After several weeks of disheartening earnings figures from Sony Corp., Nintendo, and many third-party publishers, a new report cast further gloom over the game industry--and let a few rays of sunshine through, too.

　　In their November 2003 Toy & Video Game Industry Primer, U.S. Bancorp Piper Jaffray analysts Anthony Gikas and Stephanie Wissink state that 2003 "marked the midpoint … of the product cycle of current generation video game hardware." In layman's terms, that means Xbox, GameCube, and PlayStation sales peaked this year at 15 to 17 percent growth, and sales will slow until the next generation of consoles emerges in 2006. More importantly, the report forecasts a hardware price drop of 20 percent during the same period.

　　However, there was some good news for games publishers. Citing figures from the NPD Group, Sony, and IDSA, as well as their own data, U.S. Bancorp Piper Jaffray predicts that the "tie ratio" of console software-to-hardware sales will increase from the current 12:1 to a peak of 22:1 over the next two years before dropping off. Unsurprisingly, the 2003 tie-ratio leader is the PlayStation with 22.6:1, followed by the PlayStation 2 at 11.8:1, Xbox at 9.5:1, and GameCube at 9.4:1. These numbers were reflected in the overall software market share, which sees Sony way ahead at 69.3 percent, Xbox at 17.3 percent, and GameCube at 13.3 percent.

　　According to Gikas and Wissink, when the 2003 software sales are tallied, handheld (i.e. GameBoy) titles will have the highest growth at 11 percent, followed by consoles at 10 percent. Unfortunately, as evidenced by the recent spate of developer closings, the PC market is shrinking, finishing the year down two percent.

　　The entire U.S. Bancorp Piper Jaffray report can be downloaded for free at the Reuters Investor site (registration required).