Electronic Toys & Games Manufacturing
Description
Companies in this industry manufacture electronic toys and games, including video game consoles. Major companies include console makers Microsoft (based in the US), Nintendo (Japan), and Sony (Japan), as well as peripheral providers such as Bigben (France), Nyko (US), and Logitech (Switzerland).
Global video game revenue, an indicator of game console demand, is forecast to generate about $200 billion through 2026, according to Newzoo. It is fueled by the world's largest video game markets by revenue: China, the US, and Japan, according to Statista.
The US doll, toy, and game manufacturing industry, which includes electronic toys & games manufacturing, includes about 500 establishments with a combined annual revenue of $1.6 billion.
Entertainment and games software and manufacturing of personal computers (PCs) used for gaming are covered in separate industry profiles.
COMPETITIVE LANDSCAPE
Demand is driven by personal income and product innovation. The profitability of individual companies depends on effective marketing, competitive product design, and manufacturing efficiency. Market success drives additional revenue via royalties paid by third-party game developers. The US video game console industry is highly concentrated: the top 50 companies account for more than 80% of the industry's revenue.
Electronic gaming products compete with PCs, TV, home entertainment set-top boxes, smartphones and tablets, and other forms of electronic and nonelectronic entertainment for consumer leisure time.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products in the industry includes nonelectronic games and puzzles, which account for about 25% of the industry's revenues. This is followed by toys, games and hobbies (about 15%) and dolls, action figures, and toy animals (about 10%). Other products and services include baby carriages and contract manufacturing services. The home video game console market is dominated by three product lines: Sony's PlayStation, Microsoft's Xbox, and Nintendo's Wii. Similarly, handheld products made by Nintendo (DS, Switch) account for most of the portable gaming console market. Nintendo also offers a hybrid console called Switch that has both home console and mobile gaming capabilities. Peripheral hardware includes devices that elevate the human-machine interaction (HMI) such as controllers, joysticks, and driving wheels. Peripherals also include upgrades to core products, such as larger hard drives, additional memory, and wireless connectivity devices.
Most parts are manufactured and assembled offshore. The essential components of a system include a central processing unit (CPU); memory; optical drive; hard drive storage device; chassis; power supply; and controller (sometimes referred to as a game pad). Products are manufactured in high volumes using highly automated assembly lines. Process controls and testing procedures minimize product defects.
In addition to upgrade products offered by console manufacturers, peripheral devices are often manufactured and marketed directly to consumers by third-party vendors. Some peripheral manufacturers are granted licenses from console manufacturers that give access to proprietary design information. They may also be granted rights to use manufacturers' logos.
Hardware system costs may vary greatly depending on final design and components. Frequently, the initial selling price of next-generation hardware is below manufacturing cost. Companies anticipate falling component prices as product volume increases and therefore price products to grow market share. For gaming console makers, revenues from game software, as well as royalty revenues from third-party game developers, can help offset low gross margins in their gaming hardware business.
Global video game revenue, an indicator of game console demand, is forecast to generate about $200 billion through 2026, according to Newzoo. It is fueled by the world's largest video game markets by revenue: China, the US, and Japan, according to Statista.
The US doll, toy, and game manufacturing industry, which includes electronic toys & games manufacturing, includes about 500 establishments with a combined annual revenue of $1.6 billion.
Entertainment and games software and manufacturing of personal computers (PCs) used for gaming are covered in separate industry profiles.
COMPETITIVE LANDSCAPE
Demand is driven by personal income and product innovation. The profitability of individual companies depends on effective marketing, competitive product design, and manufacturing efficiency. Market success drives additional revenue via royalties paid by third-party game developers. The US video game console industry is highly concentrated: the top 50 companies account for more than 80% of the industry's revenue.
Electronic gaming products compete with PCs, TV, home entertainment set-top boxes, smartphones and tablets, and other forms of electronic and nonelectronic entertainment for consumer leisure time.
PRODUCTS, OPERATIONS & TECHNOLOGY
Major products in the industry includes nonelectronic games and puzzles, which account for about 25% of the industry's revenues. This is followed by toys, games and hobbies (about 15%) and dolls, action figures, and toy animals (about 10%). Other products and services include baby carriages and contract manufacturing services. The home video game console market is dominated by three product lines: Sony's PlayStation, Microsoft's Xbox, and Nintendo's Wii. Similarly, handheld products made by Nintendo (DS, Switch) account for most of the portable gaming console market. Nintendo also offers a hybrid console called Switch that has both home console and mobile gaming capabilities. Peripheral hardware includes devices that elevate the human-machine interaction (HMI) such as controllers, joysticks, and driving wheels. Peripherals also include upgrades to core products, such as larger hard drives, additional memory, and wireless connectivity devices.
Most parts are manufactured and assembled offshore. The essential components of a system include a central processing unit (CPU); memory; optical drive; hard drive storage device; chassis; power supply; and controller (sometimes referred to as a game pad). Products are manufactured in high volumes using highly automated assembly lines. Process controls and testing procedures minimize product defects.
In addition to upgrade products offered by console manufacturers, peripheral devices are often manufactured and marketed directly to consumers by third-party vendors. Some peripheral manufacturers are granted licenses from console manufacturers that give access to proprietary design information. They may also be granted rights to use manufacturers' logos.
Hardware system costs may vary greatly depending on final design and components. Frequently, the initial selling price of next-generation hardware is below manufacturing cost. Companies anticipate falling component prices as product volume increases and therefore price products to grow market share. For gaming console makers, revenues from game software, as well as royalty revenues from third-party game developers, can help offset low gross margins in their gaming hardware business.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
Pricing
Currency Rates
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