While software and hardware are cited as the major drivers of revenue in the industry, peripherals should not be overlooked. EEDAR analyst Jesse Divnich says to Yahoo! Games that $5 billion in sales were generated last year worldwide for console accessories.
Interestingly, the sales of devices that range from controllers and headsets to fake instruments and plastic add-ons, have grown over the past five years and weathered the recession well. "Software sales and hardware sales were both down in 2009. Accessories sales in 2009 were on par with 2008," he said.
"Typically, video games have a 20 to 25 percent margin for retailers," Divnich noted about their profitability. "With accessories, you're looking at closer to 40 to 50 percent margin."
Looking at the last few years, the rise of the Wii and music gaming have really helped the accessories market. "The Wii and games like Guitar Hero have made it not only acceptable but commonplace to purchase multiple accessories and add-ons per person, per game," said Chris Arbogast, Director of Marketing at Nyko Technologies, who confirmed that their Wii accessory line is their best performer. "In previous generations accessories were seen as necessary tools in order to interact with the console itself. I feel like this generation's creative input devices have opened people's eyes to accessories ... as a means to broaden their interaction level with their entertainment. This adoption rate of accessories has enabled our industry to flourish this generation."
A large portion of these accessories are coming from China, and according to Global Sources' China Sourcing Report: Video Games & Accessories, suppliers from that country are optimistic for 2010. Over 80 percent expect gains to be 10 percent or higher and only five percent expect return to be flat compared to 2008.
"Fueling export growth are the robust segments of video game hardware and software, portable and handheld devices, and PC and online games," said Livia Yip, Global Sources Publisher. "The optimistic economic forecast is encouraging suppliers to invest more resources to strengthen their manufacturing capability. The majority of surveyed companies plan to increase capital expenditure by 20 to 50 percent in 2010."
