive. If not... ah... whatever.

I agree. I have rarely liked something I heard on the radio in years and when it is chances are it is something I was listening to over 10 years ago.

I was a big fan of the alternative/grunge scene and somehow after the mid-90s it started going down hill. The industry lables started calling every pop rock song alternative (ex. Matchbox 20). Then when alternative quit being popular (they killed it by ruining it) suddenly Britney and boy bands and other horrid bubblegum pop artists took to the main stream. The only other main stream stuff I could find was the hip-hop and rap stuff that had no appeal to me, although their merits for talent could be argued in some cases. I just didn't like the sound.

I didn't leave music, music left me.

The last mainstream CD I bought was Tenacious D and I downloaded some free iTunes songs for my wife. Everything else has come from online indie stuff for free or in podcasts. Niky, I suggest you check out the Getting a Leg Up podcast. It has a very large mix of different stuff so you may find a band you had never heard of before. The styles range from heavy rock to world music. I think I even heard some folk on there one day.


Although I wonder if we won't see an independent games growth with things like WiiWare and the download stores. I think random peopel making games happens all the time and you can download them for your PC, but getting on a console is hard because you have to get rated and pay all the fees. I think if the console makers worked to help these guys we could see some incredible stuff for only like $10 downloadable.

 

[Pupik]

While I'm not of the "screw the music industry" persuasion... there is a good point in that rant. Basically... it's too much money to pay for too little product.

There's one of the problems right there; even the most average of games generates about a week or two of use, maybe another day or two for "dusting off", where as music tastes are constantly changing. It's harder to give an album you don't like a second or third try, which is eventually off-putting to consumers.

Now, I don't necessarily fit the scenario listed above, since I buy about 2 albums a year nowadays (I have less time for music and a large collection that I enjoy already), and I have next to no time for video games anymore (I played GT4 for an hour this entire year, and that's it), but it seems to sum up the feelings of the crowd here for the years I've been on this site.

Another difference is that I know lots of people that don't own any music; it's free on the radio, whether XM/Sirius or the old-fashioned terrestrial-based signal stuff. But they'll buy the occasional video game; you can't really get those for free, unless you're a mooch at a video game store or arcade.

 

[3-Wheel Drive]

While I'm not of the "screw the music industry" persuasion... there is a good point in that rant. Basically... it's too much money to pay for too little product. It still boggles my mind as to why we, as the consumer, are forced to pay a price premium for a technology that's already outdated (CDs, I mean), pay for ridiculous marketing costs (even when we download off the net) and for some rapper's third or fourth Bentley, when a lot of that content is plain ****.

Point me at the indies on youtube or myspace. There are some extremely talented people making much better music out there, working in obscurity, than the who's who in the Top Forty. Maybe if some realistic pricing system gets worked out, the industry will survive. If not... ah... whatever.

Actually most of that money doesn't even go to the rapper's Bentley. You're probably paying for the record executive's Bentley when you buy that CD.

However, I still think there is plenty of great music out there. Most are indie or regional/local bands, but there are still many good well-known artists out there. That being said, I'd rather go to a concert than purchase their album. At least with a concert, they're actually seeing most of that money. I very rarely buy albums, when I do, it's ones that I know for certain is going to be very good.

 

[niky]

@Foolkiller, thanks for the heads-up, I ought to check that out.

I was all into the indie/grunge/alternative thing, too, before it became repetitive, stale and mainstream. The nice thing about the alternative boom is that a lot of the content generated was quirky, different, and completely non-formulaic... when everybody started to sing like Eddie Vedder without a trace of angst, you had to know the scene was played out.

BTW, Tenacious D rocks... I even got the movie. It was horrible, in many ways, but I just loved it... it brought back memories of college and our stillborn garage band...

I think online content is the only thing that'll save the music industry. If you make less and less money on direct production and sales... try making it through advertising on free 'casts and through well-priced downloadable content. It won't be as lucrative, but the current gravy train isn't going to last much longer, anyway.

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@Pupik: Maybe a month is the least I get out of an album... I usually don't buy one until I know at least three of the tracks are keepers. Others I'd play till the CD wouldn't work anymore.

 

[Kurei]

This doesn't surprise me

Fanboys + Expensive consoles ($600 !?!, WTF?) = rise in $$$

For crying out loud, things are starting to become rediculous

 

[Tornado]

Yeah, I'm sure it is the PS3's price that caused this to happen, and not the various retarded things the music industry has done in the past couple years.