An In-Depth Analysis
of the Next Generation
Consoles and the Gamers
Behind Them
the power of an integrated media partner
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IDG Entertainment Research
Presentation
• IDC Research Worldwide Videogame
Console Hardware 2007-2011 Forecast,
2/07
• 2007 U.S Gamer Segmentation Study,
conducted by Boston Research, 4/07
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North American Game Hardware Installed Base
60.0
50.0
40.0
30.0
20.0
10.0
0.0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
SONY PS2 6.2 14.7 21.1 25.7 34.1 42.7 45.2 47.2 47.8 47.9
MS Xbox 1.4 4.6 7.8 11.9 15.5 16.1 16.1 16.1 16.1 16.1
Nintendo Game Cube 1.2 3.5 6.8 9.1 10.9 11.6 11.6 11.6 11.6 11.6
MS Xbox 360 1.0 5.6 10.0 16.0 22.9 26.1
SONY PS3 0.9 4.6 9.2 15.2 21.1
Nintendo Wii 1.2 8.0 16.3 24.3 27.0
Nintendo GBA/GBA SP 4.7 11.7 19.8 27.4 31.7 36.4 39.0 40.6 40.9 41.0
Nintendo DS/DS Lite 1.2 4.4 9.0 16.2 24.7 31.1 35.0
SONY PSP 4.8 8.5 13.1 17.6 21.7 24.0
Source: IDC Research
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2007 U.S. Gamer
Segmentation Study
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U.S. Gamer Segmentation Study
Methodology
• Online survey among U.S. consumers. Sample provided by e-
RewardsTM. an online panel provider with more than one million
members in its consumer panel.
• Respondents were recruited by email invitation and cookies were
utilized to ensure one response per respondent.
• Screening criteria included: age 13 years or older; game 1 or more
hours per week (on PC, console, handheld or mobile device).
• Conducted between 3/15/07 and 4/01/07.
• A total of 600 individuals completed the survey:
– 240 teens ages 13-17
360 adults ages 18 or older
• The results from this study were weighted to be representative of the
teen and adult U.S. population of gamers.
• At the 95% confidence level the margin of error for a sample size of
600 is +/- 4 percentage points.
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Five Key Gamer Segments
Core Status Social Active Casual
Gamers Gamers Gamers Gamers Gamers
• As a form of • I am proud of • Gaming is a social • I like games where • I use gaming as an
entertainment, I gaming skills. experience. movements are emotional release.
prefer gaming over • I enjoy being the • Gaming provides reflected in the • Gaming allows me
watching TV. first to try a new links to people I game. to play different
• I want to spend game. care about. • I like games that roles.
more time gaming. • I discuss my • Gaming is a great get me out of my • I prefer going out
• As a form of gaming group activity. chair. to dinner than
entertainment, I experiences with • I use gaming as an gaming.
prefer gaming over other people at physical release. • I don’t need to be
going to the school or work. the first to try a
movies. new game.
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Source: US Gamer Segmentation Study
Segment Breakout
Percent of Past 6 Months
Percent of All Gamers
Dollars Spent
Core Gamers
Casual Gamers 40%
18% Casual Gamers
Core Gamers 8%
33%
Active Gamers Active Gamers
15% 15%
Socila gamers
Social Gamers Status Gamers Status Gamers
9%
17% 17% 28%
Avg $ spent
Core Gamers $208.50
Status Gamers $296.20
Social Gamers $98.50
Active Gamers $181.40
Casual Gamers $82.20
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Who are the
Next Gen
Owners
Next Gen system owners?
Age
Xbox 360
PS3 Own Wii Own PS2 Own PSP Own
Age Own
13-17 51.9% 35.3% 46.5% 52.4% 48.5%
18-24 15.4% 35.8% 26.0% 16.9% 25.2%
25-34 (NET) 18.7% 17.3% 15.8% 12.1% 15.7%
25-29 9.7% 16.5% 7.4% 9.5% 14.0%
30-34 9.0% 0.8% 8.4% 2.5% 1.7%
35+ (NET) 14.1% 11.6% 11.7% 18.6% 10.6%
35-39 2.5% 0.7% 3.3% 4.5% 2.7%
40-44 2.7% 0.0% 1.8% 1.5% 1.8%
45-49 4.0% 1.3% 2.7% 4.9% 2.7%
50 or older 5.0% 9.6% 3.9% 7.7% 3.4%
Mean 23.1 23.7 22.5 23.6 21.8
Median 16.9 20.5 18.8 16.8 18.4
Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07 8
Who are the
Next Gen
Owners
Next Gen system owners?
