As part of the recent London Games Summit, Mike Vorhaus of research group Frank N. Magid Associates presented his findings on the U.S. video game industry based on a wide-reaching gaming survey that looked at platform overlap, motivations for play, key marketing essentials, female and lapsed gamers and new console penetration.
Next-Gen - A 'Close Race'
Vorhaus began by discussing the next-gen battle set to take place at the end of the year, and noted that at the end of a generational cycle "the multi-console household is not a rarity." But he noted that "...it's going to be a close race," and that Microsoft head Bill Gates was finally in that race. To that point, he admitted that while the "Xbox has nothing to do with driving profit at Microsoft," it was quite the reverse for Sony, which should lead to "an interesting battle."
He did, though, think Sony had an advantage in some ways because of the PS3 launch delay, adding that it might be beneficial, giving the console more software by its later release date. And though he added that he thought Nintendo would "hold up quite well," he countered the point by acknowledging their "problem in the tendency to be referred to as a quite young brand."
In the end, Vorhaus said he believed that at by the end of the next console cycle in the race between the PlayStation 3 and Xbox 360 it would be a "6 to 4.5 or 6 to 5 ratio slightly favoring PlayStation", with the Wii somewhat behind the two hardware leaders.
He then referenced essentials of his firm's Spring 2006 study with consumer intent, where Magid found 3% of the 1800 respondents already owning an Xbox 360, and an additional 5% definitely intending to own one. This was set against 7% 'definitely intending' to purchase a PS3, and 4% 'definitely intending' to buy a Wii - though he did point out that this was before significant new information debuted on both.
On Consoles And Online Connectivity
In the online console sphere, Magid found that on the Xbox 360, 15% responded they were "always" playing online and 19% saying they did so "frequently." These figures compare to a 5% and 9% respectively Xbox online population, and 4% and 6% for the PS2.
As the Xbox 360 expands its user-base, Vorhaus said, he imagined the numbers would continue to hold up, especially given Xbox Live is the "major unique selling proposition" in console online space.
Most interestingly, he voiced a concern regarding cheaper downloadable games for Xbox 360 and possible consumer effects: "I'm a little bit worried about Xbox Live Arcade games... eating into consumer time, and therefore reducing consumer demand for high-priced console games."
Pre-Owned Issues, Lapsed Gamers
On the retail side, Magid looked at the split between new and used game sales and found that 57% of U.S. console users have bought a used game in the last year, an extremely significant portion of the market.
"Clearly," he said, "used games in the United States have become a major piece of the overall pie," especially considering retail's propensity (alleged by Vorhaus) to "hassle you to buy the used game", as retail outlets get a larger percentage from selling used.
In fact, Magid found that no less than 35% of its polled consumers who bought a used game originally intended to buy the game new, meaning that billions of dollars per year that would have been spent on new games is allegedly being spent on secondhand ones.
Vorhaus then covered Magid's findings on 'lapsed' gamers -- the population that had given up on games. Interestingly, the largest percentage of lapsed gamers were "clearly formerly engaged players," as Magid found that only 14% of those lapsed had been playing for less than 6 months. Of the lapsed gamers, 48% said they'd given up because they "got too busy with other things," while 40% "got bored or lost interest".
DS And PSP - A Winner Emerging?
In the handheld arena, Vorhaus said he'd been told by salespeople that the DS (as has been proven out by recent software and hardware sales figures) has pulled "dramatically ahead" in the U.S. On just why that might be, Vorhaus posited that the PSP-buying audience skewed a bit older, and that the DS as a younger-skewing handheld enjoyed the benefits of a larger younger generation buying the portable - as well as the DS Lite launch boost.
Backing up those claims of a younger portable audience for the Nintendo DS, on the percentage of DS ownership in specific age groups, Magid found that 22% of DS owners were under 12, 26% were between 12 and 17, and only 10% of owners were 18-24.
Vorhaus also said that ownership and purchase intent results from earlier in the year showed that the DS and PSP were neck and neck, and that the balance "has clearly changed fairly dramatically in the past two quarters." Still, he said, "I don't think we should be counting out PSP," adding he was "actually expecting some very spectacular functionality in the next PSP."