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Gaming in the Interactive World - US - July 2009

Electronic gaming plays an important role in how U.S. consumers entertain themselves. While a range of consoles and portable players are available for videogames, dedicated devices are facing increasing competition from PCs and cellphones, which offer users an interactive experience without any need to purchase consoles or even software. This report explores the impact of and responses to increasing competition including:

  • Sector growth trends
  • The growing impact of the web
  • Future trends and strategies
  • Consumer behavior and attitudes

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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

                      • Hardware launches drive sales cycle
                        • New competition from the web and multifunction devices
                          • Software to fuel near-term sales
                            • Dedicated stores, web play key roles in sales and marketing
                              • Uncertain economy, aging population could retard sales
                                • PS3 not living up to competing seventh-generation consoles
                                  • Gaming is for the young
                                    • Purchase model prevails
                                      • Gaming as a new way to socialize
                                      • Insights and Opportunities

                                        • The media hub for the home?
                                          • New realities
                                            • Staying in motion—and pushing back
                                              • New revenue models
                                                • Figure 1: Teen and adult attitudes towards in-game advertising, by age, October 2007-December 2008
                                              • Not just for kids
                                                • It’s all about the accessories
                                                • Inspire Insights

                                                    • Edutainment
                                                      • What it means for the market
                                                        • Medical Wellness
                                                          • What it means for the market
                                                          • Market Size and Forecast

                                                            • Key points
                                                              • Launches drive sales
                                                                • Figure 2: Total U.S. sales and forecast of gaming hardware and software, at current prices, 2004-12
                                                                • Figure 3: Total U.S. sales and forecast of gaming hardware and software, at inflation-adjusted prices, 2004-12
                                                            • Competitive Context

                                                              • Online games
                                                                • Figure 4: Online entertainment usage, by age, February 2009
                                                                • Figure 5: Online, MMORPG, and social networking game usage, by key demographics, March 2008
                                                              • PCs move from work to play
                                                                • Figure 6: Use of video games on home PCs vs. consoles, by key demographics, April 2007-June 2008
                                                              • Gaming on the go
                                                                • Figure 7: Ownership of handheld gaming devices and game play on MP3 players and cell phones, by age and HH income, October 2007-December 2008
                                                                • Figure 8: Flight control iPhone game, image
                                                            • Segment Performance

                                                              • Key points
                                                                • Software to drive near-term revenues
                                                                  • Figure 9: U.S. sales of gaming products at current prices, by segment, 2006 and 2008
                                                              • Segment Performance—Gaming Hardware

                                                                • Key points
                                                                  • Proprietary model drives prices
                                                                    • Figure 10: Pricing as of launch for major gaming consoles, 2000-06
                                                                  • New functions could help drive sales
                                                                    • Hardware sales and forecast
                                                                      • Figure 11: U.S. sales and forecast of gaming hardware, at current prices, 2004-12
                                                                      • Figure 12: Total U.S. sales and forecast of gaming hardware, at inflation-adjusted prices, 2004-12
                                                                    • New risks for portables
                                                                    • Segment Performance—Gaming Software

                                                                      • Key points
                                                                        • Software sales roughly track console launches
                                                                          • Figure 13: Top 10 console games, by U.S. sales, 2008
                                                                          • Figure 14: Rockstar Games’ Grand Theft Auto IV image
                                                                        • Secondary market, competing platforms could dampen sales
                                                                          • Software sales and forecast
                                                                            • Figure 15: U.S. sales and forecast of gaming software, at current prices, 2004-12
                                                                            • Figure 16: Total U.S. sales and forecast of gaming software, at inflation-adjusted prices, 2004-13
                                                                          • Growing the audience for gaming
                                                                            • Figure 17: Video games played, by genre, by age, October 2007-December 2008
                                                                        • Retail Channels

                                                                          • Gaming benefits from relatively broad distribution
                                                                              • Figure 18: Channels through which video games are purchased, 2008
                                                                            • Secondary market plays an important role
                                                                              • Downloads take hold
                                                                              • Market Drivers

                                                                                • The recession
                                                                                  • Figure 19: U.S. unemployment, October 2008-June 2009
                                                                                  • Figure 20: Disposable personal income and personal consumption, October 2009-May 2009
                                                                                • Households with children
                                                                                  • Figure 21: Gaming hardware ownership, by children in household, October 2007-December 2008
                                                                                • Empowered consumers seek control over content
                                                                                  • Figure 22: Desire for video content storage and recall, by age, November 2008
                                                                                • An aging U.S. population
                                                                                    • Figure 23: Population, by age, 2004-14
                                                                                  • Health and safety concerns
                                                                                  • Leading Companies

