Fighting for the Video Game Market.

Zap! Pow! Beep!

Talk about slam-bam action: A series of new reports from DFC Intelligence forecasts that the worldwide video game and interactive entertainment industry will grow from $29 billion in 2005 to possibly $44 billion in 2011.

The forecast includes revenue from video game hardware and software, dedicated portable system hardware and software, PC games and online PC and console games.

DFC foresees such a fierce competition for dominance of the market between three new generation video game systems — Sony PlayStation 3, Nintendo Wii and Microsoft Xbox 360 — that predicting which video game console system will prevail is simply impossible at this point.

“Uncertainty is the keyword going forward,” said DFC analyst David Cole. “Three solid video game systems are competing for market share and it will probably be two to three years before a true leader is determined.”

“The video game business is changing in major ways,” added George Chronis of DFC. “Sony and Nintendo are shaking up the industry with new business models. These are uncertain times where neither conventional wisdom nor historical data necessarily predict who the winners and losers will be.”

One thing DFC is certain of, though, is that none of the new systems will have the market dominance that the PlayStation 2 enjoyed.

“At its peak PlayStation 2 software alone accounted for about 30% of worldwide interactive entertainment revenue,” said Mr. Cole. “By 2011 we forecast that all console software combined will only account for about a third of worldwide sales.”

With the advent of multiple console platforms, and in the midst of growing portable and online game markets, DFC argues that platform diversity will be the key to success in the future.