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Consoles Gain In Popularity, May Steal Ad
Dollars
Tameka Kee,
MediaPost
September 24, 2008
Worldwide revenues from connected
consoles--or gaming systems that are connected to the
Internet via broadband--are set to top $4 billion in
just two years, according to new data from Parks
Associates.
Yuanzhe (Michael) Cai, Parks Associates' director of
digital media and gaming, said that companies like Sony,
Microsoft and Nintendo will increasingly compete with
cable providers and set-top box makers for user and
advertiser dollars as they reach those projections.
"Game consoles are becoming multimedia Trojan horses,"
Cai said. "They're well-positioned as a platform for
other types of entertainment media because they're
typically in the living room, connected to that
gorgeous, 42-inch plasma screen. It's setting up a
serious competition between console makers, service
providers and emerging set-top box providers like Vudu."
Parks Associates estimates that by the end of this year,
roughly 40 million households worldwide will have a
connected console. By 2013, that number will jump to 170
million, posing a serious threat to set-top box
manufacturers in the short term, and "established
incumbents like Comcast and DirecTV in the longer term,"
Cai said. The threat lies in both the sheer number of
consoles and the increased consumption of non-game media
by their owners.
In the U.S., well over 50% of all current-generation
consoles (Xbox 360, PlayStation 3 and the Nintendo Wii)
are connected to the Internet. Nearly one-third of all
Xbox 360 owners and almost half of all PS3 owners watch
DVDs on their consoles, while about a third of owners
play music on either one. In terms of downloadable
content, over a quarter of all PS3 owners download
movies and TV shows, while just about 20% of Xbox 360
owners do. Cai said that the industry could expect those
multimedia usage numbers to grow, particularly as
console makers continue to broker content deals like the
Netflix/Xbox Live partnership, which was announced over
the summer.
He also highlighted Microsoft as the prime example of a
company that discovered how to successfully diversify
its console-based revenue model, both with the Xbox and
its successor, the Xbox 360. Parks Associates estimates
that the Xbox Live online service generates about $1
billion in annual revenue for Microsoft, equally split
between the downloadable videos ($250 million), Xbox
Live Arcade ($250 million), downloadable game content
for the Xbox 360 ($240 million) and Xbox Live premium
subscriptions ($260 million).
Still, Cai said the Wii would emerge as the king of
connected consoles in terms of market penetration,
followed by the PlayStation 3. By 2011, there will be
nearly 60 million Internet-connected Wiis, according to
Parks Associates' estimates. In contrast, there will be
roughly 40 million and 30 million connected PS3s and
Xbox 360's, respectively. "The PS3 is catching up
quickly in sales and connection rate with the Xbox 360,"
Cai said. "So we expect it will end up in third place by
the end of this cycle." |
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