Video game industry grows at 35 per cent: report

MUMBAI: The global video game industry had a 35 per cent aggregate revenue growth for the past fiscal year. It also had an aggregate operating income in 2002 of 11.5 per cent of revenue compared with an aggregate loss in 2001.

In its latest report research company Research and Markets however noted that these gains have not translated into stock price increases. The company estimated that the average video game company's stock was down 51 per cent from January 2000 to January 2003.

The report is titled Market Leaders in the Video Game and Interactive Entertainment Industry. The company went on to note that there was a significant difference in the prospects of companies in the interactive entertainment industry. The report divides the companies into four categories.

The first category consists of the four market leaders: Electronic Arts, Microsoft, Nintendo and Sony. These are the dominant companies in the industry.

The report noted that in the past five years, Sony had emerged as the leading force in the video game industry. From fiscal 1995 to fiscal 2002, Sony reported $36 billion in revenue from video games, compared with $32 billion for Nintendo. On the other hand, Nintendo has reported significantly higher operating income.

Nevertheless, the momentum is clearly on Sony's side. Nintendo has been consistently profitable, but their revenue has not significantly grown in the past ten years.

The report also examined the performance of European companies that have grown rapidly through expansion. They are Eidos Interactive, Infogrames, Ubi Soft and Vivendi Universal Games. These companies have large product lines but face the challenge of absorbing acquisitions, managing debt and building up a solid marketing infrastructure outside Europe.

The report also stated that Japanese-based companies Capcom, Konami, Namco and Sega are faced with the problems of a declining arcade business and a slow Japanese economy. Their biggest challenge will be expanding on an international basis.

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