Games console sales in downward spiral

Video game console sales for 2003 will drop dramatically despite the games market enjoying more success last year than US box office receipts, market researchers have warned.

In-Stat/MDR predicts that the industry is entering the downward spiral of a cyclical trend which will see 2003 shipments and revenues fall from 2002 levels.

Worldwide console shipments in 2003 will drop by more than two million units from those in 2002, with lower numbers of PlayStation 2 (PS2) and PSOne console shipments being primarily responsible for the drop-off, the analyst said.

Both Nintendo GameCube and Microsoft Xbox shipments are expected to increase in 2003, but not enough to offset the reduced Sony shipments.

Console revenues are expected to fall as well - by nearly $2bn - with both price cutting and lower shipment numbers responsible for the drop.

In-Stat/MDR senior analyst Brian O'Rourke said: "We expect all three competitors to release their next-generation consoles in the second half of 2005 when this market will trend upward again, with revenue levels reaching those of 2002 in about 2006."

Sony shipped its 60 millionth PS2 console in September, a number the analyst does not expect the Microsoft Xbox and Nintendo GameCube to reach.

Over the past year, Microsoft has successfully established the Xbox as the number two console worldwide, surpassing the Nintendo GameCube.