                                                                                    • Key points
                                                                                      • Three players compete for hardware dominance
                                                                                        • Figure 24: Gaming console ownership, by brand, October 2007-December 2008
                                                                                      • Software a wider but narrowing field
                                                                                      • Brand Qualities

                                                                                          • Electronic Arts
                                                                                            • Microsoft
                                                                                              • Nintendo
                                                                                                • Sony Electronics
                                                                                                • Innovation and Innovators

                                                                                                    • Project Natal
                                                                                                      • Spore
                                                                                                        • WildTangent
                                                                                                        • Advertising and Promotion

                                                                                                          • Traditional advertising
                                                                                                            • Figure 25: Advertising spending, by leading gaming brands, 2007 and 2008
                                                                                                            • Figure 26: Advertising spending, by leading gaming software and retailer brands, 2007 and 2008
                                                                                                          • In-store promotions and bundled/special-edition products
                                                                                                            • Online marketing
                                                                                                              • Licensing partnerships
                                                                                                                • Television advertising
                                                                                                                  • Apple iPod touch
                                                                                                                    • Figure 27: Apple iPod touch television ad, 2009
                                                                                                                  • Nintendo DS
                                                                                                                    • Figure 28: Nintendo DS television ad, 2008
                                                                                                                  • Nintendo Wii Fit
                                                                                                                    • Figure 29: Nintendo Wii Fit television ad, 2008
                                                                                                                  • Sony PlayStation 3
                                                                                                                    • Figure 30: Sony PlayStation 3 television ad, 2008
                                                                                                                • Ownership

                                                                                                                  • Age more relevant than income in determining usage
                                                                                                                      • Figure 31: Trended ownership/usage of video game consoles and handheld devices, by key demographics, January 2006-October 2006 and October 2007-December 2008
                                                                                                                    • Gaming nearly universal among 9-14s
                                                                                                                      • Figure 32: Ownership/usage of video games—kids/teens, by age and age/gender, January 2006-October 2006 and October 2007-December 2008
                                                                                                                      • Figure 33: Ownership of handheld gaming devices—kids/teens, by age and age/gender, October 2007-December 2008
                                                                                                                    • PS2 still the most commonly owned console
                                                                                                                      • Figure 34: Top 10 consoles/portables owned—adults, by gender, October 2007-December 2008
                                                                                                                    • PS2 dominates amongst 18-24s
                                                                                                                      • Figure 35: Top 10 consoles/portables owned or played, by age, October 2007-December 2008
                                                                                                                    • Wii the only console for which penetration increases with household income
                                                                                                                      • Figure 36: Top 10 consoles/portables owned or played, by HH income, October 2007-December 2008
                                                                                                                    • Kids take gaming to go
                                                                                                                      • Figure 37: Top 10 consoles/portables owned or played—kids, by age and age/gender, October 2007-December 2008
                                                                                                                    • Interest in handhelds declines amongst teens
                                                                                                                      • Figure 38: Top 10 consoles/portables owned/played—teens, by age and age/gender, October 2007-December 2008
                                                                                                                  • Purchase Behavior

                                                                                                                    • Average annual spend on video games—$63
                                                                                                                      • Figure 39: Mean annual spend on video games, by gender, age, and HH income, March 2009
                                                                                                                    • Only two games purchased per year on average
                                                                                                                      • Figure 40: Frequency of video game purchase/rental, by gender, age and HH income, October 2007-December 2008
                                                                                                                    • Borrowing and rental rare amongst younger kids
                                                                                                                      • Figure 41: Kids’ attitudes towards purchasing/renting games, by age and age/gender, October 2007-December 2008
                                                                                                                      • Figure 42: Teen attitudes towards purchasing/renting games, by age and age/gender, October 2007-December 2008
                                                                                                                    • Women more likely to buy games as gifts than for themselves
                                                                                                                      • Figure 43: Buying to play vs. gift purchases, by gender, age and HH income, March 2009
                                                                                                                    • Timing of purchase
                                                                                                                      • Figure 44: Timing of new game purchases—adults, by age, October 2007-December 20008
                                                                                                                    • Teens buy early but not on day of release
                                                                                                                      • Figure 45: Timing of new game purchases—teens, by age and gender/age, October 2007-December 20008
                                                                                                                  • Usage Patterns

