Developing high-performance game consoles is a significant project for hardware vendors. Gartner Dataquest analysts said with proprietary silicon solutions, these consoles require high investments to stay on the leading edge of the performance curve. It's this high investment that has necessitated longer product life cycles to all vendors for maximum profits through game software sales.
A recent GartnerG2 survey found that 75 percent of video game sales will be to consumers that already have a video game console, this is up from 55 percent one year earlier.
A new competitive landscape may shorten the product life cycle, which means the industry could see new video game consoles in 2004. This would have a tremendous impact on the game industry business model. Gartner Dataquest analysts said manufacturers must also be prepared for more cautious consumer spending and a slower ramp of production and distribution capacity, which would temper the upturn in sales in 2002.