Race
Xbox 360
PS3 Own Wii Own PS2 Own PSP Own
Own
White 66.2% 75.8% 73.2% 80.6% 75.8%
Hispanic/Latino/Spanish 5.0% 5.4% 6.9% 6.5% 6.4%
Asian 9.0% 12.0% 8.0% 1.8% 3.3%
African-American/Black 6.6% 5.9% 7.0% 8.2% 9.2%
Some other heritage 0.6% 0.0% 0.6% 0.6% 1.0%
Decline 12.7% 0.8% 4.3% 2.4% 4.4%
Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07 9
What other systems
Next Gen
Owners
do they own?
Systems currently owned
Xbox 360
PS3 Own Wii Own PS2 Own PSP Own
Own
PC 68.0% 62.4% 71.6% 72.9% 62.4%
Sony Playstation 2 55.9% 47.5% 100.0% 81.7% 42.8%
Game Boy Advance 44.0% 45.0% 34.1% 41.2% 30.4%
Nintendo GameCube 26.1% 36.0% 26.2% 25.9% 27.9%
Microsoft Xbox 360 37.2% 38.8% 19.4% 27.0% 100.0%
Microsoft Xbox 27.5% 22.2% 24.2% 33.4% 40.3%
Game Boy Advance SP 18.9% 37.7% 23.4% 41.0% 20.5%
Playstation Portable/PSP (handheld) 18.1% 31.6% 22.3% 100.0% 18.9%
Sony Playstation 3 100.0% 30.2% 14.2% 17.9% 22.0%
Nintendo DS/Lite 17.4% 33.7% 16.0% 24.2% 15.0%
Nintendo Wii 21.8% 100.0% 8.8% 22.0% 17.0%
Other 8.7% 5.2% 11.5% 10.3% 6.6%
Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07 10
Next Gen
Owners
Primary Value Proposition for
Next Gen system
Xbox 360
PS3 Own Wii Own PS2 Own PSP Own
Own
Gaming system 53.9% 82.8% 62.4% 61.6% 63.8%
An entertainment system (all 3 combined) 45.4% 17.2% 33.8% 34.7% 36.2%
Movie system 0.6% 0.0% 3.7% 3.0% 0.0%
Music system 0.0% 0.0% 0.0% 0.6% 0.0%
Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07 11
How often do they game
Next Gen
Owners
with friends?
Percentage of time spent gaming with a friend
Xbox 360
PS3 Own Wii Own PS2 Own PSP Own
Own
0% 10.5% 11.0% 20.6% 19.5% 12.4%
ANY (NET) 89.5% 89.0% 79.4% 80.5% 87.6%
1-9% 0.0% 2.4% 4.3% 3.7% 1.0%
10-19% 14.0% 9.3% 12.6% 16.6% 8.2%
20-29% 16.6% 9.1% 21.9% 25.0% 14.1%
30-39% 7.4% 17.6% 5.9% 7.8% 7.9%
40-49% 8.3% 5.4% 5.5% 6.1% 10.4%
50-59% 20.3% 16.5% 10.9% 6.1% 20.9%
60-69% 2.8% 2.2% 5.5% 3.9% 3.6%
70-79% 7.4% 1.3% 3.8% 3.1% 4.4%
80-89% 6.1% 9.3% 3.7% 3.9% 7.3%
90-99% 5.1% 9.3% 3.9% 2.8% 5.1%
100% 1.5% 6.8% 1.4% 1.5% 4.6%
Mean 38.0% 44.0% 29.0% 27.0% 41.0%
Median 40.0% 40.0% 20.0% 20.0% 40.0%
Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07 12
What type of games do
Next Gen
Owners
Next Gen system owners play?
