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THE MARKET: Factors to Market Growth: Violence, Regulation, and Ratings (2/2); Projected Market Growth: Market to Reach $10.5 Billion by 2002, Video Game Category to Peak at $6.3 Billion in 2000
Video Games and PC Entertainment Software, The Market For (1998) (List all pages of this report), June, 1998
Publisher: Packaged Facts, Telephone: US (800) 346-3787; Other (212) 807-2657

In the overall picture, Packaged Facts does not believe that
government regulation will be a serious hindrance to market growth,
although such controls--along with the strong support of parents--
would certainly affect the content of game software. More important
in content development over the long run will be the industry's
ability to attract a more diverse consumer base, which Packaged Facts
expects will lead to a diminished focus on violent content, though
certainly not eliminate it. Perhaps even more significant for the
industry, a rating system (or systems) by which marketers,
distributors, and retailers abide--and which is understood by parents-
-could go a long way toward encouraging sales and broadening the
market. While certainly not eliminating opposition to the extreme
level of violence found in games like Mortal Kombat (which some
consumer advocacy groups feel should be withdrawn from the market
altogether), rating systems might act to give the industry an aura of
social responsibility and acceptability that would appeal to parents
and thus help to expand the market's boundaries.

Projected Market Growth

Market to Reach $10.5 Billion by 2002

Based on the factors discussed above, Packaged Facts expects the
overall market for video game hardware and software and PC
entertainment software to grow from $7.2 billion in 1997 to $10.5
billion in 2002, representing a compound annual growth rate of
approximately 8% over the trend period. (Table 3-11; Figure 3-4)

Video Game Category to Peak at $6.3 Billion in 2000

A comparison of movie box-office receipts and video game software
sales points to the "mainstreaming" of gaming as a leisure pursuit.
Moreover, the introduction of next-generation hardware and software
will help spur the essentially mature video game category through the
turn of the century. The longer-term prospects are superior for PC-
based entertainment software, however, a competitive factor that
Package Facts expects to stifle video game growth by the latter half
of the 1997-2002 trend period.

Driven by these factors, the video game category is forecast to peak
at $6.3 billion in 2000, dipping back below $6.0 billion by 2002.
Annual sales growth is projected to decline from 10% in 1998 to 4% in
1999, with the category then reaching a stagnation stage. (Table 3-
11)

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