Video game sales on winning streak, study projects

Video game enthusiasts play Nintendo's new ''Super Smash Bros. Brawl'' game for the Wii system at the E for All video game expo in Los Angeles, California October 19, 2007.

LOS ANGELES (Hollywood Reporter) - The video game industry is expected to shoot from $41.9 billion in global sales last year to $68.3 billion in 2012, a compound annual growth rate of 10.3 percent and better than all other media sectors except for online advertising and access.

The data comes courtesy of the upcoming "Global Entertainment and Media Outlook: 2008-2012" from PricewaterhouseCoopers.

Console games, the largest category, will grow by 6.9 percent annually, from $24.9 billion last year to $34.7 billion in 2012.

Online and wireless games will grow the fastest at 16.9 percent and 19 percent, respectively. Online will jump from $6.6 billion last year to $14.4 billion in 2012, while wireless games go from $5.6 billion to $13.5 billion in the same frame.

Just behind those is the emerging video game advertising sector, which will go from the $1 billion level in 2007 to $2.3 billion in 2012, a 16.7 percent annual growth rate.

"That's phenomenal growth," said PwC partner Stefanie Kane -- especially considering that in-game advertising only works with certain kinds of games, sports being a primary example.

As has been the case, PC games are the laggards. That sector will fall 1.2 percent a year from 2007's $3.8 billion to $3.6 billion in 2012.

The U.S. also will lag a bit compared with global growth, with overall video game revenue growing by 7.9 percent annually, from $12.1 billion in 2007 to $17.7 billion in 2012.

As of the end of 2007 in the U.S., there was an installed base of 9 million Xbox 360 consoles, which Microsoft launched in November 2005. That was followed in the next-generation category by 7 million for Nintendo's Wii and 3 million for PlayStation 3, both of which were introduced in November 2006.

PwC cites several key factors in growing the video game industry, including:

* mobile phones capable of downloading games with sophisticated graphics and displaying them on relatively large screens;

* an online market driven by the increased penetration of broadband households;

* the increasing popularity of massively multiplayer online games that earn revenue through subscription fees and microtransactions.

PwC doesn't make projections for specific games, but Kane said that sequels historically have done extremely well, with top franchises being "Grand Theft Auto," "Halo," "Guitar Hero" and "Spider-Man."

Reuters/Hollywood Reporter