Two newcomers help make 2006 a record year for gaming sales

Canadians rung up record sales for console and handheld gaming systems last year with total sales of hardware, software and accessories nearing the $1-billion mark according to a recent report from research firm The NPD Group.Of course, you might expect the results to be skewed owing to the arrival of not one but two new gaming systems on the market: Nintendo Co. Ltd.’s Wii and Sony Corp.’s PlayStation 3. However, the much-heralded new arrivals came too late in the year – and couldn’t provide enough inventory to satisfy consumer demand – to contribute more than a combined 130,000 units to overall console sales of approximately 830,000, a 46% gain over sales figures in 2005 and a record high."Even without those two systems, it still would have been a record year for the console market," says Darrell Ryce, director of technology and entertainment for The NPD Group. In total, 1.62 million video gaming systems were sold in Canada last year for a cash register total of $349 million.Handheld systems accounted for almost half of those – 787,500, an increase of 22% over 2005 figures – led by the Nintendo DS, which was also the top-selling system overall with 374,000 units. Second place went to Sony’s PlayStation 2 with 327,000 units sold, thanks in part to price cuts due to the new PlayStation 3 hitting the market.The console segment might also be seeing some divergence. Instead of catering solely to the whims of adolescents and young adults looking for a head-to-head fragfest with turbocharged graphics, Nintendo has been positioning the Wii as more family-friendly entertainment with its novel motion-sensitive controller (CNM, Nov. 30/2006). According to Ryce, it appears that strategy might be paying off. "The Wii had probably the strongest launch, in terms of unit volume, of any new system we’ve seen in a while," he says, noting that its sales trounced the debuts of the PlayStation 3 this year as well as Microsoft Corp.’s Xbox 360, which was introduced in 2005.And while you might think that handheld systems are facing increasing pressure from the explosive growth in cell phone-based casual games, Ryce says that for a true gamehead, there’s no comparison between the two. "If it’s someone who wants to play Tetris, and that’s all they want to play, then I guess the mobile phone gaming environment would be a threat to the portable video game market," he says. "But…if they wanted to get into some real gaming-type products, today it really needs to be either the PlayStation Portable or the Nintendo DS or GameBoy."The software side of the business, meanwhile, proved even more lucrative in 2006: total Canadian sales tallied up to $481 million, which translated into a more modest 9% annual growth rate. Ryce says that although the pace of growth in hardware sales might slide later this year only to rise with the holiday shopping period, software purchases will likely post a steady rate of increase throughout the year."Typically…there’s a lag when systems come into the market – they offer up somewhere between a dozen to 24 titles at launch…and then typically in the next quarter you’ll see some more titles come out, but it does take some time for the products that are available to ramp up," he says. "What we’d anticipate in 2007 is that we’re going to see a greater of titles being offered up for all the new systems in the market – that’s really going to drive a lot of the sales."Finally, accessories – such as extra controllers and styli, battery packs, carrying cases and more – grew at a healthy pace to hit sales of $104 million last year, a 24% increase year-over-year. Like software sales, this category might also benefit from the arrival of two new systems late last year. Says Ryce: "As you develop your library and start using the system more, you start requiring more things to attach to it."

Two newcomers help make 2006 a record year for gaming sales

Broadcast | February 7, 2007

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