Increasingly, research is showing that video games reach a U.S. audience far beyond what retail-sales data suggest. New-media-research consultancy Interpret is tracking 175 top-tier video-game titles, exploring the actual reach, frequency and demographic makeup of each title through its quarterly Gameasure report. And according to CEO Michael Dowling, numerous factors help games reach larger audiences: social game play with friends, game rental, used-game sales and the passing of games from one person to another. Because in-game ad placements are sold based on retail sales, the only available measurement of a video game's reach, the full impact of a game is not reflected in its pricing -- and buyers are getting a bargain.
"In 2007 ... 27% of games last purchased by gamers were purchased used or previously owned, which has a fairly significant impact on reach," Mr. Dowling said. He also said more than 20% of gamers lend games to friends.
Activision's "Call of Duty 4: Modern Warfare" sold more than 3.68 million copies in the U.S. according to NPD Group, but its reach is 2.9 times greater: 10.65 million gamers have played it, according to Gameasure.
Playing with friends
Another Activision hit, "Guitar Hero III: Legends of Rock," has sold more than 5.29 million copies in the U.S. But thanks to the mass-market appeal of the game and its two-player nature, its reach is actually 2.7 times that total: Gameasure shows that 14.13 million people have played the music-rhythm game. And Microsoft's "Halo 3," the top-selling game of 2007, reached far more than the nearly 5 million people who bought it in the U.S. Gameasure reports that more than 12.2 million gamers played "Halo 3," which has a huge online following.
"Next-Gen just announced their research saying that we can expect to see 480 games released in fourth-quarter 2008, or a game every 276 minutes," said Dario Raciti, gaming leader at OMG Digital. "You can bet a lot of these will be picked up as rentals or used, so it is important for us to be able to quantify that overall reach."
While the core gaming demographic -- males 18 to 34 -- still spends more than eight hours a week playing games, the market is expanding at a rapid pace thanks to mainstream acceptance of Nintendo's Wii and continued strong sales of PlayStation 2 and Nintendo DS. Mr. Dowling said more than 41 million PS2 gamers have yet to upgrade to PS3. In fact, PS2 is still a very viable platform, with key titles from Sony, Electronic Arts and other major publishers.
"For the first time in any of the previously observed console cycles, the mainstream gamer has been pulled in earlier -- by the Wii," Dowling said. "In prior cycles, this doesn't typically happen until later in the cycle, driven by [lower] price points. So what we are seeing is a bifurcation of the market, where the Wii is alone in attracting more mainstream gamers, and the PlayStation 3 and Xbox 360 are slugging it out for the harder-core gamer."
Active, well-off gamers
The Wii has a 54%-male audience (males 25 to 54 make up 28%) and a median household income of $61,139, the highest among next-generation consoles. Xbox 360 has a 72%-male gaming audience and a median household income of $44,527. PS3 has a 74%-male gaming audience and a median household income of $55,948.
According to Gameasure, the active gamer is someone who personally owns and plays a game system and has purchased at least one game in the past six months. During the past year, the total audience of active gamers 12 to 65 in the U.S. grew to 98 million from 93 million. A full third of that audience plays games for at least 10 hours a week.