                                                                                                                    • Xbox 360 owners most engaged
                                                                                                                      • Men play nearly twice as many hours as women
                                                                                                                        • Figure 46: Hours of game play—adults, by gender, October 2007-December 2008
                                                                                                                      • 25-34 year olds spend most time gaming
                                                                                                                        • Figure 47: Hours of game play—adults, by age, October 2007-December 2008
                                                                                                                      • Highest-income households spend less time gaming
                                                                                                                        • Figure 48: Hours of game play—adults, by HH income, October 2007-December 2008
                                                                                                                      • Boys aged 9-11 the true gaming champions
                                                                                                                        • Figure 49: Hours of game play—kids, by age and age/gender, October 2007-December 2008
                                                                                                                      • Children graduate from simpler platforms to more complex ones
                                                                                                                        • Games too solitary for teen girls
                                                                                                                          • Figure 50: Hours of game play—teens, by age and age/gender, October 2007-December 2008
                                                                                                                      • Games as Social Media

                                                                                                                        • Console gaming typically more social than PC gaming
                                                                                                                          • Figure 51: Who adults play games with, by platform, March 2009
                                                                                                                        • Men seeking to connect via gaming
                                                                                                                          • Figure 52: Attitudes towards gaming with others, by gender, March 2009
                                                                                                                        • The younger the gamer, the more social the gamer
                                                                                                                          • Figure 53: Attitudes towards gaming with others, by age, March 2009
                                                                                                                        • Social games for high-income households
                                                                                                                          • Figure 54: Attitudes towards gaming with others, by HH income, March 2009
                                                                                                                        • Kids play alone or with peers—not with older/younger kids
                                                                                                                          • Figure 55: Who kids play games with, by age and gender/age, October 2007-December 2008
                                                                                                                        • It’s a family affair, and especially so for women
                                                                                                                          • Figure 56: Level of game play and social game play, by gender, March 2009
                                                                                                                        • 18-34 year olds most likely to game as a social activity
                                                                                                                          • Figure 57: Level of game play and social game play, by age, March 2009
                                                                                                                      • Avatars and Micro-transactions

                                                                                                                        • Women virtually neck and neck with men
                                                                                                                          • Figure 58: Gaming avatar usage and virtual gaming purchases, by gender, March 2009
                                                                                                                        • Youngest adults most keen on avatars and virtual purchases
                                                                                                                          • Figure 59: Gaming avatar usage and virtual gaming purchases, by age, March 2009
                                                                                                                      • Genres Played

                                                                                                                          • Action/adventure still number one
                                                                                                                            • Figure 60: Game genres played—adults, by gender, October 2007-December 2008
                                                                                                                          • Cards, casino games a good bet for seniors
                                                                                                                            • Figure 61: Game genres played—adults, by age, October 2007-December 2008
                                                                                                                          • Action/adventure tops with kids
                                                                                                                            • Figure 62: Game genres played—kids, by age and age/gender, October 2007-December 2008
                                                                                                                          • Interest in most genres declines among older teens
                                                                                                                            • Figure 63: Game genres played—teens, by age and age/gender, October 2007-December 2008
                                                                                                                        • Gaming and the Web

                                                                                                                          • Incidence of game play connected to the web—adults and kids/teens
                                                                                                                            • Figure 64: Incidence of game play while connected to the web—adults, by gender, age and HH income, October 2007-December 2008
                                                                                                                          • Kids and teens more likely to play games connected to the web
                                                                                                                            • Figure 65: Incidence of game play while connected to the web—kids/teens, by age and gender/age, October 2007-December 2008
                                                                                                                          • Online console gaming behavior
                                                                                                                            • Figure 66: Online console gaming behavior, by gender, March 2009
                                                                                                                          • Youngest adults most keen on web activities
                                                                                                                            • Figure 67: Online console gaming behavior, by age, March 2009
                                                                                                                        • Attitudes and Motivations

                                                                                                                          • Self-perception as “hardcore” vs. “casual” gamers
                                                                                                                            • Figure 68: Perceived game skill level, by age, March 2009
                                                                                                                          • Women want self-improvement, men like advertising
                                                                                                                            • Figure 69: Attitudes toward newer elements of gaming, by gender, March 2009
                                                                                                                          • Improving dexterity and brain fitness popular across age groups
                                                                                                                            • Figure 70: Attitudes toward newer elements of gaming, by age, March 2009
                                                                                                                        • Gaming and Viral Marketing