Genre of games played
Xbox 360
PS3 Own Wii Own PS2 Own PSP Own
Own
Sports 65.0% 65.6% 50.3% 52.7% 58.3%
Puzzle/Board 36.4% 34.3% 34.9% 38.0% 22.9%
Action adventure 55.2% 46.0% 50.5% 63.9% 49.3%
Driving/racing 60.4% 51.9% 44.9% 56.8% 42.5%
Action combat 53.5% 33.8% 44.3% 46.4% 50.0%
Fighting 41.9% 47.2% 42.2% 40.7% 41.0%
Fantasy/Role-playing 28.9% 41.6% 38.2% 28.7% 29.3%
First-Person Shooter 45.7% 35.1% 35.8% 35.6% 37.9%
Real-time Strategy 30.4% 34.6% 25.4% 28.5% 29.6%
Simulation/Building 26.1% 22.0% 22.7% 34.9% 17.6%
Mascot 22.0% 27.8% 22.7% 22.3% 19.4%
Music/Rhythm 26.7% 24.5% 20.2% 18.5% 16.5%
MMORPG 37.3% 19.1% 19.4% 17.4% 25.2%
Air combat 33.3% 15.8% 16.1% 12.6% 21.2%
Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07 13
Next Gen
Owners &
Shoppers
Why did/will Next Gen system
owners/shoppers buy their systems?
Primary factors that influence purchase of PS3
PS3 Own PS3 Plan
Appeal of leading edge technology 52.6% 63.9%
High definition images 59.0% 57.6%
Future potential of system 50.8% 48.7%
Realism of game play 41.0% 51.8%
Online game playing 33.3% 15.4%
Other 20.1% 10.4%
Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07 14
Next Gen
Owners &
Shoppers
Why did/will Next Gen system
owners/shoppers buy their systems?
Primary factors that influence purchase of Xbox 360
Xbox 360 Xbox 360
Own Plan
Appeal of leading edge technology 63.0% 47.8%
High definition images 45.5% 50.2%
Availability of games/titles 38.9% 52.6%
Realism of game play 42.4% 44.0%
Future potential of system 35.7% 49.2%
Online game playing 39.7% 22.8%
Price point 18.4% 27.5%
Other 4.0% 7.6%
Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07 15
Next Gen
Owners &
Shoppers
Why did/will Next Gen system
owners/shoppers buy their systems?
Primary factors that influence purchase of Wii
Wii Own Wii Plan
Physically interactive nature of system 66.5% 53.0%
Price point 58.4% 45.5%
Appeal of leading edge technology 44.6% 30.0%
Friendly/Accessible interface 42.1% 27.5%
Action-oriented games 34.6% 29.5%
Availability of family-oriented games 32.7% 29.1%
Other 5.0% 12.5%
Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07 16
What other systems
Next Gen
Shoppers
do they own?
Systems currently owned
Xbox 360
PS3 Plan Wii Plan PS2 Plan PSP Plan
Plan
PC 68.7% 60.2% 87.7% 68.1% 80.4%
Sony Playstation 2 88.8% 64.5% 50.3% 73.6% 63.2%
Game Boy Advance 28.4% 44.2% 38.0% 42.6% 31.2%
Nintendo GameCube 29.8% 44.8% 49.3% 28.5% 24.5%
Microsoft Xbox 360 18.5% 28.9% 24.0% 48.2% 15.4%
Microsoft Xbox 26.4% 37.1% 38.0% 35.1% 37.7%
Game Boy Advance SP 27.1% 29.1% 38.0% 27.5% 28.6%
Playstation Portable/PSP (handheld) 27.9% 18.6% 32.9% 47.9% 11.2%
Sony Playstation 3 10.1% 17.0% 24.0% 31.2% 24.4%
Nintendo DS/Lite 13.6% 23.1% 15.1% 18.5% 16.8%
Nintendo Wii 9.7% 7.1% 15.1% 18.0% 12.9%
Other 12.8% 16.0% 0.0% 10.3% 19.9%
Source: 2007 U.S. Gamer Segmentation Study, Boston Research, 3/07 17
Strategies: PS3 vs. Wii
The dynamics of this console generation are very different from those of past
cycles because Microsoft, Sony, and Nintendo have clearly differentiated
hardware and strategies.
