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By the Numbers: Video Games, DVD erosion and Smartphones

stats imageAre video games the MTV of a new generation? Are DVD’s really on the road to becoming obsolete? Are smartphones being accepted as fast as the hype suggests?   New research from NPD Group and the Pew Foundation sheds a little light on each of these questions.   This edition of the Metue “By the Numbers Report” recaps some of their findings

Video Games and Kids
It’s no shocker to hear kids like video games and play them often but detailed information about what they play, the social context and parental involvement have been studied less often.  The Pew Internet and American Life Project, with sponsorship from the MacArthur foundation took a deeper look in a new report called “Teens, Video Games and Civics.”  Today, they  released a 76 page report showing their results.

Among their findings:
•97% of teens ages 12-17 play computer, web, portable, or console games.
•86% of teens play on a console like the Xbox, PlayStation, or Wii.
•60% use a portable gaming device like a Sony PlayStation Portable, a Nintendo DS.
•48% use a cell phone or handheld organizer to play games.
•By gender: 99% of boys and 94% of girls play video games.

With regard to specific genre’s of game’s played, or exact titles favored, the survey found:

Genre of Games Played by Percentage of Survey Respondents

Racing (NASCAR, Mario Kart, Burnout)


Puzzle (Bejeweled, Tetris, Solitaire)


Sports (Madden, FIFA, Tony Hawk)


Action (Grand Theft Auto, Devil May Cry, Ratchet and Clank)


Adventure (Legend of Zelda, Tomb Raider)


Rhythm (Guitar Hero, Dance Dance Revolution, Lumines)


Strategy (Civilization IV, StarCraft, Command and Conquer)


Simulation (The Sims, Rollercoaster Tycoon, Ace Combat)


Fighting (Tekken, Super Smash Bros., Mortal Kombat)


First-Person Shooters (Halo, Counter-Strike, Half-Life)


Role-Playing (Final Fantasy, Blue Dragon, Knights of the Old Republic)


Survival Horror (Resident Evil, Silent Hill, Condemned)


MMOGs (World of Warcraft)


Virtual Worlds (Second Life, Gaia, Habbo Hotel)


  Source: Pew


The games most favored:

10 Most Frequently Played Games

Survey Question: What are your current top three favorite games?

Game Title

Number of mentions

Guitar Hero


Halo 3


Madden NFL (no specific version)




Dance Dance Revolution


Madden NFL 08




Grand Theft Auto (no specific version)


Halo (no specific version)


The Sims (no specific version)



Other findings from the survey:

•65% of game-playing teens play with other people who are in the room with them.

•27% play games with people who they connect with through the internet.

•32% of gaming teens report that at least one of their three favorite games is rated Mature or Adults Only.

The report also goes on to take a deeper look at how the same game playing kids participate in politics and civic activities in order to try and draw behavioral correlations. (A full copy of the report is publicly available here)

The Coming DVD Decline?
Many expect the online distribution of video content, coupled with increased entertainment options for consumers, will eventually erode the DVD market.  They look at the music industry and the decline of CD’s as an evidentiary example.  There is certainly a lot of hype about the prospect – services like Amazon on Demand, iTunes, Netflix Watch Now along with offerings from Microsoft (Xbox Live), Hulu and others are helping to fuel it.  But will DVDs, and their newest HD generation (Blu Ray), actually follow the same path as CD’s and moreover, are they on the precipice before the decline?

It’s a tea-leaf reading game but the safe money bet says yes.  Eventually, DVD’s will disappear. The bigger question is when – five years, ten, fifteen?  And where are we in the cycle?

In the recently released “Entertainment Trends in America” report, market research firm NPD looks at, among other things, just these questions.  Some of the findings appear to confirm what many insiders have presumed – were in the beginning stages of a transition.  It also says digital downloading isn’t the cause of flat DVD sales today.  (NPD titled their press release: DVD Sales Flattening, But Don’t Blame Digital Downloads).

The findings: when asked how they watched a movie over the prior three months, the majority of respondents (67%) said they watched a DVD they owned themselves.   50% watched a rented DVD.  18% tried a video on demand service.  Only 2% of the survey pool said they paid for a digital video download from the web.  6% downloaded a movie from a file sharing service and just 8% watched a full length movie on a portable device.

Of money spent, 41% of movie budgets were spent on DVD purchases and 29% on DVD rentals. 18% was spent on movie tickets.  Only .5 percent was spent on digital formats distributed over the Internet (rentals and purchases). $8 out of every $10 spent on movies went to DVDs.

The information is telling but just as much so may be another statistic: 52% of respondents reported visiting Internet video sites too. 

Taken as a whole, the implication seems to be – consumers are aware and curious about web video services but not yet ready for a transition.  That may well be because the hardware marketplace doesn’t yet offer many easy, mainstream accessible solutions for bridging Internet distributed content to the TV and home entertainment center.  That hurdle will probably need to be overcome before broader change happens.

The Rise of the Smartphone?
Overall mobile handset sales haven’t been growing but the smartphone subsegment is different. NPD took a look at the specifics and reported results that suggest the hype around devices like the iPhone, RIM’s Blackberries and potentially, upcoming Android based phones, is more than just idle talk.

According to NPD, between January and July of this year, U.S. consumers bought  9 million units, an 84% year over year increase.  Revenues from smartphone sales reached almost $1.7b, a 71% y/y increase.

For the January to July period, smartphone sales accounted for 19 percent of U.S. handset sales versus 9% for the same period last year.

Broken out by sales ranking, RIM was the top vendor for the seven month period.  Apple finished second, Palm third, followed by Samsung and then Motorola. (Note:these are U.S. sales, not global).

Note: In looking at the NPD numbers, its important to keep in mind they cover a seven month period. On a smaller time basis, smartphone sales performances may show different trends. In fact, the same day as the NPD report, research firm Gartner released their own look. One of their findings, second quarter sales rates were off dramatically compared to Q1 globally. The bright spot, however, was the U.S. market. Gartner found "On a regional level, the North American market remained among the fastest-growing markets in the second quarter of 2008 with an increase of 78.7 per cent year over year. The region also accounted for almost 25 per cent of the global smartphone sales to end users. "

By units, Gartner’s global findings showed Nokia well ahead of the pack for Q2 sales with more than 15.3m unit sales. Research in Motion was second with 5.6m units. Apple did not make the global top 5 for Q2. The rest of the top 5 was HTC, Sharp and then Fujitsu.

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