The cause was not only a generally weaker economy but also increased competition from major chains like Target and Wal-Mart that have considerably increased their offerings.
"The `haves' are gaining at the expense of the `have-nots,'" wrote UBS Warburg analyst Michael Wallace in a recent report. "What is becoming clear is that companies with top titles -- Electronic Arts and Take-Two -- are taking market share from the others."
With consoles in more than 60 million homes worldwide, that trend is likely to continue. Casual gamers are more likely to buy games from well promoted companies like EA, which with about a billion dollars of cash reserves also has the war chest to acquire and develop hugely expensive hit titles.
Analysts predict a wave of consolidation as companies gear up for the complex and expensive task of creating software for the consoles due out in 2005.
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