Entertainment software set to grow 17% by 2010
GfK: Videogames, Blu-ray will drive lift
By Marcy Magiera -- Video Business, 6/18/2008
GfK's Global Home Entertainment Update & Forecast 2008-2010 can be purchased at www.contentagenda.com.
JUNE 18 | Worldwide home entertainment software revenue will grow 17% between 2008 and 2010 to $78.2 billion, fueled by growing consumer demand for next-generation videogames and Blu-ray Disc, according to a new forecast from Media Control GfK International.
The report, which covers videogame and home video software, predicts worldwide consumer spending of $67.1 billion in 2008, up 10% from 2007 (including a foreign exchange gain on the dollar of about 2%).
"Worldwide, consumers spent $61 billion at retail on DVD and games software in 2007, more than double what was spent at the worldwide box office," said Amy Heller, GfK U.S. president. "That amount is expected to grow to $67 billion in 2008 thanks to growth of new formats like the Wii. Hopefully, the industry will be able to band together on information sharing and data gathering for this somewhat elusive market, as clearly it will be an important segment to manage as the transition to digital copy is made."
Growth for this year and the next several years will be almost exclusively from the games sector, with game software for all console, PC and handheld platforms expanding to $33.3 billion this year, up 22% from 2007. Games growth will be about 18% in 2009 and 12% in 2010, according to the report.
Home video, meanwhile, will remain virtually flat at either side of $34 billion worldwide through 2010, with growth from the fledgling Blu-ray Disc format compensating for declines in the aging standard DVD.
Blu-ray sales will more than quadruple this year, to $1.5 billion worldwide, according to GfK, then grow 184% in 2009 to $4.1 billion and another 94%, to hit $8 billion in 2010.
In presenting the forecast to the Entertainment Supply Chain Academy in Los Angeles on Wednesday, Heller said projections assume that Blu-ray set-top players will grow from an installed base of 4.5 million this year, to 18 million in 2010, while PlayStation 3 grows from 20 million to 50 million in the same time.
The largest variable in the growth of Blu-ray is price, Heller said, noting that in 2007, the average Blu-ray title cost $27.16 in the U.S., the lowest of anywhere in the world, and $50.29 in Japan, the highest price worldwide. However, the research concern believes Blu-ray will continue to command a premium of $13 to $23 over standard DVD.
During the forecast timeframe, DVD sales will fall from $32.2 billion in 2008 to $26.2 billion in 2010, GfK projects. There are some bright spots globally, with home video sales in smaller territories including Italy, Germany and Australia expected to grow more than 10% this year.
The U.S. accounts for the largest share of the global home entertainment market by far, about 39% this year.
In the U.S., home video revenue is expected to decline about 3% this year, with DVD down 8%, to $13.9 billion, and Blu-ray more than quadrupling, to $888 million (a bit lower than the $1 billion many studios are predicting).
Videogames in the U.S. will hit $11.4 billion in 2008, up 19%.
Media Control GfK collects point-of-sale retail data in a dozen countries outside the U.S. Where it does not have point-of-sale data, it used partner data and industry interviews to develop its forecast.
