The console transition is about to begin - are you ready?

Posted by dowpig :: Industry Trends | Retail-Products | Usage Statistics & Measurement

[dowling] We are in earnings season, in case you missed it. And with it has come a rash of disappointing results. Even the good news is tempered by the fact that it is "lower than expected." Companies in the latter category include Activision and EA, both of which are in no immediate jeopardy. And, judging by their upcoming releases, they should no doubt produce strong results for the holiday period. Others won't be as lucky. Atari, for one, has seen a significant reduction in their revenues for the quarter ended in September. Take Two Interactive, Inc., also not immune, has recently cut its forecasts for this year and next, bringing its stock to new 52-week lows. Much of this is being blamed on video gamers' desire to hold off on purchases to save for next generation hardware and software titles. This makes sense and is even logical considering what the industry experienced in the last console transition. So, I can understand why most are accepting of this fact.  The transition, though predictable and seemingly familar territory, is anything but. We are entering a complex transition with significantly more variables. For one, the video game consumer looks a lot different than he/she did 5 years ago. In fact, while still largely a male driven industry, the divide between male and female gamers is shrinking - 62% male, 38% female, compared to 80%, 20%, respectively 5 years ago. Also, 5 years later, gamers' approach to leisure time is being impacted by significant technological advancements. Playing games is still very much an integral part of their daily lives, but with increased broadband penetration, more advanced mobile technologies and vast libraries of DVD content, their options are expanding rapidly. In today's complex entertainment market, video game companies can no longer succeed by focusing solely on delivering a shrink-wrapped product at retail. Nor can they merely target hardcore gamers and hope to be profitable. The stakes are higher, but so are the opportunities. Don't just focus on the companies with cash and scale. Also pay attention to nimble and creative companies that understand how to harness the internet for distribution, community and context.

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