Week 2 EOC: Boston Consulting Group - Video Games

Console video game companies are being hurt by a decline in sales. “Total video game sales fell from $1.11 billion in September 2011 to $848.3 million last month, a decline of 24 percent(http://www.pcmag.com/article2/0,2817,2410940,00.asp)” The drop in sales is due in part by the economic recession, as well as gamers switching to cheaper formats for game play. Mobile devices, such as cell phones and tablets, which are more portable and have lower initial cost for games are having an impact on the market.  “Games are the number one category of sales at Apple Inc.’s App Store; tablet users spend 67 percent of their time on the devices playing games, according to the mobile analytics firm Flurry, while smartphone users dedicate 39 percent of their time to games.” (http://www.boston.com/business/innovation/2012/11/01/mobile-apps-upending-video-game-industry/UnPw0t2ZBnyLJ83Iz6uHjK/story.html) Nintendo has seen a significant drop in sales for its Wii console so far this year, selling  only 3,270,725, making their sales less than half of the 6,847,893 they sold all of last year(http://www.vgchartz.com/article/250537/2012-year-on-year-sales-and-market-share-update-to-november-3rd/).  Although Nintendo will be releasing a new console for the holidays, it is difficult to say if their sales will even come close to last years. this puts nintendo in the dog category.  Sony’s PS3 sales so far this year puts them on course to sell roughly the same as last year, however, no growth in sales is to be expectedmaking them a cash cow for now. Microsoft’s sales are on track to be slightly lower than last years, and without a significant upgrade or enhancement to the console system are likely to continue to diminish for the foreseeable future putting them in on thier way from being a cash cow to a dog. . With increased usage of mobile devices as gaming platforms the market share for game consoles has decreased, as many part time gamers see the benefit of gaming on their phones, tablets and other hand held devices while on the go. Mobile devices are currently the star in the market due to growth and lower cost overhead for game makers.   Even though console game systems sales are slow due to the recession, many gamers have decided to convert to different gaming formats, and potentially will stay there even after recovery for this current recession. There will continue to be a market for console games in the future because many serious gamers will continue to be attracted to the format, but the market looks like it will be a smaller segment than in the past.