Online Game Revenue to Fuel the Future

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Strategy Analytics recently released the report, “Global Video Game Market Forecast.” In it they state that the video game industry will grow globally to $64.9 Billion by the end of 2013. The rise they say will come in increased software purchasing for the current generation of consoles as well as the handhelds and the PC thanks to digital digital downloads, online subscription services, in-game advertising and sales of virtual goods as well as an increase in physical purchases.

I don’t know that I agree with the physical purchases increase. Sure there will always be major physical releases but with increased hard drive capacity on the consoles and the widespread availability of broadband I can see digital delivery continuing to grow as it has done.

They also state that online game revenues, which are expected to rise at a compound annual growth rate (CAGR) of 18.7% to reach $24.8B by 2013, will grow the most--accounting for more than 38% of total video game software revenues.

This is certainly a possibility with more and more massive multiplayer online (MMO) games announced every week and bigger and better licenses (Star Wars, Star Trek, LEGO, DC Comics) it should only continue to grow as the games already in the space and those coming soon expand their offerings. The revenue generated from premium MMO games as well as in-game virtual item sales and virtual currency have a lot of momentum at present and their continued growth will help the industry as a whole to grow.

“Strategy Analytics predicts more revenue growth from online sources instead of from traditional physical game sales as broadband adoption continues, which is similar to other media sectors. More gaming devices and games are being connected online and new online revenue models are appearing on the market,” said Martin Olausson, Director of Digital Media Research at Strategy Analytics.

Jia Wu, Analyst in the Strategy Analytics Digital Media Strategies (DMS) service and author of the report, added, “New online revenue streams, such as in-game dynamic advertising and sales of virtual goods, will spur rapid growth in online game revenues in the coming years.”

Strategy Analytics predicts the sales of virtual goods in social network-based video games to be the predominant growth category over the next five years. While the Asia Pacific market will dominate virtual goods sales, North America and Western Europe will experience faster growth.

So while 2009 wasn’t the best year for games and January didn’t look so rosy it is certainly bound to be a bright future as the global economy rebounds. People have already realized that video games are a viable and acceptable mainstream entertainment choice. They deliver a far longer and better return on investment with countless hours of time per dollar spent (as opposed to music and film which offer limited time for the money). Certainly as video games expand and reach into new markets with innovative new games and ways to play, it will become the dominant entertainment form for the future.

For reference, the box office overtook home purchases (DVD/Blu-Ray) last year with US sales at $9.87 billion, and DVD/Blu-Ray at $8.73 billion and overall film sales in the US for 2009 were $28.38 billion (including rentals, view-on-demand, etc).  US video game sales for the year totaled $19.66 billion (8% down according to the NPD Group).

In : PC

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