PS3 and Wii are polar opposites
PS3 built for the long term, targeted at hardcore enthusiast gamer and future proofed
with high-performance specifications.
PS3 designed for the gamer, but delivers ahead of the curve to early adopters
Despite the PS3’s high retail price, but the hard core gamers who will purchase the
console first are not price sensitive.
For the early adopter, the price is a bargain
Wii is targeting a new audience while maintaining the fan base
Wii’s technology less impressive
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Source: IDC Research Worldwide Videogame Console Hardware 2007-2011 Forecast, 2/07
Next-Gen Console Forecast
2005 - 2011
Of the three consoles, the Wii is in the best position for the front half of
this hardware cycle
Nintendo appeals to a broader market as well as its fans at launch
Sony and Microsoft must target their established fan bases for the quick
ramp-up
Xbox 360 has the potential to increase market share by continuing to
publish first-party software and promote online experience
In late 2008 and 2009, Wii and Xbox 360 will approach peak shipments
Their new next-gen console announcements in 2010, release date 2011
PS3 will have a longer life cycle, shipments peaking in 2011
PS3 could surpass Wii and Xbox 360 in 2012
Sony’s best replacement strategy for the PS4, announce it in 2011, launch in
2013
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Source: IDC Research Worldwide Videogame Console Hardware 2007-2011 Forecast, 2/07
Handheld Games Forecast
Handheld games continue to diversify the games industry
Sony’s PSP is the first non-Nintendo handheld to achieve a respectable
installed base
Sony has expanded the market by bringing its core 18 – 34 yr old male
demographic to handheld gaming
PSP may now be competing with the PS2 for time share among the same
demographic
PSP’s multimedia functionality is a draw, but also a time-share issue
DS is cutting a wider demographic, skewing more female than previous
handhelds
DS Lite is a fashion accessory with its iPod-style makeover
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Source: IDC Research Worldwide Videogame Console Hardware 2007-2011 Forecast, 2/07
Videogame Software
Shipments by Platform, 2005 - 2011
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Source: IDC Research Worldwide Videogame Console Hardware 2007-2011 Forecast, 2/07
Industry Revenue Projections
• Videogame hardware and software revenue to grow 31.4% to a
total of $38.85 billion in 2007
• Factors contributing to growth:
• Wii’s penetration into markets beyond the traditional
hardcore and enthusiast gamers
• Increasing the total accessible industry market
• Uptake of PS3
• Further penetration of the Xbox 360
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Source: IDC Research Worldwide Videogame Console Hardware 2007-2011 Forecast, 2/07
Conclusions
Wii will remain strong through this cycle due to:
Increasing consumption by hardcore and enthusiast gamers
Nintendo’s console and handheld success in growing the total accessible
market with lapsed and new gamers
Manufacturers’ efforts to expand into markets outside North America and
Japan
Multiplatform titles should be developed as discretely as possible to take
advantage of the differences in control, processing performance and user
preferences specific to each console.
Stronger performance by the DS in the handheld sector due to lower
development costs and the large installed base including new gamers.
Xbox Live remains the best user experience for online consoles.
Sony must quickly deliver titles that prove the PS3 is an evolutionary step
forward not available on competing platforms.
Like Nintendo and Microsoft, Sony’s first party titles are likely the only console
exclusives that will serve to differentiate the platform
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Source: IDC Research Worldwide Videogame Console Hardware 2007-2011 Forecast, 2/07
Looking Ahead
• There will be a decrease in high end titles targeted at the hardcore
market due to the rising costs of development and evolving publisher
strategy backing mass market titles with relatively lower development
costs. The result will be a positive for hardcore gamers: there will be
fewer mediocre hardcore titles and better differentiation.
• Publishers with the foresight to invest in developing core and
enthusiast titles for the PS3 and the Xbox 360 will reap high returns
in the midterm as the installed bases for these consoles build to
double-digit regional penetration.
• Online features and, preferably, business models for console titles
should be addressed in the initial design and development phase.
Aftermarket paid downloadable content, subscription and advertising
fees should be designed to maximize profit per title and to lengthen
titles' lifecycles.
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