                                                                                                                          • Men more invested in viral marketing
                                                                                                                            • Figure 71: Additional attitudes towards gaming—the impact of friends, by gender, March 2009
                                                                                                                          • 18-24s keen on spreading the word
                                                                                                                            • Figure 72: Additional attitudes towards gaming—the impact of friends, by age, March 2009
                                                                                                                        • Impact of Race/Hispanic Origin

                                                                                                                          • Ownership and usage
                                                                                                                            • Figure 73: Gaming on handheld gaming devices, MP3 players and cell phones, by race/Hispanic origin, March 2009
                                                                                                                          • Asians most keen on Wii
                                                                                                                            • Figure 74: Top 10 gaming consoles/portables owned or played—adults, by race/Hispanic origin, October 2007-December 2008
                                                                                                                          • Blacks spend twice as much as Asians on games
                                                                                                                            • Figure 75: Mean spend on video games, by race/Hispanic origin, March 2009
                                                                                                                          • Blacks and Hispanics buy and rent more games
                                                                                                                            • Figure 76: Frequency of video game purchase/rental, by race/Hispanic origin, October 2007-December 2008
                                                                                                                        • UGC

                                                                                                                          • One in four give thumbs up to UGC gaming
                                                                                                                            • Figure 77: Attitudes towards user-generated content in games, by gender, March 2009
                                                                                                                          • One in three 18-34s like UGC gaming
                                                                                                                            • Figure 78: Attitudes towards user-generated content in games, by age, March 2009
                                                                                                                        • Cluster Analysis

                                                                                                                            • Core Gamers
                                                                                                                              • Who they are
                                                                                                                                • Opportunity
                                                                                                                                  • Websters
                                                                                                                                    • Who they are
                                                                                                                                      • Opportunity
                                                                                                                                        • Loners
                                                                                                                                          • Who they are
                                                                                                                                            • Opportunity
                                                                                                                                              • Cluster characteristics
                                                                                                                                                • Figure 79: Gaming clusters, April 2009
                                                                                                                                                • Figure 80: Methods of game play, by gaming clusters, April 2009
                                                                                                                                                • Figure 81: Engagement in gaming, by gaming clusters, April 2009
                                                                                                                                                • Figure 82: Self-perception of engagement with games, and word-of-mouth marketing, by gaming clusters, April 2009
                                                                                                                                                • Figure 83: Interest in UGC, by gaming clusters, April 2009
                                                                                                                                                • Figure 84: Spend, by gaming clusters, April 2009
                                                                                                                                                • Figure 85: Gaming attitudes and interests, by gaming clusters, April 2009
                                                                                                                                              • Cluster demographics
                                                                                                                                                • Figure 86: Gaming clusters, by gender, April 2009
                                                                                                                                                • Figure 87: Gaming clusters, by age, April 2009
                                                                                                                                                • Figure 88: Gaming clusters, by HH income, April 2009
                                                                                                                                                • Figure 89: Gaming clusters, by race/Hispanic origin, April 2009
                                                                                                                                              • Cluster methodology
                                                                                                                                              • Custom Consumer Groups

                                                                                                                                                • How console and handheld gaming hardware use the PC for gaming
                                                                                                                                                    • Figure 90: Online/offline PC game usage, by dedicated gaming device ownership, October 2007-December 2008
                                                                                                                                                  • Sony lagging in getting installed base to purchase current console
                                                                                                                                                      • Figure 91: Current gaming console ownership, by brand ownership, October 2007-December 2008
                                                                                                                                                    • Stereotypes about gender and age remain largely accurate
                                                                                                                                                        • Figure 92: Methods and types of game play, by age and age/gender, October 2007-December 20008
                                                                                                                                                      • Young women play with family, young men on board avatars and connectedness
                                                                                                                                                          • Figure 93: Attitudes towards game play and social gaming behavior, by age and gender, march 2009
                                                                                                                                                        • Young Hispanics most keen on mobile gaming
                                                                                                                                                            • Figure 94: Methods and types of game play, by age and race/Hispanic origin, March 2009
                                                                                                                                                        • Appendix: Survey Results for Online Teens

