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About Rainier

PC gamer, WorthPlaying EIC, globe-trotting couch potato, patriot, '80s headbanger, movie watcher, music lover, foodie and man in black -- squirrel!

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Online Games Revenue To Reach Over $3 Billion By 2015

by Rainier on May 1, 2010 @ 1:59 a.m. PDT

In recent years, the game market in Asia has exploded driven by online games and virtual goods Now these trends are rapidly coming to the rest of the world. A new Research and Markets report predicts that the MMO market will grow from about $800 million in 2009 to over $3 billion by 2015.

This new report, based on surveying current consumer attitudes and seven years of actual transaction data provides the most comprehensive look to date at how digital distribution models are being adopted by core gamers.

To understand how the movement to digital downloads and virtual goods are impacting the core game consumer, DFC Intelligence conducted a survey of nearly 5,000 gamers and partnered with Live Gamer to analyze seven years of virtual good transaction data from games released in Korea, U.S. Germany, Japan, the Philippines and Vietnam.

Research firm DFC Intelligence and Live Gamer, the global leader of total commerce solutions for online game publishers, social networks and digital entertainment companies, today announced a new report indicating that gamers in Europe and North America are now largely comfortable with buying digital content. According to the report, titled Consumer Trends in Virtual Goods and Downloadable Gaming in North America and Europe, gamers are rapidly adopting the virtual item model where they purchase individual digital components such as virtual currency, items or characters.

The survey was conducted in January and February 2010 among nearly 5,000 gamers in North America and Europe. In addition, DFC Intelligence analyzed over seven years of historical Live Gamer micro-transaction data from multiple countries including South Korea, U.S., Japan, Germany, Vietnam and the Philippines.

The virtual item model has been a major driver of market growth in Asia, and has only recently been introduced to the mass market in Europe and North America, which was highly popularized through the growth of social networks. Recent games like Farmville from Zynga, Free Realms from Sony Online Entertainment and Combat Arms from Nexon have been able to attract millions of users while monetizing through virtual goods. According to the survey, 88 percent of respondents said they had purchased some form of digital content (including music, movies and games), while 60 percent of those responding indicated they had purchased an in-game good that was not a full game.

In most cases, the digital items are offered in free-to-play (F2P) products, which are low risk for the consumer, said DFC analyst David Cole. By offering free play, these games can attract millions of users, many of which are now choosing to pay for virtual items to enhance the experience. In looking at the historical track record it is clear that a major advantage of a virtual item model is a single product can have a lifespan of years online as opposed to a few months on the retail shelf.

Many of the products that use a virtual item model fall into a category DFC Intelligence calls MMOG Lite. MMOG Lite products often allow for persistent worlds and character building, but without the high monthly fees associated with large commercial massively multiplayer online games (MMOGs). In North America and Europe, DFC forecasts that the MMOG Lite market will grow from about $800 million in 2009 to over $3 billion by 2015.

Korea still has the highest current revenue and longest history of all the markets we studied. However, when looking at seven years of actual historical transactional data, it is clear markets like Germany, Japan and the U.S. are not only trending towards Korea, but doing so at a significantly higher spend per transaction, said Cole.

However, a virtual item model is not limited to any one game genre. Music titles, shooters, sports games and pretty much any type of game will be able to benefit from growing consumer acceptance of digital items, said DFC analyst Jeremy Miller. Furthermore, the success of social networks like Facebook show the popularity of virtual items can extend far beyond games.

This study shows that core gamers are comfortable with the free-to-play model and are increasingly engaging in the purchase of virtual goods, said Andrew Schneider, co-founder and president of Live Gamer, The findings underscore the market potential as traditional Western game publishers migrate towards microtransactions as the central monetization method.

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