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Online Games – Who Knows How Big?

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DFC Intelligence has predicted that online gaming is going to reach US $12 billion by 2011. They believe that this growth will be led by consoles.

I think this prediction is low, perhaps way low and the focus on consoles is incorrect.

First, online gaming seems to be undercounted outside the US. The market in Korea and China are both near US $1 billion today and there seems to be rapid growth throughout Asia. If countries like Vietnam and the Philippines are seeing a substantial online gaming market, it is becoming a truly global phenomenon. Countries like India are just beginning to be touched by this market.

The numbers in Europe are similarly encouraging, but harder to find.

Basically, every country on Earth that can afford to is deploying cheap broadband Internet (except the US where the definition of “broadband” is a fraction of what is available elsewhere for less). Where broadband appears, online games follow… fast.

Also, the rapidly growing Virtual Asset Sale business strategy and rise of casual online games — many with hundreds of thousands of concurrent players — is a market that is not easily measured. Nor is the rise of casual game portals with micro-purchases and virtual currency systems easily measured by analysts.

PCs are becoming so inexpensive that they are no longer a barrier. When the PS2 came out, a PC was probably a $1500 purchase. Now, there are very respectable machines for less than the price of a nex-gen console – with a nice LCD monitor. Both AMD and Intel are pushing towards a $100 computer for the Third World along with many development groups. While the purpose may be for education, much of the use is going to be for games.

The hardest thing is going to be measuring this phenomenon. Game portals, virtual currencies, asset-based games, and more independent game providers all over the world will make tracking this market increasingly tricky. Online games are likely to be the first truly global online market. Unlike regular e-commerce, there is no problem with delivery, just bandwidth, processing, and lag – the cost for all of which are plummeting.

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About Steven Davis

  • Katie

    Hi Steve- was hoping to speak to you about a possible gaming piece including Cenzic Securities and K2 Networks, an online gaming publisher- might there be an appropriate time to contact you? Let me know, thanks so much. [Personal contact info deleted]