Screen Digest 2000

In the most extensive survey ever of the UK and European leisure software market, the new Screen Digest Report (Interactive Leisure Software Market Assessment and Forecasts 1999 -2003) records 1999 as another record year for UK sales of leisure software and associated hardware. Total spending on hardware and software in the UK reached almost £1.4 billion, 10 per cent up on 1998. The report commissioned by the European Leisure Software Publishers Association (ELSPA) and incorporating exclusive financial information provided by ELSPA members, reveals the UK industry at the top of the European league. In terms of leisure software only, sales of $1.6 billion in the UK place it significantly ahead of the second placed German market, which nets just over $1 billion.

The European leisure software market, which Screen Digest estimates to be worth $5.5 billion, is now on a par with the US market, with the Japanese market in third place at $3.5 billion. The UK is the third largest individual country market after the US and Japan. The global market is estimated at nearly $17 billion.

Another first for 1999, is the fact that consumer spending on leisure software has overtaken the video retail market despite the latter receiving a boost from the new DVD video technology. In terms of consumer spending, leisure software is now firmly established as the leader in the on-screen entertainment market, more than double the size of the video rental market and 1.7 times more than cinema box office spending.

Economic Contribution – Without Government Financial Subsidies
One of the key facts to emerge from the report is the positive impact of UK leisure software products on the country’s economy and creative reputation. British developed games generated an export value of £503m in 1998, up nearly 11 per cent from 1997 and exceeding export sums from either British film or TV. The leisure software sector recorded a positive balance of trade in 1998 of £218m compared to a total net trade deficit of £195m recorded by the film and TV industries combined.

The report notes that in 1999, investment in the development of new games was up by 36.5 per cent to £330m, which is almost half the total invested in UK film production (although film production benefits from extensive tax and support measures that are not available to the games industry).
Commenting on these points, Roger Bennett, Director General of ELSPA said:

“The emergence of the UK computer and video games industry as a global force has been achieved without the financial assistance, tax breaks and other support measures that film and other cultural industries receive from the government. This is not to decry the government’s support for other entertainment sectors but it does make the games industry’s achievements all the more notable”.

Creative Reputation
The UK dominates the rest of Europe in terms of the creativity of the output from the 6000 people who work in the 250 British development studios. In 1998, Goldeneye 007, developed by Rare, was the third biggest selling console game in the US. Four of the top ten French games were British and three of the top six PC games in Germany were developed in the UK. In the UK itself, five of the top 10 overall best sellers and all of the top four PC titles in 1998 were UK developed. British games accounted for 12 per cent of the “hard to crack” US market, 30 per cent of the French market and over 20 per cent of the German market. The ubiquitous Lara Croft, star of the Tomb Raider series is now recognised as a global icon and an official “Cultural Ambassador” for the UK.

Other facts highlighted in the report are:

Sales of Software – Impact of Price Pressure
35 million units of leisure software were estimated to be sold to UK consumers in 1999, a 27 per cent increase on 1998. Expressed in volume terms, the market growth rate is higher than the value equivalent which shows a 19 per cent increase on 1998 revenues, due to the steadily increasing pressure on software prices.

Console Penetration
Just short of 2 million games consoles (e.g. PlayStation, N64, Saturn and Dreamcast) were purchased in the UK in 1999, just short of the 1998 high of 2.4m units. This means a total of 7.3m UK homes (circa 31 per cent of the market) contain an advanced games console. Just four years ago the level of penetration of consoles was 0.7 per cent of UK households.

The level of 1999 sales is much higher than previously predicted and is despite the fact that the current generation of consoles, led by Sony PlayStation, is now into its fifth year. The impact of the new generation of consoles, launched at the end of 1999 via Sega’s Dreamcast, will really be felt this year along with Sony’s PlayStation II, Nintendo’s Dolphin and probably Microsoft’s’ X-Box.

Future Outlook
The report predicts that the UK leisure software market will dip this year and will level off in Europe but will recover quickly as it enters the fastest growth phase ever to reach new heights by 2003.

Screen Digest identify a number of radical changes and challenges which will impact on the market this year including:
· on-line gaming, with associated new business models
· e-commerce as a challenge to traditional “bricks and mortar” games retailing
· digital distribution
· new forms of copyright piracy.

The full report Interactive Leisure Software: Market Assessment And Forecasts 1999-2003 costs £695. It is available to ELSPA members at £180. Orders can be made via the Screen Digest website at www.screendigest.com. Queries should be addressed to sales@screendigest.com.