The NPD Group Reports Sales for Console and Portable Video Games Accessories

Business Wire, May 10, 2004

Business Editors/High-Tech Writers

PORT WASHINGTON, N.Y.--(BUSINESS WIRE)--May 10, 2004

Game Controllers and Internet Components See Considerable Sales

Increases While Double-Digit Decreases of Older Accessory Categories

Cause Flat Sales Overall

According to leading marketing information provider, The NPD Group, total U.S. retail sales for console and portable video game accessories in 2003 remained flat over the previous year with $1.2 billion in sales, while first quarter (January - March) 2004 saw a 10 percent increase over the same period last year with revenues of over $278 million.

Accessories, auxiliary devices that connect and operate in conjunction with a console or portable video game unit, include products such as controllers, memory cards and DVD remotes.

Considerable increases in U.S. retail sales for 2003 and Q1 2004 were seen within the video games controller categories, bringing in totals of over $408 million and $92 million, respectively. In Q1 2004 alone, controller categories such as Gamepads, Steering Wheels, Stick Controllers and Specialty Controllers, saw dollar sales increases of 22 percent, 30 percent, 27 percent and 170 percent, respectively.

The most significant decreases in dollar sales fell within accessory categories such as Vibration Feedback and Magnifier/Light, with 2003 U.S. retail sales down by 66 percent and 58 percent, respectively. The trend continued in Q1 2004, with sales of vibration feedback accessories seeing a 71 percent drop in revenue and Magnifier/Light accessories sales falling 62 percent vs. the same period last year.

"The drop in sales of these categories don't come as a surprise, since many accessories that were once sold as separate units are now being integrated into others and offered as standard features," said Richard Ow, senior industry analyst. "Vibration feedback and backlit displays are two perfect examples of this trend, with most controllers now being sold with vibration feedback capabilities and many portable devices offering pre-installed backlit displays."

Internet Components, such as network adaptors and modems, saw the highest overall percentage increases in dollar sales in 2003 and Q1 2004 of 155 percent and 107 percent, respectively.

"This is a win-win situation for both consumers and the video games industry," said Ow. "Online gaming provides consumers with the ability to experience entirely new ways of playing video games, while the industry continues to see increased revenues through this alternative to off-line gaming."

DVD Remotes for video game consoles continue to see decreased revenue sales. In 2003, U.S. retail sales of DVD Remotes declined 30 percent over 2002, while DVD Remote sales fell an additional 18 percent in Q1 2004 over the same period last year.

According to Ross Rubin, director of technology industry analysis for The NPD Group, when the PlayStation 2 and Xbox were first released, the inclusion of DVD video functionality was considered to be a breakthrough. Consumers who were considering the purchase of a DVD player saw that, for a small incremental premium, they could have the functionality of a device that cost well over $200 on its own. However, today, with the extensive installed base of DVD players in homes, most consumers don't take DVD-playback capabilities into consideration when purchasing a video games console.

"As the consoles have aged, they've become less expensive, making a DVD remote accessory a proportionately greater share of the purchase," said Rubin. "In addition, consumers may be weighing the cost of that remote at the point of purchase against the enjoyment they'd get from an additional game."

About The NPD Group, Inc.

Since 1967 The NPD Group has provided reliable and comprehensive sales and marketing information for a wide range of industries. NPD provides critical knowledge on what is selling, where, to whom and why to help our clients make more successful, fact-based business decisions. Today more than 1,300 manufacturers and retailers rely on NPD to help them better understand their customers, product categories, distribution channels and competition in order to help guide their business and positively impact sales and revenues. Information from The NPD Group is available for the following major vertical sectors: apparel, appliances, automotive, beauty, cellular, consumer electronics, food and beverage, foodservice, footwear, home improvement, housewares, imaging, information technology, music, software, travel, toys and video games. For more information visit www.npd.com.