Metrics: “Online Games is best performing game sector index at -29%”

Yes, thirty-percent down is the new up.

I’ll rarely focus on market values, but since I just posted on relative new-media/old-media values I’m quoting (in the title) this month’s Video Game Briefing (PDF) from Paul Heydon at Avista Partners. (You can subscribe.)

Online games (down 29% from Jan 2008 ) narrowly led PC/Console games (-30%) and distributors/accessories (down 34%).  They all outperformed the S&P 500 (-38%), well ahead of retailers and mobile games, (both down about 50%). The low point was Nov 20, ’08, but not by much.

The report also shows regional performance, ranked as you would expect (Asia, S&P, U.S., Europe) but perhaps spread more-broadly than you expect.  And there are many details on M&A and on equity raised. In total:

  • Over $1.8 billion of M&A deals in global sector (LTM)
  • Over $1.6 billion raised in global sector (LTM)>

Metrics: New media’s mkt value up 102%. Old media lost 32% (’05-’08).

The communications, media, and technology (CMT) sector lost 47% of its market value in 2008, worst than most markets overall.  An Oliver Wyman press release, summarizing their 2009 State of the Industry Report (PDF) notes that within that sector, for the the 5-year period:

Traditional media — including media agencies, publishing, and broadcast and entertainment — lost 32% of its market value, or $137 billion, while new media (online content and services) gained 102% or $58 billion.

The top performer in the media segment was China’s Tencent, with a market value of $11.6B.

(The above quote is from the press release.  If you can find that data in the full report — or other analysis of the new-media-subsegment —  then I owe you serious respect.)

The report does discuss sector-specific strategies.  Strategic recommendations include strong focus on emerging markets and on broadening corporate scope, such as broadening from distribution to content. (More on this detail in a later post.)

In support of comScore’s assertion (which I argued against) that free-online game growth comes at the expense of paid content, note that 18% of US consumers “expect to spend significantly less” on “a la carte content purchases (including movie tickets, … downloads, games, etc.)” And 19% expect to spend “a little less.” Only 10% see spending more.  (Oliver Wyman’s November survey: Exh. 8, p. 13, of the full PDF report.)