Industry Growth

The entire industry – hardware and software – grew at a tremendous pace during 2007. Sales for the year totaled $17.9 billion, up from $12.5 billion in 2006 and $10.5 billion in 2005.



Year-on-year sales increased by a very impressive 43%. The previous record for such growth took place when the industry grew from $6.6 billion in 2000 to $9.4 billion in 2001, an increase of 42%. In the year after that jump, 2002, the market grew a more modest 10%. If 2008 follows a similar trend, then sales could reach nearly $20 billion. A stronger 25% growth from 2007 sales would value the 2008 market at over $22 billion.

It is worthwhile to see where consumers were spending their money. If we compare the distribution of sales by sector (console hardware, portable hardware, console software, portable software, and accessories) we can identify the areas of growth from 2006 to 2007:




We can see from these graphs that consumers spent more money on console hardware in 2007 than they did in 2006, as well as more on accessories. Given the higher priced PlayStation 3 models and the high sales figures for the Wii, the increase in hardware sales is not unexpected. Furthermore, extra controllers and local storage are all more expensive for the newer systems, which should have driven accessory sales. The conventional wisdom is that during 2008 software sales will rise dramatically and claim a larger portion of total industry sales.

Tomorrow: Software

Speaking of software, tomorrow's article will recap the software sales market for 2007 as well as provide some ideas for where that market may be headed in 2008.

Credits

We would like to thank the NPD Group for its gracious distribution of the sales data each month. Without their cooperation, work like this would be impossible. Also, thanks to NeoGAF and its contributor, Cheesemeister, for the helpful compilation of weekly Media Create data.