Are profits in video games shifting from the West to the East?
The worldwide video game industry is experiencing healthy revenue growth. In the U.S., sales grew 19 percent to $22 billion in 2008, according to market researcher NPD. That has been a cause for much celebration as games outrun the recession.
But market researcher DFC Intelligence in La Jolla, Calif., has a different take. The company asked in a report today whether revenue gains are coming at the expense of profits. And while U.S. companies have collectively suffered losses in 2007 and 2008, Asian companies are more profitable because they have embraced new online business models that keep the money coming in long after a customer buys a game at a store.
Profits are shifting East. DFC came to that conclusion after looking at a bunch of public companies in the U.S., Japan and Asia. The U.S. companies have celebrated continued revenue growth, mainly in physical disk-based media sold in stores. But Asian companies have embraced hybrid product and service business models that are inherently more profitable.
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