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Console and PC Games - US - October 2010

Video game sales surpassed movie ticket sales from 2007 to 2010; in its first day sales of Halo Reach ($200 million) exceeded domestic box office sales ($108 million) for the opening weekend of TransformersRevenge of the Fallen, the highest grossing movie of 2009. Gaming is a central past time in the 21st century, with about one in four gamers spending more time with gaming media than with televised media.

The report emphasizes not only consumer insights about gamers, but also the industry that revolves around their needs. The success of the Wii put Nintendo on top as a software provider, accounting for about 18% of unit sales for console games. Electronic Arts (EA) and Blizzard Entertainment lead the way in PC software sales. The success of the Nintendo Wii has led its competitors to introduce competing motion control methods for their games. Kinect for Xbox 360 and the PlayStation Move hit the market in the 4th quarter of 2010; their presence should bolster software sales for the 2010 holiday season and into 2011.

While sales of video games increased 50% to $11.2 billion, sales may be challenged in the near future as the current generation of consoles has now been on the market for several years and digital distribution of games has curtailed the sale of packaged software for PCs. Sales in this segment were almost halved between 2005 and 2010.

Analysis and insights include:

  • Size and growth forecast for the market as a whole and for console and PC games
  • How leading publishers and retailers are innovating to keep hold of their audience
  • The role of game franchises (sequels, spinoffs) in sales growth
  • Marketing and advertising strategies of the leading game companies
  • In-depth coverage of gamers’ preferences, spending habits and decision-making process interests
  • Custom survey results and insights among teen gamers aged 12-17
  • Future opportunities in game development, marketing and promotion.

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Table of contents

  1. Scope and Themes

    • What you need to know
      • Definition
        • Data sources
          • Sales data
            • Consumer survey data
              • Advertising creative
                • Abbreviations and terms
                  • Abbreviations
                    • Terms
                    • Executive Summary

                      • Market cyclical and hit driven
                        • A handful of publishers control sales
                          • Console sales dominate, PC shifts to digital distribution
                            • GameStop beats Walmart when it comes to young adults
                              • Competition from online and casual gaming
                                • Spending big to earn big
                                  • Each child worth about four adults
                                    • Price sensitivity runs high
                                      • Young men and teens excited about Kinect and Move
                                      • Inspire Insights

                                          • Trend: Advertainment
                                          • Insights and Opportunities

                                            • Lower-priced games
                                              • Figure 1: Price sensitivity, by age, July 2009-March 2010
                                            • Three dimensions
                                              • Figure 2: Ownership and purchase intent for 3DTV, by gender, June-July 2010
                                            • Senior opportunity in functional gaming, social gaming and beyond
                                            • Market Size and Forecast

                                              • Key points
                                                • New ‘shiny disc’ sales challenged
                                                  • Console and PC video game software sales and forecast
                                                    • Figure 3: North American * packaged video game sales and forecast, 2005-13
                                                    • Figure 4: North American * packaged video game sales and forecast, at inflation-adjusted prices*, 2005-13
                                                • Market Drivers

                                                  • Installed base of consoles
                                                    • Figure 5: Americas* unit sales of video game consoles and software (excluding handhelds), 2007-09
                                                  • Kinect for Xbox 360 and PS3 Move
                                                    • Franchises keep delivering
                                                      • Figure 6: Selected best selling game franchises* in the Americas**, from launch through September 2010
                                                    • Holiday sales
                                                      • Word of mouth central to sales
                                                        • Figure 7: Factors that influence video game purchase choices, by age, June-July 2010
                                                    • Competitive Context

                                                      • Increasing competition from other platforms threatens mainstream sales
                                                        • Figure 8: Penetration of online, casual, console and mobile gaming, by age, June 2010
                                                      • Trending toward social and group play
                                                        • Digital distribution and play
                                                        • Segment Performance

                                                          • Key points
                                                            • Figure 9: North American* packaged video game software sales, by segment, 2008 and 2010
                                                        • Segment Performance—Console Games

                                                          • Key points
                                                            • Kinect and Move should help sales rebound
                                                              • Figure 10: North American* sales and forecast of packaged console games, at current prices, 2005-13
                                                          • Segment Performance—Packaged PC Games

                                                            • Key points
                                                              • Digital distribution takes hold
                                                                • Sales and forecast of packaged PC games
                                                                  • Figure 11: North American* sales of packaged PC games, at current prices, 2005-13
                                                              • Leading Retailers

