PwC: Videogames to Surpass Music in Revenue This Year

June 22, 2007

This article is included in these additional categories:

Videogames | Youth & Gen X

Videogames will remain one of the above-average growth segments of the consumer electronics (CE) and global entertainment industries through 2011, with worldwide spending on games forecast to exceed music spending, according to PricewaterhouseCoopers (PwC), Smarthouse News reports.

In some markets, such as the US, the UK and Australia, PwC forecasts that the videogame market will beat out the music sector as a result of the growth of online and wireless games, new consoles and in-game advertising. The projections include consumer spending on games, but not hardware and accessories spending.

Additional game-related data and forecasts from PwC’s eighth annual “Global Entertainment and Media Outlook” report:

  • Worldwide game spending grew 14.3%, to $31.6 billion, in 2006 and is expected to grow 18.5% in 2007, reaching $37.5 billion.
  • By 2011, the worldwide gaming market will be worth $48.9 billion, growing at a compound annual growth rate (CAGR) of 9.1% during the five-year period 2007-2011. That CAGR contrasts with the 6.4% overall CAGR forecast by PwC for entertainment overall.
  • In the US, PwC projects, the CAGR for game spending will be 6.7%, reaching $12.5 billion in 2011. This year’s 15.5% growth is expected to shrink to 3.3% growth in 2011.
  • PwC estimates that the US gaming market grew 10.6% in 2006, reaching $9 billion, and it forecasts that the market in 2007will surpass $10 billion for the first time, reaching $10.4 billion.
  • Asia/Pacific is expected to remain the highest-spending region, reaching $18.8 billion in videogame revenues in 2011, with a CAGR of 10.0%
  • The videogame market for Europe, the Middle East and Africa (EMEA) is forecast to grow at a 10.2% CAGR for the period.
  • PwC reduced its overall five-year forecast for gaming from last year’s estimates:
    • For the US, it now projects a 6.7% CAGR, compared with the 8.9% it estimated last year.
    • The EMEA forecast is now a 10.2% CAGR, down from 13.0% last year.
    • Asia/Pacific: from 12.3% to 10%
    • Worldwide: from 11.4% to 9.1%.

US game spending projections by segment:

  • Online and wireless:
    • Online: from an estimated $1.1 billion market in 2006 to $2.7 billion in 2011
    • Wireless: more than doubling, from an estimated $499 million to $1 billion in 2011
  • Console and handheld: from an estimated $6.5 billion in 2006 to a projected $7.9 billion in 2011.
  • PC games: The segment decline is expected to continue, from an estimated $969 million in 2006 to $840 million in 2011.
  • In-game advertising: from an estimated $80 million in 2006 to $950 million in 2011.
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