Over the course of just a few years, online gaming has grown from a nascent industry to $353 million in direct sales and subscriptions revenue and $450 to $550 million in advertising.
"Although software and hardware revenue fluctuate, online revenue grows steadily, according to the Yankee Group report, Online Video Gaming Will Plug Publishers, Home Net Vendors and BSPs into New Revenue. Revenue from the sale of video game consoles is significantly affected by the console life cycle. Originally priced at $299 when they debuted, video game console MSRPs will fall to $79 to $49 within the next several years.
"Console growth is negatively affecting CD-ROM based PC game sales," says Michael Goodman, Media & Entertainment Strategies senior analyst. "PC gamers are migrating to consoles, causing revenues for PC games on CD-ROMs to decline and console revenue to grow. Online gaming represents a shift in revenue, away from boxed CD-ROM games sold at retail to online sales."
With the growth of online gaming, a number of conclusions can be reached about this evolving market:
- New devices are creating revenue opportunities for Web-based games.
- Advergaming represents a significant opportunity for advertisers, publishers, and developers.
- Online games will stabilize and supplement revenue from PC and console games.
- Online console gaming represents an opportunity to enhance the relationship between broadband service providers and console manufacturers.