                                                                • Key points
                                                                  • GameStop leading retailer; Walmart working hard to overtake it
                                                                      • Figure 12: Retailer of most recently purchased game, by age, June-July 2010
                                                                    • GameFly: Try before you buy
                                                                      • Digital distribution—is video game retailing a dinosaur?
                                                                        • Console games
                                                                          • PC games
                                                                          • Leading Companies

                                                                            • Key points
                                                                              • Customs can drive console sales; but many publishers go cross-platform
                                                                                • Leaders account for the majority of sales
                                                                                  • Figure 13: Americas* unit sales of packaged console games (including handheld games), by publisher, 2007 and 2009
                                                                                  • Figure 14: Americas* unit sales of leading console titles, by publisher and platform, January-September, 2010
                                                                                • PC games
                                                                                  • Figure 15: Leading PC game publishers/titles*, 2009-10
                                                                              • Innovations and Innovators

                                                                                  • Microsoft Kinect for Xbox 360
                                                                                    • Figure 16: Kinect demo links, 2010
                                                                                  • EA works in social networking
                                                                                    • Activision’s Guitar Hero most popular console game page
                                                                                      • Activision’s Call of Duty: Black Ops in 3D
                                                                                        • Free to play/micro transactions
                                                                                        • Marketing Strategies

                                                                                          • Overview
                                                                                            • Traditional media spend
                                                                                              • Figure 17: U.S. traditional media ad spending—video game brands, 2008-09
                                                                                            • TV ads
                                                                                              • Key points
                                                                                                • Focus on: Desire/Features
                                                                                                  • Figure 18: EA Games Rock Band—Tragic Kingdom album that put No Doubt on the map, television ad, May 2010
                                                                                                  • Figure 19: THQ—The Last Airbender—Your Destiny Awaits, television ad, June 2010
                                                                                                • Ads akin to movie trailers
                                                                                                  • Figure 20: Microsoft Xbox 360—Halo Reach—The Battle Begins, television ad, July 2010
                                                                                                • Focus on: Humor, humor and more humor
                                                                                                  • Figure 21: EA Sports—Madden NFL 11—Man and Boy Put Dog on a Treadmill, television ad, June 2010
                                                                                                  • Figure 22: Activision—Call of Duty Modern Warfare 2—Everyone’s Doing It, television ad, April 2010
                                                                                                • About 5% of all adults read video game magazines online or in print
                                                                                                  • Figure 23: Use of video game news sources, by gender, July 2009-March 2010
                                                                                                  • Figure 24: Use of video game news sources, by age, July 2009-March 2010
                                                                                                • Other marketing initiatives
                                                                                                • Playing and Purchasing

                                                                                                  • Key points
                                                                                                    • About one-third own/play games but only two in 10 buy them annually
                                                                                                      • Figure 25: Game playing/purchasing, by gender, age, household income, and presence of children, July 2009-March 2010
                                                                                                    • Console gaming more common than packaged PC gaming
                                                                                                      • Figure 26: PC and console gaming in past three months, by gender, June-July 2010
                                                                                                    • Usage among over-55s limited
                                                                                                      • Figure 27: PC and console gaming in past three months, by age, June-July 2010
                                                                                                    • 18-24s differ from older adults in choice of platforms
                                                                                                      • Figure 28: Video game consoles owned or played, by age, July 2009-March 2010
                                                                                                  • Spend on Games and Accessories

                                                                                                    • Key points
                                                                                                      • 18-34s show highest level of spend
                                                                                                        • Figure 29: Spend on games and accessories, by age, June-July 2010
                                                                                                      • Income less of a driver than age
                                                                                                        • Figure 30: Spend on games and accessories, by household income, June-July 2010
                                                                                                        • Figure 31: Number of games bought or rented in last year, by household income, July 2009-March 2010
                                                                                                        • Figure 32: Number of games bought or rented in last year, by age, July 2009-March 2010
                                                                                                      • Men spend more
                                                                                                        • Figure 33: Spend on games and accessories for consoles and PCs, by gender, June-July 2010
                                                                                                    • Genre

                                                                                                      • Key points
                                                                                                        • Action/adventure most popular
                                                                                                          • Figure 34: Genres most often played in last six months, by gender, July 2009-March 2010
                                                                                                        • Opportunity to expand market to 45+ with kids/family, sports genres
                                                                                                          • Figure 35: Genres most often played in last six months, by age, July 2009-March 2010
                                                                                                      • Attitudes and Motivations

