Top Video Game Companies Generate Annual Revenue of $25 Billion

A new report released by DFC Intelligence takes a close look at the top publishers in the video game and interactive entertainment industry.  According to the report there are several factors that leading companies share in common.  These include expansion internationally, platform and business model diversity and a focus on core franchises that build value over time.  Leading companies like Activision, Electronic Arts and Square Enix have a global business, are bringing core franchises to online and mobile platforms and are looking at emerging opportunities like advertising in games.

The seventeen companies in the report reported fiscal 2004 revenue of $24.5 billion, down 3% from fiscal 2003.  So far fiscal 2005 revenue is up 3%.  The four leading companies, Sony, Nintendo, Electronic Arts and Microsoft, dominate the market and reported fiscal 2004 revenue of $16.7 million.  In terms of revenue, Sony is the clear market leader, having generated $45 billion in game related revenue from fiscal 1998 through 2004.  However, Nintendo has been the most profitable company, earning about $7 billion in operating income from fiscal 1998 to fiscal 2004, compared with about $4.5 billion for Sony (from its games division) and $1.8 billion for Electronic Arts.  Microsoft is clearly an up-and-coming powerhouse, although the company has reported heavy losses from its games division.

Beyond the top four companies, the interactive entertainment market remains fragmented.  Other then Electronic Arts solidifying its position as the leading software publisher there has been very little consolidation in the game market over the past few years.  Electronic Arts is in a league of its own and other software publishers are in a tight race for a distant second place.

Source: DFC Intelligence