While SA is officially in a recession, the gaming industry shows no signs of slowing, as retail sales have experienced almost 30% year-on-year growth in the past 12 months, according to figures from market research company Gfk.
“The outlook is definitely positive,” says Roger Carbonell, analyst at Gfk. “Compared to other consumer products, games have experienced growth in the double digits.”
Wayne Parkinson, sales manager at Ster-Kinekor, which distributes the PlayStation brand, says the gaming industry is often described as “recession-proof”, with consumers spending more on home entertainment as a long-term investment.
According to Clive Jandrell, CEO of games distributor Megarom Interactive, during a downturn people avoid purchasing capital goods, like new cars, houses and furniture. But not spending on these high-cost items means consumers have disposable income available, which can be spent on the latest gaming titles and hardware, explains Jandrell.
The latest consoles range from around R1 600 to over R6 000, while games can go from R140 for classic games, to R800 for new releases.
“Serious gamers in the 20- to 30-year age group are still going to buy the games they've been looking forward to for months,” he says.
Great expectations
Jandrell quotes independent Gfk figures of sell-through at retail level, which show the South African gaming industry experienced 27% year-on-year growth. At the end of last year, when prices increased and global markets were in the grip of economic turmoil, the local gaming industry managed 17% year-on-year growth in November and 28% in December.
One of the reasons for this strong upward trend, says Carbonell, is that the market is far from saturated. He estimates local household penetration of non-portable consoles to be around 8% to 9%. “Only a very small segment of the market has been reached; there's huge potential for growth.”
The problem, however, is that prices have increased, both for hardware and software, largely because game pricing depends on the exchange rate, says Carbonell.
Family affair
According to Jandrell, there has been a change in the profile of gamers, sparked by Nintendo's Wii platform. While perhaps lacking in hardware sophistication, the Wii allows for more social, collective gaming experiences, attracting those outside the traditional gaming profile, like children and families.
Parkinson says casual gaming is becoming more of a priority for game developers as the market grows. “Gaming is no longer the exclusive domain of teenage boys; it's being made available to the whole family.”
Only a very small segment of the market has been reached; there's huge potential for growth.
Roger Carbonell, analyst, Gfk
Another element to this development, says Jandrell, is security. “Parents would rather their kids play games at home than be out on the street. There are also more titles coming out focused on the female sector of the gaming industry - it's not all blood and thunder anymore.”
Tamsyn Reece-Edwards, trainee store manager at BT Games in Centurion, says the outlet has seen an upswing in game sales recently. “These days, instead of taking the whole family out to the movies every week, parents are buying gaming hardware as a once-off and then getting a new game every now and then for much cheaper .“
Jandrell says people are also investing in home entertainment equipment such as HD TVs and recorders, home theatre systems, and DVDs, rather than going out and spending money.
Do-it-all devices
There are also more titles coming out focused on the female sector of the gaming industry - it's not all blood and thunder anymore.
Clive Jandrell, CEO, Megarom Interactive
Parkinson says device multi-functionality appeals to consumers who want get more out of their entertainment purchases, as many gaming consoles come with additional capabilities such as Web browsers and DVD players.
“There's a trend towards people using consoles for more than just playing games; they can surf the Web or share movies and this makes it more viable in our current economic situation.”
The three big gaming brands in SA remain the Sony PlayStation, Microsoft's Xbox 360, and Nintendo's DS, re-released in February 2008, while the Wii was introduced locally in October 2007.
Gaming grows up
According to Jandrell, retailers are spending more time and money on games, with chains like Musica and Look & Listen re-designing stores to incorporate sections dedicated to specific brands and their products. ”It's not a case of a few games in a corner anymore,” says Jandrell.
“Your average 25-year-old has almost been brought up with gaming; it's part of their entertainment environment,“ says Parkinson.
He adds that there is a move towards more sophisticated game playing, as developers try to boost longevity. “Gaming is becoming more graphic, intense and intuitive with more levels and sets.”
Games are also being designed with characters that develop as users play the game, so the same game can be played over and over with a different outcome each time. “It's becoming more interactive, with the game being driven by the player rather than the program,” says Parkinson.
According to Carbonell, the biggest development in the local gaming industry has been the huge increase in next-generation consoles such as the Xbox and PS3. “There has been a strong change, with SA moving along international market lines. You definitely see a move towards higher resolution games, the Wii being the exception.”
Carbonell predicts the portables market will continue to grow, as it has been under-distributed. “Retailers may begin focusing more on portables in the future; there's no indication that growth is slowing down in the console market.”
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