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Peter MacDougall speaks at the GKM Conference

by the NWR Staff - October 31, 2002, 8:27 pm PST

Nintendo's own Peter MacDougall spoke to the Gerard Klauer Mattison Conference yesterday. FULL Speech Transcript within!

It certainly is a pleasure to be here representing the most time-honored name in the video game industry, an industry which a few years ago was called “obsolete” and the same industry which today they say is virtually recession-proof. It’s true, despite the dismal economic conditions which surround us, dedicated video games in America are indeed on track to set yet another revenue record this year.

Twelve months ago, most observers saw the video game industry surpassing $10 billion at retail for the first time in 2002. Well, what were they thinking of? The experts now say we may even reach $11 billion. And remember, two years ago we didn’t even reach $7 billion. That’s an impressive leap and there are several key factors working to make this possible.

The first, and maybe most apparent, is the number of people over the age of 18 who have flocked to game play. Back in the early ‘90’s, the percentage of console players under the age of 18 was 61 percent. The most recent IDSA survey puts that at 45 percent for the industry as a whole. And Sony’s own internal study states the corresponding number of PlayStation 2 users is just 30 percent. Part of this shift is the simple result of former younger players never losing their passion.

The IDSA surveys what it calls “most frequent” players. Of that group, about two in five have been playing less than five years. More than a quarter began playing regularly between six and 10 years ago. Thirteen percent have been at it between 11 and 15 years, and one in six has been playing more than 16 years. That means a lot of people in the ‘80’s who enjoyed Duck Hunt and their first Mario games never put down their controllers.

Secondly, the fact that those older players have more disposable income is also having a direct and very beneficial impact. The adoption rate for new hardware is faster than ever before, for both consoles and our handheld Game Boy Advance.

At a similar point in the last generation of consoles, approaching the holiday season of 1997, we in America had collectively sold through about 9 million systems. Today, the corresponding number is over 15 million. And our Game Boy Advance is the fastest-selling new video game system of any type in U.S. history.

There is similar great news on the software front. Obviously, hardware penetration is essential but when it comes to profits, most of the action comes from game sales. Again, I’ll use the 1995-1997 period as a benchmark. At a similar point in that generation, the Nintendo 64, PlayStation 1 and Sega Saturn had combined to sell-through four games for every console sale. Today, that ratio is 5.2 to one.

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