Ads Help Drive Gaming Growth

NEW YORK The videogame sector will remain one of the above-average growth segments of the U.S. and international entertainment industries through 2011, with global games’ spending set to exceed music expenditures this year, according to PricewaterhouseCoopers.

The size of the U.S. games market will top the music sector next year, PwC projects.

Key growth engines will include online and wireless games, new-generation consoles, as well as the burgeoning in-game advertising business.

Advertising will be a key spark for U.S. gaming revenue, growing from an estimated $80 million last year to $950 million in 2011, according to PwC. This estimate could prove conservative as advertisers strain to reach the younger males that many games tend to attract.

The predictions are all part of the eighth annual edition of PwC’s “Global Entertainment and Media Outlook” report, set for release today.

By 2011, the worldwide gaming market will be worth $48.9 billion at a compound annual growth rate of slightly more than 9 percent during the five-year period, with gains slowing annually because of the maturation of the current generation of consoles, according to the global consultancy. The compound gains handily exceed the 6.5 percent advance that PwC sees for the overall entertainment economy during the period.

Its data includes consumer spending on games, but does not include expenditures for hardware and accessories.

“Video gaming is one of the most exciting stories in terms of pure growth numbers,” said Marcel Fenez, PwC’s global managing partner, entertainment and media practice.

For the U.S. gaming business, PwC projects 6.7 percent compound annual gains for 2007-2011 to $12.5 billion.

The Asia-Pacific region should have highest overall spending on gaming during the period and reach $18.8 billion in 2011, PwC forecasts. Despite its leading size, its 10 percent average annual gains will only be exceeded by the combined region of Europe, the Middle East and Africa (EMEA), which is pegged for a 10.2 percent compound annual gain and set to remain at No. 2 in terms of worldwide gaming.

U.S. gaming sector growth will trail all other regions during the five-year frame, with this year’s 15.5 percent growth shrinking to 3.3 percent by the end of the period, according to PwC.

For 2006, PwC’s preliminary estimates are for the U.S. gaming market to have expanded 10.5 percent to $9 billion, and it expects the first jump beyond the $10 billion mark this year to about $10.4 billion.

Worldwide game spending jumped 14.3 percent to $31.6 billion in 2006 and should rise 18.5 percent to $37 billion this year, according to the preliminary data.