View Full Version : Video game industry profit report

29-03-05, 15:27
I thought this was very, very interesting. I'm sure very little people would have been able to guess this (it seems like a long read but it's very simple):

Industry Profits

DFC Intelligence is a group that is self described as:

“…a strategic market research and consulting firm focused on interactive entertainment and the emerging video game, online game, interactive entertainment and interactive television (ITV) markets. Since 1995 we have published in-depth strategic market reports and subscription-based research services. Our research is used by many leading companies in over 30 countries worldwide.”

With that in mind, on March 22, 2005 they released a new report that takes an in-depth look into the Video Game and Interactive Entertainment Industry. This report is 750 pages that contains several different publisher’s history, financial performance, product lineup, development teams, and much more.

Of the 17 companies included in the report the four leading ones were found to be Nintendo, Sony, Microsoft, and Electronic Arts. Those four companies together reported revenue of 16.7 billion dollars in 2004. Individually Nintendo, despite the fact that many people assume they are doing poorly in sales, managed to be the most profitable company by earning 7 billion dollars in operating income between the years 1998 and 2004. Sony’s Game Division during that same period only managed 4.5 billion dollars and trailing just a short distance behind them was Electronic Arts which earned 1.8 billion dollars. Microsoft’s Game Division on the other hand, despite the fact that they have had very respectable sales this generation, has reported heavy losses.

Source: http://www.dfcint.com/

So Sony may be first in console sales, but that doesn't mean they earn the most money. Although the PSP may sell well, Sony is taking a loss with each one sold (similar to the XBOX). They're having some problems in their other electronic divisions as well. And it looks like they're in deeper trouble:

Sony Hit for $90.7 Million
SCEA ordered to stop selling PS2 consoles and controllers.

March 28, 2005 - The PS2 console and Dual Shock controller could soon become collectors' items. Immersion Corporation, a developer of touch feedback technology, has been awarded $90.7 million in damages for a patent infringement suit against Sony Computer Entertainment of America, Inc. and Sony Computer Entertainment, Inc. Along with this, the U.S. District Court for the Northern District of California has also issued a permanent injunction against the sale of consoles, controllers, and 47 games that have been deemed to have patent infringements as well.

Consumers will still be able to purchase all of these items in stores, however, since Sony will likely appeal the decision. As the appeal goes through, Sony will be paying compulsory licensing fees. In previous court orders on January 10 and February 9, Sony was ordered to pay a compulsory licensing fee and has paid for the time period from July 1, 2004 through December 31, 2004. Fees for time periods in 2005 will follow the same rates that have already been established.

All of this started back in February of 2002 when Immersion filed a lawsuit against both Sony and Microsoft over the force feedback technology that they had patented and which the other companies were using in their controllers. Immersion specializes in haptic technology which enables games to get more of a sense of feeling from their games. They also develop non-gaming applications as well such as surgery simulations. But it was when the company saw that videogame companies were using their own technology that they decided to sue in order to be paid for it.

In July, 2003, Microsoft settled with Immersion for $26 million, getting a stake in the company at the same time. Sony has decided to instead fight the lawsuit and back in September of 2004 the courts decided in favor of Immersion and ordered Sony to pay $82 million for the infringement. The new figure of $90.7 million includes $8.7 million of interest.

In its defense, Sony has argued that the technology being used in the Dual Shock is both simple and is taken from prior art that was around from before Immersion's patents. It has also countered that several of the uses have come from in-house development. So far it is looking like these arguments are falling on deaf ears and that as Sony will likely appeal to a higher court this case will take even longer to settle itself.

Source: IGN (http://www.ign.com)

Nintendo wasn't sued because they agreed to pay before the release of the Gamecube, although if you remember the n64 was first to implement the rumble feature in the controls. Nintendo has a patent on that, but for the GC they used technology similar to the Immersion one.

Interesting tidbit about the rumble feature: Sony originally released its PS1 with controllers that did not have the analog function or the rumble feature. After the release of the N64, Sony replace their original controls with the features first implemented by Nintendo. Haha.

But don't think Sony is in huge trouble, it's probably just a bump in their road... :{

[ 29. March 2005, 16:30: Message edited by: bumb1ebee ]