                                                                                                        • Key points
                                                                                                          • Updates and extensions account for only a minority of sales
                                                                                                            • Figure 36: Interest in buying updates and expansions, by age, June-July 2010
                                                                                                          • Violence in games not an issue for vast majority
                                                                                                            • Figure 37: Interest in buying updates and expansions, by age, June-July 2010
                                                                                                          • Men, 18-24s more likely to rate gaming above other media
                                                                                                            • Figure 38: Attitudes toward video games as a form of entertainment, by gender, July 2009-March 2010
                                                                                                            • Figure 39: Attitudes toward video games as a form of entertainment, by age, July 2009-March 2010
                                                                                                          • Borrowing/renting most common among 18-24s
                                                                                                            • Figure 40: Price sensitivity, borrowing and renting, by age, July 2009-March 2010
                                                                                                          • Games viral among friends
                                                                                                            • Adults 25-34 buy games earlier
                                                                                                              • Figure 41: Video game adoption among friends, by age, June-July 2010
                                                                                                            • Vast majority committed to learning complex games
                                                                                                              • Figure 42: Motivations for gaming, by age, June-July 2010
                                                                                                            • Playing with kids sole motivation for only a limited minority
                                                                                                              • Figure 43: Motivations for gaming, by age, June-July 2010
                                                                                                            • Two thirds of console gamers describe themselves as “casual” gamers
                                                                                                              • Figure 44: Hardcore vs. casual console gamers, by gender, June-July 2010
                                                                                                            • Minority use consoles to watch videos, browse internet
                                                                                                              • Figure 45: Non-traditional uses for gaming consoles, by gender, June-July 2010
                                                                                                          • In-Game Ads

                                                                                                              • 25-34s most likely to have seen in-game ads
                                                                                                                • Figure 46: Reach of in-game product placement, by age, June-July 2010
                                                                                                            • Purchase Intent for Consoles

                                                                                                              • Key points
                                                                                                                • Consoles part of consumers’ purchasing plans
                                                                                                                  • Figure 47: Wii, PS3, and Xbox purchase intent, as a gift or for oneself, June-July 2010
                                                                                                                • Women, over-55s continue to buy in to Wii
                                                                                                                  • Figure 48: Wii, PS3, and Xbox purchase intent, by gender, age, and household income, June-July 2010
                                                                                                                • Plans to “gift” consoles consistent across demographic groups
                                                                                                                  • Figure 49: Purchase intent for game hardware as a gift, by gender, age and household income, June-July 2010
                                                                                                              • Kinect and Move

                                                                                                                • Key points
                                                                                                                  • Kinect and Move offer new UI for Xbox and PS
                                                                                                                    • Teen interest in trying Kinect and Move three times higher than adults
                                                                                                                      • Figure 50: Interest in trying Move and Kinect among adults, by age, June-July 2010
                                                                                                                      • Figure 51: Interest in trying Move and Kinect among teens, by gender, June-July 2010
                                                                                                                    • Both products on the purchase and gift radar
                                                                                                                      • Figure 52: Purchase intent for Kinect and Move, as a gift or for oneself, June-July 2010
                                                                                                                    • Core gaming groups more interested in Kinect than Move
                                                                                                                      • Figure 53: Purchase intent for Kinect and Move for personal use, by gender, age and household income, June-July 2010
                                                                                                                      • Figure 54: Purchase intent for Kinect and Move as gifts, by gender, age and household income, June-July 2010
                                                                                                                  • Functional Gaming

                                                                                                                    • Key points
                                                                                                                      • Games that increase brain activity or improve memory desired by all ages
                                                                                                                        • Young adults mostly interested in video games for functional purposes
                                                                                                                          • Figure 55: Interest in functional gaming, by age, June-July 2010
                                                                                                                      • Game Selection

                                                                                                                        • Price and recommendations leading factors
                                                                                                                          • Ads and brand influence younger adults most
                                                                                                                            • One in five games bought on impulse
                                                                                                                              • Gift purchasing frequent reason for selection among older respondents
                                                                                                                                • Figure 56: Factors that influence video game purchase choices, by age, June-July 2010
                                                                                                                            • Game Gifting

                                                                                                                              • Women and 25-44s more likely to gift games
                                                                                                                                • Figure 57: Game gifting plans, by gender, June-July 2010
                                                                                                                                • Figure 58: Game gifting plans, by age, June-July 2010
                                                                                                                            • Massively Multiplayer Online Games (MMOGs)

                                                                                                                              • Women play MMOGs
                                                                                                                                • Figure 59: MMOG gaming on PC and console, by gender, June-July 2010
                                                                                                                            • Race and Hispanic Origin

