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  Game On
  The business of making video games is about to become even bigger business.
  By Andrew C. Schneider, Associate Editor, The Kiplinger Letter
  July 12, 2007
                                                                               Text Size T     T

  U.S. video game makers are fighting back to win market share
                                                                                  Comments
  from foreign competitors who have a strong head start in the sizzling
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  hot segment of Internet games for wireless devices. The stakes are
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  impressive: Wireless games played on mobile devices will be the the
  fastest-growing segments of the the U.S. video game market over the             Print This Article

  next few years, second only to Web-based games played on a game                 Order a Reprint
  console or PC.                                                                 ADVERTISEMENT
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  Coming up strong are EA Mobile, a division of Electronic Arts, the top      Insurance
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  U.S. game publisher of hit games which include Madden NFL, The              compromising coverage.
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  Sims and Need for Speed. Also, Glu Mobile, based in San Mateo,               more

  Calif. Last month, the six-year old firm unveiled a Transformers game
  to tie in with the summer blockbuster film. And San Francisco-based
  Greystripe, which sponsors a Web site, Gamejump.com, that allows
  users to download games from 40 different developers for free. The site is supported by
  advertising that runs on players' cell phones at the start of downloaded games.

  But foreign competition is formidable. Early adoption of third-generation phone networks in
  Europe and Asia, which let gamers using handsets download better graphics, has long

                               spurred local game production -- and sales. U.S. firms are now
                               trying to outmuscle established foreign players in the wireless
                               game industry. These firms include Japan's G-mode, South
                               Korea's Com2uS and Entaz, China's Shanda Interactive
                               Entertainment and France's Vivendi Games Mobile.

                               In the U.S. alone, sales of wireless game subscriptions will
                               balloon nearly 70% to $1 billion in 2011 -- 8% of the total game
                               market -- compared with $600 million this year, or 6%, according
                               to PricewaterhouseCoopers.

  In Europe and Asia, wireless game subscriptions will expand at a similarly rapid pace --
  jumping to $3.1 billion in 2011 from $1.9 billion in 2007 for the collective Europe, Middle East
  and Africa region (with the bulk concentrated in Western Europe) and to $4.4 billion in 2011
  from $2.5 billion in 2007 for the Asia Pacific region (chiefly Japan, South Korea, China and
  Australia).

  As in other segments of the entertainment industry, traditionally distributed video games will
 lose out to online and wireless competition. Growth in the industry-leading segment of
 console and handheld games will slow dramatically. U.S. sales will increase to $7.9 billion in
 2011 from $7.4 billion this year -- a 6.8% increase, compared to a 68% growth for wireless
 game subscriptions in the same timeframe. Sales of PC-based games are expected to peak
 worldwide this year. U.S. sales will drop to $840 million in 2011, down from $1 billion this
 year. European, Mideastern and African sales will shrink to $1.4 billion in 2011 from $1.5
 billion this year, while Asia Pacific sales will contract to less than $1.3 billion in 2011 from
 $1.4 billion this year.

 For weekly updates on topics to improve your business decisionmaking, click here.


  If you liked this article, check out The Kiplinger Letter for accurate forecasts on what's ahead for
  business, the economy and your investments — and how you can profit.



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