Executive Summary

The electronics games market, comprising systems and the games themselves, is about to break the £1bn barrier, from sales of just £20m only 5 years ago in 1989. The market was valued at £950m in 1993, an increase of 27% on the 1992 figure. However, the 1993 increase was modest compared to previous years, with sales increasing by a phenomenal 533% between 1990 and 1993. The electronic games sector has been the most dynamic sector of the toy and games industry in the last few years, but its growth has affected the sales of many traditional toys and games.

Market growth has been driven by the two market leaders Sega and Nintendo, and these two companies dominate the sector not only in the UK, but also in the major markets of Europe, US and Japan. These two companies, based in Japan, sell virtually all of the static games consoles in the UK with brands such as Sega MegaDrive, Sega MegaCD, and Super Nintendo Entertainment System (SNES). The major hand-held consoles are GameBoy (Nintendo) and GameGear (Sega). Other hardware suppliers include Commodore, Atari and Philips. The games are published by various suppliers including Nintendo and Sega, but encompassing a range of other publishing and software houses which have sprung up in recent years.

Electronic games have proved most popular with boys between the ages of 10 and 15 years-old, although younger children and some adults are also users. With an estimated 20% of UK households owning a games machine, penetration is low compared to the US and Japan, and further growth in ownership is expected over the next few years. Specialist toy outlets have largely ignored electronic games and the major retailers are the electrical chains, High Street multiples like Woolworths and Argos, and mail order channels. Only Toys `R' Us represents toy retailers as a major distribution channel.

The spectacular market growth of the early 1990s is unlikely to be repeated in the next few years, although suppliers are hoping that developments in hardware technology will boost sales. More powerful systems, such as 64-bit machines, and new systems using CD technology are coming onto the market and other companies from the electronics and international media sectors are entering the market. The effect is likely to be a loosening of the hold that Sega and Nintendo currently have on the market. Overall sales in the market are forecast to reach £1.6bn by 1996.

Fears about excessive violence in some games have prompted the games industry to produce its own classification scheme, Monitor Man, for games. Various studies are being undertaken to examine the health risks of games. The UK industry is also being investigated by the Monopolies and Mergers Commission (MMC) following complaints that prices are too high, restrictive practices may be in operation and that Sega and Nintendo are too powerful in the marketplace.

More Information

  Denotes a required field.