Russ Crupnick

NPD

 

It’s 2:30 PM, do you know where your gamer is?

 

Music really caught up by changing formats.  Where are we going to wind up?

 

“Retail” games 19B vs Box office 10B, Music 11B, Home Video 24B.  50% of that is software.  Golden goose in home video.

 

Record shattering in 2007.  Last year was 13.5B.  Quite an explosion after flatline in early 2000s.  All categories benefited from growth.  We’re in a good place now, but where do we go from here.

 

Look at CDs… big decline from golden years of the CD in 1999 (15B in CDs alone).  CDs sold fell by 50% from a few years ago.  Digital Download is good, but doesn’t make up for lost CD sales.  Going to be even worse in 2008.  We don’t want to end up there.

 

Is it all about piracy?  Well, kind of.  Less than half the music we acquire is paid for.  60% is from borrowing and ripping or downloading p2p.  Digital substitution is a big deal.  How is our industry evolving?  If I can listen from streaming or buy a 99 cent track instead of an album, that is digital substitution.  Think about how to mitigate substitution for our industry.  Content drought is big too.  Is the music as good as it used to be?  We have to deal with the 90% of games that are crap.  Retailers will reduce space in response.   “Teen Spirit” – average teenager gets 80% of their music without paying.  What is the model to get teenagers back to paying for music?  Video game success is coming directly out of music industry.  Software up 41%, CDs down 45%.  On the other end, boomer contentment.  They buy 1/3 of the CDs but there is no marketing to them.  They have a collection and radio and that’s it. 

 

DVD packaged media – end of an era?  Peaked in 2006, from zero in 1997.  Flat box office – sequel satiation.  DVDs come from the original movies.  So that flattening carries through to the home video market.  DVD sales for 3rd sequels down 50% from 2nd sequel (Spiderman, Pirates, etc.).  How good will Halo 15 be?  Hi-Def formats confused the market.  Not really about the format war though, it’s about not understanding why this is better than DVD.  Digital is also trying to be relevant, at least the studios are experimenting here.  Time shifting – DVRs, streaming, portability.  This is very scary to big entertainment.  DVRs are going to eat into time spent a lot – that will double soon.  This could compete with gaming?

 

“Going from a game of checkers to a 3d chess game.”  Not a flat world in gaming now, multidimensional.  Gaming opportunity:  Only 56% doing it 2-3 times a week?  Who are the targets?  25% of Americans game daily or several times a week.  Frequent breaks male 65/35.  But occasional is 50/50 and non-gamers are 60/40 the other way.  Non-gamers are baby-boomers and older.  Gaming is really ubiquitous though, frequent gamers cut across all ages.

 

On what platforms?  63 on video game system, 30 on portable, 61 on computer.  Frequents do it on everything.  Occasional is not that far behind though.  16% gaming on a cellphone, and only 10% buying on cellphone.  If we want to be more frequent, capitalize on those devices.  Are those payment systems in place to buy games for cellphones?  Desire to play is greater than those actually exercising it with purchase.  That’s the magic of iTunes, lots of ways to have those transactions. 

 

Frequent and Occasionals pretty similar among technology interest groups (cutting edge, utility, etc.).  They really aren’t that different. 

 

“Stop calling us gamers”  -- Entergamers?  Happen to be heavy entertainment consumers and gaming is one piece of what they do.  60% of frequent gamers buy DVDs, 50% in music.  Likelihood of buying across categories is high.  Spend more than $3000 a year on basic entertainment.  Games are only 25% of that.  Similar purchasing amounts between frequent and occasional gamers too (HDTV purchase, DVR, etc.)  Same balance for use of social networking sites.  Almost half across both categories.  Virtual world visits are much higher though – 14 freq vs 4 occ.  Big spike about watching movies on a console for frequent gamers.  Console as media center, the pipe to the TV, could be a very big thing.   Music on video consoles?  11 freq.  Gaming as a vehicle for discovery and acquisition of music, not just listening.

 

Consumers and retailers are fickle.  24/7 battle.  Consistently superior content is key.  Try different distribution models.  Options are expanding and are eventually going to cut into gaming.  The core opportunity is the enthusiasm for entertainment.  But that makes it a fight for time.  Many more Americans should be gaming!