                                                                                                                                • Key points
                                                                                                                                  • Video games equally popular regardless of race/Hispanic origin
                                                                                                                                    • Figure 60: Playing and purchasing in last year, by race/Hispanic origin, July 2009-March 2010
                                                                                                                                  • Wii more popular with Asians, Xbox with blacks
                                                                                                                                    • Figure 61: Console and packaged PC systems played/owned, by race/Hispanic origin, July 2009-March 2010
                                                                                                                                  • Action/adventure top genre across all groups
                                                                                                                                    • Figure 62: Genre most often played in last six months, by race/Hispanic origin, July 2009-March 2010
                                                                                                                                  • Minorities more likely to prefer games to television
                                                                                                                                    • Figure 63: Attitudes toward video games as a form of entertainment, by race/Hispanic origin, July 2009-March 2010
                                                                                                                                • Teens

                                                                                                                                  • Key points
                                                                                                                                    • Usage
                                                                                                                                      • Figure 64: Incidence of gaming among teens, by gender and age, November 2008-December 2009
                                                                                                                                    • Older teen boys move away from Wii
                                                                                                                                      • Figure 65: Consoles owned/played among teens, by gender and age, November 2008-December 2009
                                                                                                                                    • Wiimote resonates with Asian teens
                                                                                                                                      • Figure 66: Gaming platforms owned/played by teens, by race/Hispanic origin, November 2008-December 2009
                                                                                                                                    • Teens keen on consoles
                                                                                                                                      • Figure 67: Incidence of packaged video game play among teens in last three months, by gender, June-July 2010
                                                                                                                                    • Teens purchase twice as many games as youngest adults
                                                                                                                                      • Figure 68: Number of games bought or rented in last year among teens, by gender and age, November 2008-December 2009
                                                                                                                                    • Black teens buy and rent more
                                                                                                                                      • Figure 69: Number of games bought or rented by teens in last year, by race/Hispanic origin, November 2008-December 2009
                                                                                                                                    • Teen boys more engaged than teen girls
                                                                                                                                      • Figure 70: Attitudes toward video games as a form of entertainment among teens, by gender and age, November 2008-December 2009
                                                                                                                                    • Attitudes toward price, borrowing and renting
                                                                                                                                      • Figure 71: Price sensitivity, borrowing, and renting among teens, by gender and age, November 2008-December 2009
                                                                                                                                    • Fighting genre more popular with black and Hispanic teens
                                                                                                                                      • Figure 72: Genre played most often by teens in last six months, by race/Hispanic origin, November 2008-December 2009
                                                                                                                                  • Kids

                                                                                                                                    • Key points
                                                                                                                                      • Usage
                                                                                                                                        • Figure 73: Video game penetration among kids 6-11, by gender and age, November 2008-December 2009
                                                                                                                                      • Asian kids much less likely to play video games
                                                                                                                                        • Figure 74: Video game penetration among kids 6-11, by race/Hispanic origin, November 2008-December 2009
                                                                                                                                      • Wii and PS2 lead among kids
                                                                                                                                        • Figure 75: Consoles owned/played among kids 6-11, by gender and age, November 2008-December 2009
                                                                                                                                        • Figure 76: Video game consoles owned or played among kids 6-11, by race/Hispanic origin, November 2008-December 2009
                                                                                                                                      • Children buy/receive four games per year on average
                                                                                                                                        • Figure 77: Number of games bought/received in last year among kids 6-11, by gender and age, November 2008-December 2009
                                                                                                                                        • Figure 78: Number of games bought/received by kids in last year, by race/Hispanic origin, November 2008-December 2009
                                                                                                                                      • Preferences between entertainment media
                                                                                                                                        • Girls more likely to favor TV over gaming
                                                                                                                                          • Figure 79: Preferences between gaming and television among kids 6-11, by gender and age, November 2008-December 2009
                                                                                                                                        • Black children more likely to prefer games to television
                                                                                                                                          • Figure 80: Preference between games and tv among kids 6-11, by race/Hispanic origin, November 2008-December 2009
                                                                                                                                        • Children engaged in cost-savings efforts
                                                                                                                                          • Figure 81: Price sensitivity, borrowing and renting, by gender and age, November 2008-December 2009
                                                                                                                                        • Black and Hispanic kids rent/borrow more
                                                                                                                                          • Figure 82: Price sensitivity, borrowing and renting among kids 6-11, by race/Hispanic origin, November 2008-December 2009
                                                                                                                                        • Internet connectivity while gaming limited
                                                                                                                                          • Figure 83: Internet connectivity during gaming among kids 6-11, by gender and age, November 2008-December 2009
                                                                                                                                          • Figure 84: Internet connectivity during gaming among kids 6-11, race/Hispanic origin, November 2008-December 2009
                                                                                                                                      • Cluster Analysis

