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Friday, February 18, 2011
 U.S. Video Game Buyers Shifting Entertainment Budgets
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Message Text: Recent economic conditions have encouraged American consumers to spend carefully across entertainment categories, and gaming has been no exception.

Public data shows that game sales at retail decreased slightly in 2010, and, according to Nielsen's recently released 360° Gaming Report, so did gaming?s share of entertainment spending per household. These decreases took place even as household leisure budgets increased by 9 percent from 2009 among video game buying homes. So, where did video gaming's share of spending go?

"It appears that while overall leisure budgets increased year-over-year, not all media and entertainment categories benefited equally. Out of home activities (such as dining out) and cell phone-related entertainment saw gains, but at the expense of video games and other forms of entertainment. While the share of the leisure budget dedicated to video games decreased slightly, the number of actual dollars reportedly spent on video games was nearly even in 2010 versus 2009. Amidst a rising tide in overall leisure spending, standing still or losing dollars added up to a smaller share of wallet for video games, movie-going, DVDs / Blu-rays, music and print media," Nielsen said.

How do we explain the growth in spending on out-of-home activities and cell phone-related entertainment?

"The first is a likely barometer of improving overall consumer confidence while the second may reflect a broader shift toward mobile in how consumers invest their media and entertainment dollars. Given the popularity of games as a paid form of content on mobile devices (Angry Birds, etc.), it stands to reason that some of the spending traditionally earmarked for non-mobile video games shifted to cell phone-related entertainment but is likely still within the gaming umbrella. The same logic may apply to the other categories that experienced slight declines in share. The screen is shifting but the content may be the same, " the research firm added.

Video game buyer households account for 26 percent of U.S. homes, roughly even with 24 percent in 2009. Despite the proportionally smaller investment in gaming in 2010, the category still earned a larger slice of entertainment spending among these households than other TV-based entertainment options, including subscribing to premium TV packages and DVD / Blu-ray related-spending. In addition, Nielsen's data was collected before the holiday season was over and thus may not be a harbinger of things to come as momentum builds from Kinect's successful launch in November and as a strong slate of releases becomes available to potential buyers this spring.
 
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