Market Outlook, Industry News - 2/04
Issue: Volume: 27 Issue: 2 (Feb 2004)

Market Outlook, Industry News - 2/04

Yet, as highlighted in the newly released "Digital Content Creation 2003" report from Jon Peddie Research (JPR), several trends are stimulating a recovery. First and foremost, spending has increased on films for digital effects, compositing, editing, color correction, and the like. Video is seeing strong growth in consumer and professional segments. Also leading the way is a growing demand for digital content for advertising, as that industry resumes its pre-2000 growth rate. In all the DCC markets, the actual unit shipments of digital content creation software are increasing at a compound annual growth rate of 15.8 percent. On the downside, average selling prices are decreasing, so revenues for DCC software are growing at a much slower pace than unit sales.

Moving to hardware, according to the latest MarketWatch report from JPR, the PC graphics market experienced better than seasonal growth in the third quarter of 2003, when some 56 million graphics devices shipped. However, the PC market recovery is a mixed bag for graphics suppliers. Intel, with its integrated graphics chipsets (IGCs), has become the dominant supplier of graphics to the PC industry, taking market share from discrete graphics hardware suppliers.
Revenues for DCC software are growing slowly, despite a notable increase in unit sales. A reduction in the average selling prices is thought to be responsible for the trend.

The good news is that the trend toward the use of IGCs in desktop PCs has stabilized and, as a result, discrete graphics chips will hold their own in the near future. Motherboard manufacturers are building one-size-fits-all products for desktops that feature "good enough" IGCs and accommodate add-in boards for higher-end units. The situation is different on mobile computers, where IGCs are continuing to grow at the expense of discrete graphics chips. In all cases, the average machine sold to the average consumer may well include IGCs that are insufficient for demanding applications, such as PC gaming, desktop publishing, image processing, and video. As a result, there is continued interest in advanced graphics processors, which in turn is stimulating the development of new products from a revitalized S3, as well as from XGI, a new graphics provider that has spun out from Taiwanese chipset provider SiS. ATI and Nvidia, meanwhile, are locked in a pitched battle for market share, which will continue to raise the bar for all segments of graphics chips. —Kathleen Maher, senior analyst, Jon Peddie Research

Splutterfish (Venice, CA) has announced that its Brazil Rendering System Version 1.2 provides support for Discreet's 3ds max 6.

E frontier (Tokyo, Japan) has acquired Curious Labs (Santa Cruz, CA), maker of Poser. According to a recent merger agreement, e frontier will serve as the parent company and both entities will retain their individual names. Expanding its content management business, IBM (White Plains, NY) has acquired Green Pasture Software (Corvallis, OR), a provider of document management software solutions that enable businesses to collaborate, edit, and manage multiple documents electronically and in real time. IGN Entertainment (San Francisco) and GameSpy Industries (Irvine, CA) have entered into a merger agreement to combine, an online gaming and entertainment environment, and Game-Spy's Web destinations serving game enthusiasts and game developers. The merger is expected to create the Internet's largest PC and console game content network and the largest online gaming audience. Turbine Entertainment Software (Westwood, MA), a developer and publisher of online subscription entertainment, is developing its first self-funded project, Dungeons & Dragons Online, a PC game to be published by Atari. Currently working on The Lord of the Rings: Middle-Earth Online, Turbine Entertainment Software also has purchased the complete Asheron's Call massively multiplayer online game franchise from Microsoft Game Studios. Avid Technology (Tewksbury, MA) has acquired NXN Software AG (Munich, Germany), maker of the popular NXN alienbrain line of digital asset management tools for the entertainment and CG industries.