This is an interesting news I found about Online Games.Any independant
online games developer out there?
Online Games to Hit $13 Billion by 2011
The online gaming market is set to almost quadruple in the next
several years due to new consoles and online functionality.
The analysts at market research firm DFC Intelligence have issued a
new 750-page report, The Online Game Market, that forecasts the
worldwide online game market to grow from $3.4 billion in 2005 to more
than $13 billion in 2011. While Asia has long been thought of as the
leader in online gaming, DFC expects North America to challenge this
lead during the period.
The growth spurt over the next several years is expected to be driven
by higher PC penetration, increased adoption of broadband Internet,
and the increased usage of video game consoles online.
DFC notes that the emergence of online gaming is also driving up the
number of consumer subscription services, the use of the games
delivery method of online digital distribution and has helped lead to
an increasing acceptance of in-game advertising.
Although sports, racing and action genres are starting to go online
more frequently, most of their revenue is still derived from retail
sales. The leading online game category that will drive the space,
according to DFC, is the MMO. Despite the fact that MMOs appeal to a
fairly small base, the subscription revenues are big contributors.
"MMOGs have a sophisticated online business model that drives a great
deal of revenue for the top products," said DFC analyst David Cole.
The report also takes a look at the effect of online gaming on
consoles. The PC has been the dominant platform for online gaming, but
as the next-gen consoles put more and more emphasis on their online
capabilities, this could change. "As console systems go online in
increasing numbers they are expected to be a key driver of growth,"
explained DFC. "Unlike past video game systems, the new console
systems from Microsoft, Nintendo and Sony all will have a major focus
on online connectivity right from the start. The Xbox Live online game
service is a central part of the Microsoft Xbox 360, the Sony
PlayStation 3 is expected to have an increased focus on online games
and the Nintendo Wii will feature the online enabled Virtual Console
concept that will allow for some significant online digital
distribution."
And speaking of digital distribution, DFC expects it to take off as
well, but the firm also foresees how it could be smoothly integrated
with retail. "... it can work with the existing retail structure via
such mechanisms as consumers buying retail cards that allow for online
digital distribution," explained DFC. Added DFC analyst Alexis
Madrigal: "Digital distribution and virtual item sales have started to
do very well in certain Asian markets and these distribution models
are expected to start having increased success on an international
basis."
Digital distribution is also driving the casual games sector,
particularly in North America and Europe. "Casual games have been the
best at attracting advertisers, but they are now finding a great deal
of growth from subscription and digital distribution models. Asian
markets with products like Kart Rider, and Western products, like
Habbo Hotel, are showing how a virtual item purchase model can work
for games that have traditionally been advertising or subscription
supported," continued Madrigal.
Still, with all this market growth, not everything is rosy in the
online game business. "On the downside, even with market growth many
companies are likely to struggle to become profitable. A big problem
is that the market is becoming more fragmented among different
companies, types of products and markets," DFC noted. "The top online
games have tended to do very well in one market like Korea, China, or
the U.S., but have generally struggled in trying to expand to other
markets. Furthermore, traditional video game publishers have not done
well in the online game business and this has allowed for the rise of
several online-only game companies that are making the marketplace
more competitive for established players."
Even with the fragmentation, big online markets like South Korea,
China, Japan and the U.S. can still each support individual games that
generate over $100 million a year in that one region. A prime example
of this is Blizzard Entertainment's World of Warcraft. In fact, DFC
expects WoW to do over $100 million in each of several different
markets in its first year alone.
Article By James Brightman - BusinessWeek
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