Hardware intros make for record game sales - video & DVD - home video games - Brief Article - Statistical Data Included

DSN Retailing Today, Feb 11, 2002

Video game hardware and software sales scored big in 2001. According to research firm NPD Funworld, sales in the category topped $9.4 billion, a total that shattered the previous industry record of $6.9 billion set in 1999. The total includes sales of all video game hardware, software, portables and accessories, according to NPD.

The record year was driven by the introduction of two video game consoles in November, the X-Box from Microsoft and the GameCube from Nintendo, along with the popularity of Sony's Playstation 2, which debuted in October 2000. Retailers reported strong sales of all three platforms during the holiday season and no problems keeping them in stock. Though all three consoles sold well, one reigned supreme.

"According to our numbers, Playstation 2 was the biggest seller in November and December, with X-Box second and GameCube a very close third," said Ryan Jones, an analyst with research firm The Yankee Group in Boston. "Playstation sales for the period were about $2.5 million and X-Box and GameCube were about $1.5 million each."

While sales of X-Box and GameCube may have been affected by limited availability--each system launched with approximately 700,000 units in early November and shipped about 100,000 units per week to retail during the holidays-- Playstation 2 had no such problem.

"Sony's had Playstation 2 out there for more than a, year now so they can produce whatever the market demands," said Jones. "But what it comes down to in this industry is games, games, games and Playstation had the real advantage there."

Jones expects Playstation 2 to stay ahead of the pack during 2002 on the strength of its huge catalog of games, while Microsoft and Nintendo play catchup. Both Nintendo and Microsoft launched their platforms with approximately 15 games each last year, while Playstation 2 had dozens of games already on the market.

But the battle among the major players in the industry may move to a new front in the next few years. Now that game consoles are being designed to do more than just play games--Playstation 2 and X-Box both have built-in DVD players--the new trend is giving consumers more bang for their buck.

"You're going to see more emphasis placed on the accessories," said Jones. The strategy now is to produce a system that's going to be the centerpiece of a living room's home entertainment section".