Improving outlook for video game and music retailers

05 August, 2014 by Don Groves

The video game and recorded music retailing sector has emerged from a five-year decline and is on course for steady growth from digital downloads and a shortening of the piracy window.

That’s according to IBISWorld’s Video Game and Recorded Music Retailing in Australia report, which forecasts the industry will expand by 2.2% to $1.7 billion in 2014-15.

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The 834 businesses in that sector collectively will post profits of $129.8 billion in that period, IBISWorld predicts. Recorded music and DVDs will account for 57.5% of the market, with video games at 40% and other goods at 2.5%.

The market researcher expects trading conditions to continue to improve in the next five years as revenues increase by an annual average of 1.4% to reach $1.9 billion in 2019-20.

“Video game and recorded music retailers have faced a challenging environment over the five years through 2014-15,” the report says, estimating sales declined at the rate of 0.1% per year.

“Industry performance has been affected by a number of factors including the loss of revenue due to illegal music downloads and movie piracy, a shift in the way consumers play video games towards the online market and growing competition between players and external operators.

“Operating conditions for industry players have also been influenced by trends in real household discretionary income, consumer sentiment, the average hours worked by all employees and the number of internet connections.”

Explaining its optimistic outlook, the report says, “Revenue growth is projected to stem from growth in the volume of digital downloads accessed via the websites of industry operators. A decline in the piracy window (which is the time between a film being shown at the cinema and the release of DVDs on disc or online) is likely to benefit revenue growth for the industry.

“Furthermore, the perceived social and family benefits of computer games are expected to support consumer demand over the next five years.”

JB Hi-Fi is the market leader with a 32.9% share, followed by EB Games at 16.3%, Sanity 10.3% and Leading Edge 3.5%, it estimates.
 

 

 

 

 

 

 

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