
In 2007,
online console revenue is at 2.5% of total global video game market
revenue, including console and handheld hardware and software revenue.
By 2011, revenue from connected consoles will represent 18.6% of total
market revenue. Although subscription revenue for premium online
services and games will grow from $476 million in 2007 to over $2.4
billion in 2011, its share of online console revenue will decline from
48.5% in 2007 (already down from a high of 86.5% in 2006) to 23.2% by
2011. Downloadable content (DLC) consisting of games and
game-related items, which at $35 million in 2006 represented a 13.5%
market share of online console revenue, will become connected consoles'
primary revenue source in 2007, growing from $493 million in 2007 to
$7.2 billion in 2011. In 2011, game-centric DLC will make up 68.6% of
online revenue. Advertising revenue from sponsored services,
in-game ads, and product placement in connected consoles will reach $12
million in 2007, posting the first significant online console ad spend.
Advertising revenue will grow to $858 million in 2011, with an 8.2%
market share of online revenue.
Computer and video games have become very popular. In particular the
interest in playing fun free online games over the internet is
increasing strongly. Despite the growing popularity of YouTube,
MySpace, and Facebook, gaming remains the king of online entertainment,
driven largely by casual gaming activities.
Sites like Yahoo Games
and EA's Pogo.com offer users access to a wealth of advertisement
supported free online games, where sponsors have options for branding
opportunities, and display and banner ad placements. Online games
on the consoles could become a $10.5 billion business by 2011 from $981
million in 2007, according to market researcher IDC.
Video game growth will be
strongest in the Asia Pacific region, its largest market, with a 10%
annual growth rate through 2011, but will increase in the Europe/Middle
East/Africa region (10.2%), the U.S. (6.7%), Canada (9.4%), and Latin
America (8.2%) as well. Certain trends hold steady across most
regions: For instance, driven by increased penetration of broadband
access, online gaming is surging. In the U.S. and Europe/Middle
East/Africa, online gaming represents the fastest-growing consumer
segment (19.3% and 24.6%, respectively); in Asia Pacific and Canada,
online growth came in second only to wireless (at 16.1% and 13.9%,
respectively). Other trends are more regional. The in-game advertising
market is expected to increase 64% in the U.S. And in China it is
expected to rise at a compound annual rate of 14.3% to $2 billion in
2011, most all of that growth will come in online games.
Spurred
by the new generation of consoles and handhelds, and by increased
penetration of broadband and wireless technologies, the video game
industry is ripe with opportunity. "Growth in platforms allows you to
hit new demographics," says Stefanie Kane, a partner with PwC's
entertainment and media practice, noting that handheld game devices have
brought more women into the market, and that the entrance of cable and
on-demand TV channels will further widen the base. "There is a lot of
unlocked potential."
You might think the face of one of the
hottest areas in gaming right now is a young male in his 20s who owns
the latest supercharged gaming system from Microsoft or Sony - or both.
But you'd be wrong.
Instead, the epitome of the new-era gamer is a woman in her late 30s or early 40s who plays on an average PC.
Yes, the video game industry seems to have been turned on its head.
For
years, the dominant themes have been faster game machines, increasingly
realistic graphics, more immersive play, as well as the old standbys -
blood, guts and blowin' stuff up.
But that picture has begun to
look increasingly outdated. While young men dominate the gaming industry
as a whole, casual games are one of the fastest-growing parts of the
industry and attracting a whole new demographic.
You can find
signs of the revolution everywhere. One of the fastest-growing parts of
the game industry is centred on so-called casual
fun free online games,
PC-based titles that users can generally start playing in minutes and
usually don't require the mastery of some combination of multiple
buttons to enjoy.
The upheaval has spread to the console market,
as sales of Nintendo's Wii console and DS handheld, both of which stress
fun-to-play games over powerful processors or realistic graphics, are
far outstripping their supercharged competitors from Microsoft and Sony.
Revenue
streams enabled by active online consoles in this cycle show the
strongest growth in the sector and will not only determine the future
success of the console vendors but also be crucial to the success of
many third-party publishers.
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