PORT WASHINGTON, NEW YORK, March 11, 2008 – According to The NPD Group, a leading provider of consumer and retail information, video game industry retail revenue tripled in growth in 2007; at the same time consumer spending on music fell 10 percent and DVD revenues also flattened. As entertainment categories shift in importance, a new NPD report looks at how consumers are allocating time and dollars for entertainment, in order to help marketers look for revenue opportunities beyond their own discrete industry categories.
“It’s easy to lose sight of the fact that all of these entertainment categories are interlaced with one another, and they are all separately vying for a larger share of consumers’ leisure time and wallet share,” said Russ Crupnick, entertainment industry analyst for NPD. “New technologies, new devices, and digital-content delivery are changing the entertainment landscape in such a way that companies must keep tabs on the latest trends in competitive categories -- not just on their own entertainment sectors.”
Retail sales of video games rose by 41 percent among teens last year, just as sales of CDs to this age group dropped 45 percent. In fact, music sales have continued to decline in all age groups – but especially among teens. Among the top reasons teens cited for buying fewer CDs in 2007, than the year before, was the appeal of video games.
While it’s true that growth was centered on gaming last year, core gamers -- those who played video games daily or several times each week -- still spent most of their entertainment budgets on non-gaming entertainment. These consumers remain more likely to buy a DVD or CD, than they are to purchase a new video game. In fact, 58 percent had purchased a new DVD in the past six months, 46 percent bought a CD, and 43 percent purchased a game for a console.
”We have this perception of hard-core gamers glued to their consoles, and immersed in virtual worlds, when in fact, they are still spending a lot of time with, and money on, music, movies, and other pastimes,” Crupnick said. “To be a winner in the entertainment wars, companies need to make sure they lead at every consumer touch point – from traditional retail to digital to wireless. In doing so, they stand a better chance of increasing their share of the time and money consumers choose to spend on their products.”
NPD notes competition not only among the different types of entertainment software (CDs, DVDs, games) and modes of delivery (physical or digital), but also from other consumer electronics devices penetrating U.S. households. For example, 30 percent of core gamers now have a digital video recorder (DVR) in their homes. As ownership and use of these devices grows, there will be even greater competition for consumers’ free time.
Data note: Information in this press release was derived from The NPD Group’s “Entertainment Trends in America” consumer surveys, the results of which will be made available to NPD clients later this Spring. Data was based on a sample of more than 10,000 US consumers, and results were balanced to reflect the U.S. population age 13 and older.
About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,600 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless.For more information, contact us or visit http://www.npd.com.