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Nearly Half of U.S. Video Game System Owners Plan to Buy A New Console or Handheld Game Device This Holiday Season, Reports Jupiter Media Metrix

Total online games revenue will increase seven fold to 2.6 billion dollars by 2006

Fantasy role-playing games will remain the most successful online subscription game genre

NEW YORK, Dec. 17 /PRNewswire/ -- Jupiter Media Metrix, the global leader in Internet and new technology analysis and measurement, today reports that 45 percent of U.S. consumers who own a video game system intend to purchase a new game console or handheld game device this holiday season. In a new report released today, Jupiter analysts forecast that although the number of households owning a gaming console connected to the Internet will increase to 12.3 million by 2006 (up from 700,000 households in 2000), online PC games will continue to account for the lion's share of gaming subscription revenue. Jupiter projects that subscription revenues from online PC games will total 1.5 billion dollars by 2006, while subscription revenues from connected console gaming will only reach 250 million dollars in the same period.

``Stakes for the connected console video games market are growing rapidly, but don't signal a goldmine quite yet,'' said Billy Pidgeon, Jupiter analyst. ``While revenues from software for offline consoles remain two to three times higher than offline PC games revenues, subscriptions for online PC games will continue to exceed subscriptions for online console games in the immediate term. By the end of 2001, when consoles from all three games system manufacturers are in play, Jupiter forecasts that there will be over 100 million console gamers in the U.S. Even though the new generation of consoles will not deliver the true breakthrough for online functionality, they represent a significant step forward in revenue potential. Publishers and media outlets must prepare for innovative digital marketing possibilities and new revenue opportunities that will stem from broadband connected consoles with hard drives.''

In a separate announcement today, Jupiter Media Metrix reported that 46.7 million wired computer users at home in the U.S. played a PC-based game application in October 2001, up 10 percent from 42.4 million users in January 2001. The announcement features the latest Media Metrix data on PC game application usage and the top stand-alone PC game applications.

Additional highlights and forward-looking analysis from the new Jupiter Research report, titled ``Connected Consoles: Preparing for the Next Cycle,'' include:

• According to a June 2001 Jupiter Consumer Survey, video game system owners look at price (46 percent) and selection of exclusive games (44 percent) when deciding which new console to purchase. Jupiter analysts believe that exclusive software titles, or ``systems sellers,'' will be the main marketing attraction for the three major video game system competitors (Microsoft Xbox, Nintendo GameCube and Sony PlayStation 2).
• The online PC gamer audience will grow 59 percent to 101.3 million individuals by 2006 - up from 63.6 million in 2001 and 54.6 million in 2000. Adults aged 19 to 50 will account for the largest cross-section of this audience (44.2 million people), with kids ages two to 12 and older adults age 50 and above consisting of 20.4 million and 17.9 million individuals respectively. Jupiter analysts have found that while most PC gamers have connectivity, casual PC gamers tend to play only low-end Web embedded games online, and play high-end games offline. Jupiter defines casual gamers as those individuals who play once a week at most and average less than five hours of game play per week.
• In contrast to the online PC gamer audience, console gamers will grow 40 percent by 2006 - increasing from 101.1 million individuals in 2001 to 141.7 million gamers by 2006. Console players expect immediate gratification out of the box - a responsive and immersive gaming experience with no delays or bugs. According to Jupiter analysts, online console games services due out from Microsoft and Sony Computer Entertainment in 2002 must deliver on consumers' expectations or risk market share downturns in the next console business cycle.
• Jupiter analysts believe that the music industry could gain the most in the near-term from steady growth in the connected console market. Dynamic or user selectable music soundtracks will add replay value and excitement to gameplay. Publishers can extend a game's lifespan and gain cross-promotional partnerships by having musicians release special singles and remixes for use as game soundtracks.

``Online game investments will begin to pay off after 2006, when broadband penetration reaches 41 percent of all online households and the current generation of consoles is ready for replacement. Media companies with strong affinity audiences must evaluate developing online games around their genres. Publishers should take advantage of a direct connection to their audience for promoting new titles with video previews, downloadable demos and streaming games for demo and rental,'' Pidgeon said.

Companies interested in purchasing the new Jupiter Research Report can call toll-free at 1-877-464-6627 or visit http://www.jmm.com. Businesses who would like to have an analyst present this research at an upcoming event can contact Jamie Kampel at 917-534-6132 or jkampel@jmm.com.

Jupiter Video Games Report Methodology

Jupiter utilizes a wide set of data-gathering tools to conduct research, including systematic polling of leading industry executives, extensive consumer surveys, extensive executive surveys, Media Metrix audience measurement data, AdRelevance online advertising metrics and a rigorous approach to building market forecasting models. Jupiter analyses and forecasts are based on a number of methodologies, including close examination of analogous markets (either previous growth of new technologies or relevant off-line market case studies), consumer self-stated intentions culled from proprietary Jupiter surveying, complex market segmentation analysis, and analysis of historical trends. Additionally, all forecast assumptions are rigorously debated in a process designed to capture the collective judgment of analysts with relevant experience and perspectives on each given market. For a fuller explanation of the methodology, please visit http://www.jmm.com.

Jupiter Consumer Survey -- In June 2001, Jupiter designed and fielded a survey to online consumers selected randomly from NPD consumer panels. A total of 2,194 individuals responded to the survey. Respondents received an e-mail invitation to participate in the survey, with an attached URL linked to the Web-based survey form. The sample was weighted by a series of demographic and behavioral characteristics to ensure that it was representative of the online population. Demographic weighting variables included age, gender, household income, household education, household type, region, and market size. Additionally, Jupiter took the unconventional step of weighting the data by online tenure and AOL usage, two key determinants of online behavior. Balancing quotas were determined by an ongoing weekly RDD survey of almost 5,000 US households.

In this survey effort, Jupiter worked with its research partner NPD on the technical tasks of survey fielding, sample building, balancing, and data processing. NPD, founded in 1953, is one of the largest market research companies in the US and maintains a general research panel of 400,000 households as well as an online panel of 450,000 Internet users.

 

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