New Study Discusses Next-Generation Consoles

A new comprehensive report has been released by DFC Intelligence, a company that provides revenue market strategies for and analyses of the interactive entertainment industry. The report discusses the evolution of the gaming industry - in business, marketing, and development - from the 8-bit through the so-called 128-bit next-generation era. Of particular note are its analyses of the interactive industry's growth prospects and of next-generation consoles such as the Sony PlayStation 2, the Sega Dreamcast, Nintendo's project "Dolphin," and the Microsoft Xbox.

DFC predicts strong growth in revenue throughout the video game industry, but it cautions against the expectations of highly accelerated revenue growth. The report states, "In the end, we think that 128-bit systems will outsell the 32/64-bit systems. From 2002 onward, all leading software developers will be focused on games for the 128-bit systems. However, we don't think that 128-bit systems will significantly outsell the 32/64-bit systems. We believe that, over the next few years, consumers will be spending a great deal of money on video and computer games. However, there is still a great deal of uncertainty about exactly which game systems will do well." Overall, DFC Intelligence forecasts that the total US revenue for interactive entertainment will exceed US$11 billion by 2002.

In discussing the competition among the four major next-generation consoles, the report is hesitant to declare a clear winner. Although it expects the Sony PlayStation 2 to be successful on some level, it doesn't foresee a repeat of the mass-market penetration achieved by the original PlayStation. DFC sees the Xbox and project "Dolphin" as strong competitors and expects Sega to carve out its own market niche with its Dreamcast console. It feels that, contrary to the opinion of some industry analysts, the video game market has enough demand to support all four next-generation consoles, and it foresees the four major consoles securing varying market share ranging from 20 percent to 40 percent.

"The key battle for the 128-bit market will probably occur in 2002," the DFC Intelligence report states. "With the Dolphin, Nintendo has a chance to once again be the market leader. Microsoft may have no record with video games, but so far with the Xbox they seem to be on the right track."