NPD REPORTS U.S. VIDEO GAME INDUSTRY SALES DECLINE FOR THE YEAR 2000

PORT WASHINGTON, NY, January 17, 2001 – Retail sales of U.S. video games hardware, software and accessory sales fell declined 5% in 2000 compared to 1999, according to leading marketing information provider, The NPD Group, Inc. Video game Annual 2000sales totalled $6.5 billion in 2000sales for total U.S video game market that includes console and portable hardware, software, and accessories vs. an all-time high of $6.9 billion in 1999.

While dollar sales were down, unit sales were up slightly. According to NPD, unit sales rose 1% to 191.4 million in 2000, compared to 188.6 million in 1999.

Video game console hardware and software dollar sales were down 20% and 4% respectively. However, the portable category showed significant growth in 2000. Portable software sales rose 26% in dollar terms and 28% in unit terms. Another strong performer was the portable accessories category. This category was up 56% in dollars and 76% in units compared to last year. The continued growth of the portable category was driven in part by the popularity of the Pokemon games. Pokemon’s impact is illustrated by the fact that four out of the ten top-selling video game titles for the year were Pokemon Game Boy and Game Boy Color titles.

Video game software accounted for more than 63% of the industry’s units and dollars in 2000. The decline in software sales contributed to the year’s moderate decline. At the same time, quality licenses and strong gaming content fueled extraordinary sales for products that featured Pokemon, Tony Hawk, WWF, Zelda, Grand Turismo and NFL properties.

NPD Interactive Entertainment Account Manager Richard Ow noted that, "The video game industry experienced a decline in overall dollar sales of five percent, but this was to be expected, as the video game industry was going through a ‘transitional’ period. The bear stock market and low consumer confidence also contributed to a slow year in overall retail sales. The Sony PlayStation and Nintendo 64 systems are entering their sixth and fifth years, respectively, in the U.S. market. While both systems may have already reached their peak in hardware sales, their software continues to sell."

According to NPD TRSTS Video Game Service, the video game industry did gain a mere 1% in unit terms due to declining average retail prices of well-established consoles, such as Sega Dreamcast, Nintendo 64, Sony PlayStation, and Nintendo Game Boy Color. Year 2000 sold 191.4 million units in video game hardware, software, and accessories, compared to 188.6 million units sold in 1999.

Ow continued to comment that, "Lower price points for these systems across all categories affected the overall dollar growth. Sega’s Dreamcast and Sony’s new PlayStation 2 represent the beginning of a new generation of console systems that will continue to build their market share in 2001. Microsoft’s X-Box, Nintendo’s Game Cube, and new portable Game Boy Advance will all be making a debut this year. With each system sporting its own uniquely powerful gaming and entertainment qualities, the transition from the 32/64 bit generation into the next generation of gaming will mark the beginning of an exciting new video game cycle."

Sales of the total U.S. interactive entertainment market, which includes PC entertainment and video game software, were flat at $5.7 billion for both 2000 and 1999. Interactive entertainment software unit sales were up 5% for the year, totalling 200.5 million units vs. 191.8 million units for the prior year. PC entertainment software performed well in 2000, with an 8% unit growth over 1999.