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Online Gaming Will Fuel Games Industry Growth

by Thomas on July 9, 2002 @ 3:54 p.m. PDT

Emerging video game platforms are poised for rapid growth, as a confluence of factors enables advanced multiplayer experiences on consoles and PCs, improved games on mobile phones and other handheld devices, and simple, yet engaging interactive TV games. According to a new study commissioned by the European Leisure Software Publishers Association (ELSPA) and carried out by Screen Digest, spending on these emerging services by European consumers will grow from Euros 127m in 2001 to Euros 6.5bn in 2006, a growth of over 5000 per cent.

ELSPA/Screen Digest study finds emerging gaming platforms and online services will create Euros 6.5bn in new revenues by 2006

Online consoles, PCs, interactive TV, and wireless handsets will drive consumer interest and growth

While the new online services being launched for Sony's PlayStation 2, Microsoft's Xbox and Nintendo's GameCube will start slowly, the report forecasts that these will ultimately be very successful and generate more than Euros 2.5bn in European revenues by 2006. Indeed, online console gaming is itself expected to become an important driver of broadband Internet deployment as a predicted 16.6m households in Europe connect their game consoles to the Internet over the next 5 years.

Another big new opportunity for the leisure software industry will be next generation mobile phones. With mobile operators searching for ways to balance their books after spending out on 3G licenses, games will be one of the most important new services offered to their subscribers. New handsets with colour screens that allow games to be downloaded to them are coming to European shops this year and the report predicts they will be in the hands of 60m Europeans by the end of 2003. From small beginnings (around Euros 70m in 2001), the report forecasts that consumer spending on mobile phone gaming will hit Euros 2.2bn in 2006.

"As the technology, networks, and business models come together, online gaming in all its forms will become the next significant growth driver in the interactive entertainment business," says Ben Keen, co-author of the study. "All these new outlets for gaming are finally ready to break away from the margins and usher in a dramatic new phase of growth for what is already an impressively buoyant industry."

Like many areas of the games business, British companies are world leaders in bringing games to the digital TV viewer. Games are already one of the early success stories of the interactive TV (iTV) era and Screen Digest predicts UK consumer spending on iTV games will more than double from £50.7m in 2002 to £132m in 2006. The total European iTV gaming market will be worth close to Euros 470m in 2006.

According to Roger Bennett, Director General of ELSPA: "The non-retail computer games sector is poised for a major take-off. Already Internet gaming is proving extremely popular, with's casual games site, Pogo, the most visited site on the Web logging 4.4 billion minutes of play in January this year. Digital television is also proving a valuable games portal, notably for female gamers with Skydigital claiming that over 40 per cent of players on its Gamestar service are women."

"While the traditional bricks and mortar games market will continue to grow, the development of wireless gaming, interactive TV, streaming, online console gaming and internet games enables publishers literally to think outside the box. They have huge opportunities to develop new revenue streams and most importantly, to maximise sales for their existing intellectual properties. Publishers will be able to reach out to a more diverse gaming audience, offering more opportunities to play across a wider range of platforms. The future is good for the industry and good for gamers too".

Internet PC gaming has been over-hyped by many. However, while there have been notable "dot com" failures in the field, there have also been resounding success stories. Led by multi-player games like Everquest, Ultima Online and Asheron's Call, the number of paying subscribers to Internet games now exceeds 1m worldwide. Screen Digest forecasts this will grow to 7m by end-2006, including 1.4m in Europe. These subscribers will push Western World consumer spending on PC-based Internet multiplayer games to $1.3bn by 2006, with Euros 265m of that in Europe.

While the popularity of multi-player PC games is expected to increase, that market is poised to be eventually eclipsed by the emerging market for "games on demand". Although take-up of such downloaded and "streamed" games by European PC owners will initially lag, the number of users is projected in the report to hit 5.5m by the end of 2006. The European Game on Demand market is expected to be valued at Euros 930m by 2006.

The ELSPA/Screen Digest study, "Wireless, Interactive TV, & Online Gaming," marks the first time that the prospects for all these new outlets for games have been thoroughly examined. It provides an unprecedented analysis of each market, including the technologies, growth accelerators and inhibitors, leading firms, and market forecasts.

The full report Wireless, Interactive TV & Online Gaming: Market assessment and forecast may be purchased for: GBP £995 (EURO 1775 US $1595). The price for ELSPA Members is GBP £250. Orders can be made via the Screen Digest website at Queries should be addressed to

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