UK gamemakers take a hit, despite record sales

British game software market grows just six percent, even as game spending exceeds movies and videos

British video and computer game sales surged last year, but gamemakers' profits were hit by aggressive price cuts and the transition to a new generation of gaming consoles.

New figures from the European Leisure Software Publishers Association (ELSPA) showed sales of game software hit 39.5 million units last year, making the market worth £924m. Console games were up 23 percent, though prices fell dramatically, from an average of £32.58 in 1998 to £22.30 in 2000.

The price cuts meant sales revenues only rose six percent.

PC games didn't fare as well, with the market rising just six percent. Because of price cuts -- falling from a 1998 average of £24.03 to last year's £20.08 -- the value of the PC game market actually fell six percent.

The biggest success of the year was Nintendo's handheld Game Boy machine, whose sales grew 160 percent on 1999 figures, helped by the popularity of Pokemon games.

As in the US, game buyers have held off their purchases as they waited for new consoles such as Sony's PlayStation2 and Microsoft's upcoming Xbox. That has forced software and hardware makers alike to cut prices and narrow their profit margins, according to experts.

The squeeze has hit advertising budgets as well, taking a toll on consumer-oriented publishers such as Future Publishing.

The UK is the world's third-largest game software market, according to ELSPA, after the US and Japan. UK consumers now spend more on game software than on renting videos or cinema visits. The value of UK exports of game software products, driven by software houses such as Eidos, now exceeds that of both British film and television, ELSPA says.

What's going on in games? For complete coverage see Gamespot UK.

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