                                                                                                                                                            • Figure 95: Dedicated gaming device ownership among teens, by age and gender, March 2009
                                                                                                                                                            • Figure 96: Gaming as a social activity among teens, by age and gender, March 2009
                                                                                                                                                            • Figure 97: Avatars and micro-transactions among teens, by age and gender, March 2009
                                                                                                                                                            • Figure 98: PC gaming among teens, by age and gender, March 2009
                                                                                                                                                            • Figure 99: Dedicated gaming handheld vs. cell phone gaming among teens, by age and gender, March 2009
                                                                                                                                                            • Figure 100: PC vs. console game play in the past month among teens, by age and gender, March 2009
                                                                                                                                                            • Figure 101: Purchasing habits and word of mouth marketing among teens, by age and gender, March 2009
                                                                                                                                                            • Figure 102: Interest in UGC gaming, among teens, by age and gender, March 2009
                                                                                                                                                        • Appendix: Other Useful Consumer Tables

                                                                                                                                                          • Gaming and types of games played
                                                                                                                                                            • Figure 103: Incidence of handheld and cell phone gaming, by age and HH income, March 2009
                                                                                                                                                            • Figure 104: Game genres played—adults, by HH income, October 2007-December 2008
                                                                                                                                                          • Genre preferences by race/Hispanic origin
                                                                                                                                                              • Figure 105: Game genres played—adults, by race/Hispanic origin, October 2007-December 2008
                                                                                                                                                            • Asians more likely to play video games
                                                                                                                                                              • Figure 106: Ownership/usage of video games, by race/Hispanic origin, October 2007-December 2008
                                                                                                                                                          • Appendix: Trade Associations

                                                                                                                                                            Companies Covered

                                                                                                                                                            • Activision
                                                                                                                                                            • American Electronics Association
                                                                                                                                                            • AOL
                                                                                                                                                            • Apple, Inc
                                                                                                                                                            • Association of Information Technology Professionals
                                                                                                                                                            • Atari, Inc.
                                                                                                                                                            • Best Buy stores (USA)
                                                                                                                                                            • Blockbuster USA
                                                                                                                                                            • Bureau of Economic Analysis
                                                                                                                                                            • Cellular Telecommunications and Internet Association (CTIA)
                                                                                                                                                            • Circuit City (US)
                                                                                                                                                            • CompUSA Inc
                                                                                                                                                            • Consumer Electronics Association
                                                                                                                                                            • Dell Inc.
                                                                                                                                                            • Electronic Arts, Inc
                                                                                                                                                            • Facebook, Inc.
                                                                                                                                                            • Fédération Internationale de Football Association
                                                                                                                                                            • GameStop Corp
                                                                                                                                                            • Gateway, Inc
                                                                                                                                                            • Google, Inc.
                                                                                                                                                            • Greenfield Online
                                                                                                                                                            • H&M Hennes & Mauritz
                                                                                                                                                            • Hasbro Inc
                                                                                                                                                            • Hewlett-Packard Company
                                                                                                                                                            • Jamie Oliver
                                                                                                                                                            • Konami (USA)
                                                                                                                                                            • Linden Lab
                                                                                                                                                            • Microsoft USA
                                                                                                                                                            • MSN (USA)
                                                                                                                                                            • MySpace.com
                                                                                                                                                            • National Association for Stock Car Auto Racing (NASCAR)
                                                                                                                                                            • National Football League Inc.
                                                                                                                                                            • Netflix, Inc.
                                                                                                                                                            • Nintendo of America Inc.
                                                                                                                                                            • Palm Inc.
                                                                                                                                                            • Photo Marketing Association International
                                                                                                                                                            • Pokémon USA Inc.
                                                                                                                                                            • Professional Golfers Association
                                                                                                                                                            • Research In Motion (USA)
                                                                                                                                                            • Ritz Camera Centers, Inc
                                                                                                                                                            • Rockstar Games Inc
                                                                                                                                                            • Sega Corporation
                                                                                                                                                            • Semiconductor Industry Association
                                                                                                                                                            • Software & Information Industry Association (SIIA)
                                                                                                                                                            • Sony Corporation of America
                                                                                                                                                            • Subway
                                                                                                                                                            • Take-Two Interactive Software, Inc.
                                                                                                                                                            • Television Bureau of Advertising
                                                                                                                                                            • Twitter, Inc.
                                                                                                                                                            • U.S. Bureau of Labor Statistics
                                                                                                                                                            • U.S. Bureau of the Census
                                                                                                                                                            • US Department of Labor
                                                                                                                                                            • Vivendi Universal S.A.
                                                                                                                                                            • Walmart Stores (USA)
                                                                                                                                                            • Yahoo! Inc
                                                                                                                                                            • YMCA of the USA
                                                                                                                                                            • YouTube, Inc.

                                                                                                                                                            Gaming in the Interactive World - US - July 2009

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