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Nintendo leads the ranking of gaming companies, based on software revenues. Gaming has become big business, especially during the last decade: the industry grew at double digit rates until last year. The top 10 companies now have a combined revenue of over 24 billion USD, in a market estimated to be worth well over 50 billion USD, which is slightly less than in 2008 (-5%). Despite the economic crisis, the online gaming segment is still booming, resulting in fast growth of the leading companies in this market.
Nintendo is the largest gaming company in the world. Bringing gaming to new audiences with the Wii, Nintendo reached a peak in gaming revenue in 2008. In 2009, software revenues were a little lower (-6.2%), as was the case for most top 10 companies. The largest American game publishers, Activision Blizzard (#2) and EA (#3), saw revenues decline with -7.4% and -12.7% respectively. Sony and Microsoft, both competing with Nintendo on the game console market, are far behind with less than a third of Nintendo's software revenues. Seven companies in the 2010 list have gaming software revenues above US$1 billion.
Growth of gaming revenues mainly took place in Asia, the top 5 fastest growing companies are all from Asia. Out of these five, four are online computer game companies. NCSoft and Nexon are the leading South Korean companies, NetEase and Perfect World are headquartered in China.
As the fast growth top 10 shows, online gaming is becoming more popular. For 2009, the market share of online games is estimated at one sixth of the total video game market. This share is rising quickly, as are the companies in this field. It took the most successful companies only a few years to make hundreds of millions USD. Chinese Shanda Interactive is the largest pure-play online gaming company with sales of over US$ 700 million. US based Zynga, the maker of FarmVille, made an estimated $270 million in 2009. Traditional game makers are aware of the online goldmine, and are publishing their own online titles.
Like elsewhere in the software industry, the motto in the gaming industry is: acquire or be acquired, resulting in a continuous flow of company transactions:
- Playfish, a successful European maker of social network games, was taken over by Electronic Arts in 2009.
- Koei and Tecmo merged in 2009. Revenues rose, but not enough to move up the ranking.
- Square Enix got into the top 10 after acquiring Eidos in April 2009.
The gaming industry has quickly grown in the past, and it is expected to keep growing faster than the software industry average. As the world population grows richer, progressively more money is available for entertainment, which provides a sound revenue driver for the gaming industry.
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Exercise. Memorize the following words and word combinations.
Exercise. Read and translate the text.
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| Part II | | | Text 6. Development Trends in Software Industry |