Analyst: '08 game sales to hit $10 billion

Janco Partners prognosticator expects software for Sony's console to double year-over-year and then some; Wii and PSP to expand at half the rate.

In 2007, US retailers racked up $8.64 billion worth of game software sales, according to the industry-tracking NPD Group. That's a 34 percent growth spurt over the year before, and one analyst expects 2008 will bring more of the same.

In a note to investors this morning, Janco Partners analyst Mike Hickey detailed his US retail games sales expectations for 2008. Hickey projected 20 percent game sales growth for 2008, putting the total US software market at a record high of $10.34 billion.

Hickey broke the numbers down by platform, predicting that Sony's PlayStation 3 would see the biggest growth of the year, more than doubling the system's 2007 take to finish with $1.66 billion in game sales, up more than 121 percent in all. The PlayStation Portable and Wii were next in line for software sales growth, with Hickey expecting $757 million in PSP games (up 51 percent) and $2.13 billion in Wii sales (up 46 percent).

Although the Xbox 360's game sales are projected to grow the least of the current generation of consoles (up less than 20 percent), Hickey expects Microsoft's latest to win in sheer revenue, with a projected $2.87 billion. By the same token, the Nintendo DS is expected to see a relatively tepid 8 percent growth rate to $1.3 billion, but Hickey expects consumers to purchase 49.5 million DS games this year, more than any other system.

One argument Hickey made for the software growth is that many gamers won't have new hardware to buy this year. For example, he notes that a gamer who purchased an Xbox 360, a spare controller, and four games with an annual budget of $640 in 2007 could skip the hardware and accessory purchases and instead spend $600 on 10 Xbox 360 games in 2008.

That wasn't the only projection Hickey included in his note. He also supposed a "Software Sales Gone Wild" scenario. If 2007 tie ratios (the number of games sold per console) were to stay constant through 2008, and Hickey's projected hardware sales for the current year were accurate, the gaming industry could see explosive software growth of up to 60 percent, or $13.72 billion. Though Hickey says the hypothetical results are interesting and worth considering, he warns specifically that they don't necessarily "reflect a realistic growth opportunity."

27 Comments

  • d3f1anc3

    Posted Feb 7, 2008 2:26 am GMT

    I'm still not buying a PS3 until they release a version @ a $300 price point with backwards compatability. Paying more then $400 for a console is absurd.

  • lamprey263

    Posted Feb 6, 2008 2:50 pm GMT

    I think if Sony wants to keep bringing in money, they need to keep the PS2 games on store shelves, and they'll need full BC with their PS3s so they can keep selling from their large and plentiful library of awesome PS2 games while developers and publishers work on building up the PS3 library.

  • darkride66

    Posted Feb 6, 2008 2:06 pm GMT

    hstolar mentioned "Analayst have been saying the PS3 was to dominate from day one." That's funny. I don't remember one analyst saying that. I remember lots of "slow starts till the price comes down" and a couple of "ultimate winner but not on a PS2 kind of level," but I don't recall anyone saying the PS3 would dominate. I think you may be confused between actual analysts and raving fanboys/raving fanboys sites.

  • hstolar

    Posted Feb 6, 2008 11:34 am GMT

    Analayst have been saying the PS3 was to dominate from day one .... well it hasn't dominated anything yet . All I can say is wishfull thinking .

  • darkride66

    Posted Feb 6, 2008 9:38 am GMT

    It sounds like I've been saying for the past 6 months. The rumors of the PS3's demise are greatly exaggerated. Add to this EA announcing that in the next 2 months they'll be switching over to the PS3 as lead development platform, something else I predicited as the PS3 increases it's base. Having now erased the 360's year and a half lead everywhere but North America it looks like it's full speed ahead for the PS3 this year. My other main prediction is that this year we should start hearing about specs for the new 360 for release in possibly late 2009, early 2010. I feel that MS and developers have realized just how major a handicap having no standard hard drive is to the 360, and the 360's days are numbered. I like the 360, but I've always felt MS didn't do themselves any favors in the long run by rushing it to market.

  • ZabuzaR

    Posted Feb 6, 2008 9:36 am GMT

    Sony striking back... This is going to be interesting.

  • carljohnson3456

    Posted Feb 6, 2008 6:51 am GMT

    Good to hear. Glad the PS3 bash party everyone was throwing is finally over.

  • Rect_Pola

    Posted Feb 6, 2008 6:12 am GMT

    Sounds about right. PS3 is finally at a point people are willing to buy them. All the other systems are saturated enough to trade hardware sales dollars to software. Once that point is reached the concept of "who's winning" gets harder to measure.

  • MJ-X

    Posted Feb 6, 2008 5:37 am GMT

    PS3 RUUUUULZ

  • HXCDEW

    Posted Feb 6, 2008 4:14 am GMT

    Hahaha even the analysts now agree this is PS3's year. It's time for Sony to strike back!

    "I think Sony will make great strides in . Killzone 2, Metal Gear Solid 4, LittleBigPlanet, Final Fantasy XIII, and a number of other titles will help stimulate sales. Additionally, a number of peripherals such as the PlayStation Eye and its associated titles will give the console a boost. I am also running into people who have purchased the PS3 for its Blu-ray player -- with gaming as a secondary motivation -- and that's another element to consider." -- Ted Pollak

    "is definitely Sony's year. And I'd throw Grand Theft Auto IV into the mix, given that it's considered a PS2 owner's [franchise]. Also, Gran Turismo 5: Prologue should sell some consoles...." -- Michael Pachter

    In a couple of years, PS3 will climb to the top in its rightful position!

  • jacob-goodlich

    Posted Feb 6, 2008 2:44 am GMT

    this makes me love my ps3 more too, soooo much potential!