                                                                                                                                          • Brain Teasers
                                                                                                                                            • Demographics
                                                                                                                                              • Characteristics
                                                                                                                                                • Opportunity
                                                                                                                                                  • Functionalists
                                                                                                                                                    • Demographics
                                                                                                                                                      • Characteristics
                                                                                                                                                        • Opportunity
                                                                                                                                                          • Bargain Hunters
                                                                                                                                                            • Demographics
                                                                                                                                                              • Characteristics
                                                                                                                                                                • Opportunity
                                                                                                                                                                  • Cluster characteristics
                                                                                                                                                                    • Figure 85: PC and console games clusters, July 2010
                                                                                                                                                                    • Figure 86: Attitudes toward gaming, by clusters, July 2010
                                                                                                                                                                    • Figure 87: Factors motivating most recent game purchase, by clusters, July 2010
                                                                                                                                                                    • Figure 88: Spend on games and accessories, by clusters, June-July 2010
                                                                                                                                                                    • Figure 89: Attitudes to functional gaming, by clusters, July 2010
                                                                                                                                                                    • Figure 90: Attitudes toward product placement, by clusters, July 2010
                                                                                                                                                                  • Cluster demographics
                                                                                                                                                                    • Figure 91: PC and console games clusters, by gender, July 2010
                                                                                                                                                                    • Figure 92: PC and console games clusters, by age group, July 2010
                                                                                                                                                                    • Figure 93: PC and console games clusters, by household income group, July 2010
                                                                                                                                                                    • Figure 94: PC and console games clusters, by race, July 2010
                                                                                                                                                                    • Figure 95: PC and console games clusters, by Hispanic origin, July 2010
                                                                                                                                                                  • Cluster methodology
                                                                                                                                                                  • Custom Consumer Groups

                                                                                                                                                                      • Key points
                                                                                                                                                                        • Xbox360 and online PC gamers most engaged
                                                                                                                                                                          • Figure 96: Attitudes toward video games as a form of entertainment, by systems owned or played, July 2009-March 2010
                                                                                                                                                                        • Spend on games largely consistent between platforms
                                                                                                                                                                            • Figure 97: Spend on video games by systems owned or played, July 2009-March 2010
                                                                                                                                                                        • Appendix: Other Useful Consumer Tables

                                                                                                                                                                            • Figure 98: Video game adoption among friends, by gender, June-July 2010
                                                                                                                                                                            • Figure 99: Systems owned or played, tabulated by systems owned or played, July 2009-March 2010
                                                                                                                                                                            • Figure 100: Attitudes to in-game product placement, by age, June-July 2010
                                                                                                                                                                            • Figure 101: Game borrowing, by race/Hispanic origin, July 2009-March 2010
                                                                                                                                                                            • Figure 102: Attitudes toward video games as a form of entertainment, all adults vs. gamers, July 2009-March 2010
                                                                                                                                                                            • Figure 103: Genre preferences among teens, by gender and age, November 2008-December 2009
                                                                                                                                                                        • Appendix: Trade Associations

                                                                                                                                                                          Companies Covered

                                                                                                                                                                          • Barnes & Noble, Inc
                                                                                                                                                                          • Best Buy stores (USA)
                                                                                                                                                                          • Casual Games Association (CGA)
                                                                                                                                                                          • Consumer Electronics Association
                                                                                                                                                                          • Entertainment Software Association
                                                                                                                                                                          • Facebook, Inc.
                                                                                                                                                                          • Fédération Internationale de Football Association
                                                                                                                                                                          • GameStop Corp
                                                                                                                                                                          • International Game Developers Association
                                                                                                                                                                          • Microsoft USA
                                                                                                                                                                          • Motion Picture Association of America
                                                                                                                                                                          • National Football League Inc.
                                                                                                                                                                          • Nintendo of America Inc.
                                                                                                                                                                          • PricewaterhouseCoopers
                                                                                                                                                                          • Sony Corporation of America
                                                                                                                                                                          • Twitter, Inc.
                                                                                                                                                                          • U.S. Bureau of Labor Statistics
                                                                                                                                                                          • Ubisoft (USA)
                                                                                                                                                                          • Unilever USA
                                                                                                                                                                          • Walmart Stores (USA)
                                                                                                                                                                          • Yahoo! Inc
                                                                                                                                                                          • YouTube, Inc.

                                                                                                                                                                          Console and PC Games - US - October 2010

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