This forecast includes revenue from video game hardware and software, dedicated portable system hardware and software, PC games, and online PC and console games.
The report forecasts strong growth in all major categories, including PC games. DFC Intelligence forecasts that the PC game market will grow to over $13 billion by 2012. Much of this growth will come from online game revenue, including subscriptions, advertising and digital distribution.
DFC also is looking at continued strong performance for the portable game market. "Revenue from portable game software has more than doubled in recent years and we think that the Nintendo DS could eventually become the best selling game system ever in five years," says DFC analyst David Cole.
The biggest area of uncertainty remains the performance of the three video game console systems: the Sony PS3, the Nintendo Wii and the Microsoft Xbox 360. DFC forecasts the market using three different scenarios and estimates that combined cumulative worldwide sales for the three systems will reach between 180 to 210 million units by 2012. The biggest issue is the performance for the individual systems.
In all scenarios, DFC has raised its forecast for the Wii and the PS3 and lowered its forecast for the Xbox 360. According to Cole, "The Xbox 360 will need to build a strong base outside North America to avoid being in a fairly distant third." DFC forecasts that the Wii will be the strongest system through at least 2008. However, the PS3 could start coming on strong in 2009. "We could have a situation where the Wii sells more hardware units, but by 2012 the PS3 is generating more software revenue," says Cole.