  • Chief_Kuuni

    Posted Feb 6, 2008 2:17 am GMT

    not bad at all, big #'s

  • lanista

    Posted Feb 6, 2008 1:18 am GMT

    "artson1966 lanista God your bias is so blatant its pitiful, So you me to tell me that the 10 million Ps3's sold to date where all purchased just as cheap blue ray players? Give us a break all this from one little boys comment to his mother. I suppose this means that that the game world will stop making games now? because ps3 owners wont play them because they have to many movies to watch. Good grief Try to use the common sense that the good lord gave you."

    Wow. You obviously didn't read my post carefully.
    1. I'm not biased. I own all last gen consoles and have yet to choose the next. Might be a PS3.
    2. I didn't say that all the 10m PS3s sold to date, I said many are being bought as BluRay players. That entirely fits with Sony's published strategic statement for this product. It is no longer a console, but then neither is the X360.
    3. The observation about the boy was an example to show that this is happening in the real world.
    4. No, the game world will continue to create games. My concern is that an analyst can make wild predictions for growth. If it's based on predicted hardware sales growth then it doesn't appear that he's taken into account the BluRay factor. As HDDVD is an option for X360 then assuming sales of it are to gamers is more reliable. The published attach rates also say something here.

    The PS3 is not the PS2. It's marketed as a different kind of product. I'll repeat my summation in my last post

    "However I'm not sure they'll succeed as wildly as predicted as far as games sales go...."

    Note this is my opinion, I've said I'm not sure. I may be wrong.

    I'll ignore your last insult. But if you have an argument to make, please state it along with your reasons and quit complaining about me giving my observations and/or comments on the topic.

  • CasinoOutlaw247

    Posted Feb 5, 2008 6:13 pm GMT

    my income might as well be a direct deposit to the video game industry. But, who cares as long as quality product keeps hitting the shelves.

  • Homerj

    Posted Feb 5, 2008 3:57 pm GMT

    The analysis is a little on the rosy side for the PS3....I doubt that its software attach is going to jump from 20% to 40% overnight (perhaps another analyst trying a little too hard to say "I wasnt wrong about the PS3, I wasnt I wasnt I wasnt). Otherwise...the numbers seem reasonable. 360 software attach rates are pretty much at saturation, so growth in that area will be mostly due to additional consoles being added to the install base (the 4 million or so in the projection seems probably pretty close). Even if you take these numbers as gospel, not exactly all good for Sony, with software sales only running at 40% of the 360 software sales....not going to do much to stem the bleeding of defecting third party devs.

  • artson1966

    Posted Feb 5, 2008 3:43 pm GMT

    lanista God your bias is so blatant its pitiful, So you me to tell me that the 10 million Ps3's sold to date where all purchased just as cheap blue ray players? Give us a break all this from one little boys comment to his mother. I suppose this means that that the game world will stop making games now? because ps3 owners wont play them because they have to many movies to watch. Good grief Try to use the common sense that the good lord gave you.

  • lamprey263

    Posted Feb 5, 2008 3:32 pm GMT

    Well, I know I'll buy games for all 3, but I'm leaning toward the X360 when it comes to buying multiplatform titles. I just have the Wii and PS3 for the exclusives.

  • nintendokid

    Posted Feb 5, 2008 3:22 pm GMT

    Yeah. You NEED people to tell you that you should love your system because in reality, you wanna beat it, pour scalding hot water over it, push it down the stair case, and pour Pine Sol in the breakfast that you cooked for it.

  • Haku_Ryushi

    Posted Feb 5, 2008 3:19 pm GMT

    This makes me love my PS3 even more

  • gnbfd

    Posted Feb 5, 2008 3:10 pm GMT

    SSBB+GTA4+MGS4+Wii Fit=$$$$$$$$$$$$$$$$$$$

  • thewiseplayer

    Posted Feb 5, 2008 3:10 pm GMT

    wooooo more ps3 in da peoples house even my cousin bought one wooohooooo.@all the ps3 doubters, if you want a reaason why th ps3 sale is going to grow then here it is...
    home
    resistance 2
    motorstorm 2
    little big planet
    haze
    gta4
    mgs4
    dmc4
    (and more on the way)

  • lanista

    Posted Feb 5, 2008 2:53 pm GMT

    I somehow doubt the expected growth this guy sees in the PS3

    As an example, I was at a major UK retail outlet a couple of weeks ago

    There was a boy, moaning at his mom about how his dad should have bought a 360

    His mom told him to be quiet as his dad chose the PS3 to watch movies

    So there it is. Many sales are going to people who want the PS3 as a cheap BluRay player

    That does NOT mean it'll succeed as a games console, and to be fair to Sony they've never billed it as a console - only as a MultiMedia Center

    So that entirely fits

    However I'm not sure they'll succeed as wildly as predicted as far as games sales go....

  • sterofuse

    Posted Feb 5, 2008 2:49 pm GMT

    I just got my 360. Now I need a ps3 and Wii. And a lot more games. The industry take a lot of money from me this year. But I love it!

  • Rizer

    Posted Feb 5, 2008 2:45 pm GMT

    Man, every time I look at one of these reports, it reminds me just how crazy popular video games have gotten and how quickly the industry continues to gain more ground on other media forms.

  • Sydwynder

    Posted Feb 5, 2008 2:33 pm GMT

    That's some big numbers. I myself have a huge catalogue of 360 and DS games, more so than I have in past generations...................man I love my 360!!!!

  • Beaglesniffer

    Posted Feb 5, 2008 2:26 pm GMT

    wow anywho i got all the stuff i need for my xbox so 08 will just be buying games like it says

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