Games vs Music - the stats

Ben Parfitt
Games vs Music - the stats
With any luck, MCV’s recent story stating that games now make more money at retail that music will have raised some very senior-ranking eyebrows at retail last week.

It is a shift in the balance of power that should make every supermarket and entertainment store in the UK re-assess where their priorities lie – and it is a transformation that is already well under way at the smarter of the existing outlets on the High Street.

Walk into any HMV or Zavvi now and it’s clear to see that games is gaining in prominence – and, speaking purely anecdotally, most Woolworths I have seen of late are swamped with games, leaving music to offer a few bargain basement albums. It neatly encapsulates the contrast between gaming’s popularity and the mess that the music industry is currently in.

The Entertainment Retailers Association 2008 Yearbook is a tome that seems very aware of this – and for once, it seems the games industry isn’t viewed as the plucky upstart industry. Quite the opposite, in fact – it suggests that other markets might do well to acknowledge and learn from gaming’s recent successes.

“One thing the music business can learn from the games industry is the way it introduces new and attractive products into the marketplace on a regular basis to stimulate the customers and it is disappointing that during 2007 record companies were slow to create innovative new music products,” says ERA chairman Paul Quirk. “ERA will continue to lobby for this during 2008 and we hope to see a greater variety of music products available going forward.

“One bright point has been the games business which has been the star of 2007, seeing sales growth of over 25 per cent year-on-year. There may be lessons to be learned in the way the Wii has harnessed traditional gameplay and movement with computer technology, suggesting that technology in itself is not always the answer.

“This is the true value of ERA in understanding all sectors of the market and learning from its experiences across product lines.”

But it’s not all good news. The shift towards music downloads could soon have a huge impact on the games business – it’s just fortunate that we now have a ready-made case study of how to tackle these changes.

“Both games and video have seen sales grow during 2007, but undoubtedly will start to feel the pinch as both games and video move into a digital environment,” suggests ERA director general Kim Bayley. “Both these sectors will have learnt from the experiences in the music industry and should be better placed to face the challenges ahead.”

Clearly the games industry has been the star of 2007 – now it must keep up that momentum to really prove that it is more than a fad.

AVERAGE VIDEO GAME PRICES

Music/Video Specialists
2005 - £24.20
2006 - £22.33
2007 - £24.11

Computer Software Specialists
2005 - £20.92
2006 - £21.13
2007 - £21.23

Multiples
2005 - £22.00
2006 - £21.34
2007 - £22.68

Supermarkets
2005 - £22.12
2006 - £20.73
2007 - £21.57

Internet
2005 - £19.91
2006 - £19.28
2007 - £19.33

Total Market Average
2005 - £21.33
2006 - £20.95
2007 - £21.31

After three years of modest decline, game prices increased by 1.7 per cent in 2007, helped by the regular stream of innovative product and the development of in-demand new games consoles. This modest rise in prices was accompanied by very strong volume increases.

NUMBER OF SHOPS SELLING GAMES

Music/Video Specialists

2005 - 1295
2006 - 1412
2007 - 1103

Games & Software Specialists
2005 - 1083
2006 - 990
2007 - 1070

Multiples
2005 - 1996
2006 - 2041
2007 - 2075

Electrical/Hardware Chains
2005 - 1139
2006 - 1137
2007 - 1118

Supermarkets
2005 - 1710
2006 - 1939
2007 - 2019

Total Number
2005 - 7223
2006 - 7519
2007 - 7385

Source: Chart-Track/ELSPA
Note:
In all product categories there are other outlets selling relatively small quantities of entertainment products including garages, motorway service stations and corner shops.

Despite a rise in games hardware and software market value, the number of outlets selling games has decreased since its high point in 2006. The overall decline can be largely accounted for by the demise of Music Zone and Choices, both of which stocked games. In contrast, supermarkets are increasingly stocking interactive entertainment.

SECTOR MARKET SHARE - GAMES (% UNITS)

Music/Video Specialists and independents

2005 - 8.9
2006 - 9.1
2007 - 7.1

Games Specialists
2005 - 45.7
2006 - 44.5
2007 - 42.1

Multiples
2005 - 18.7
2006 - 17.7
2007 - 19.3

Supermarkets
2005 - 11.9
2006 - 13.1
2007 - 11.3

Mail Order

2005 - 1.0
2006 - 0.8
2007 - 0.6

Internet
2005 - 11.6
2006 - 13.5
2007 - 18.1

Others
2005 - 2.2
2006 - 1.3
2007 - 1.5

Source: (All) TNS ‘Audio Visual Trak Survey’
Note: Internet share includes sales generated through the websites of established conventional retailers.


SECTOR MARKET SHARE - GAMES (% VALUE)

Music/Video Specialists and independents
2005 - 10.1
2006 - 9.7
2007 - 8.1

Games Specialists
2005 - 44.8
2006 - 44.9
2007 - 42.0

Multiples
2005 - 19.3
2006 - 18.0
2007 - 20.6

Supermarkets
2005 - 12.3
2006 - 2.9
2007 - 11.4

Mail Order
2005 - 1.1
2006 - 1.1
2007 - 0.8

Internet
2005 - 10.8
2006 - 12.4
2007 - 16.4

Others
2005 - 1.6
2006 - 1.0
2007 - 0.7

Source: (All) TNS ‘Audio Visual Trak Survey’
Note: Internet share includes sales generated through the websites of established conventional retailers.

RETAIL SALES VALUE - games and leisure software

2004 - £1401m
2005 - £1345m
2006 - 1361m
2007 - 1719m

Source: Chart-Track/ELSPA

* The sales value of games and leisure software rose by 26 per cent in 2007, on volumes up by 17 per cent, as growth in volume was accompanied by a rise in average prices. The market in 2007 is now some 22 per cent higher than its former peak in 2004.

* Volumes rose principally in conjunction with the launch of new systems such as the Nintendo Wii, the Sony PS3 and the Nintendo DS.

* By value, software sales were greatest for the Microsoft Xbox 360 console with £320m in 2007, closely followed by software for the Nintendo DS with £314 million.

* The volume of software for PCs fell by just over a million units to 17.7m, though the value of sales remained roughly constant.

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