Online Gaming Revenues To Pass $5bn By 2008, Says Report

The research group predicts that this growth will be driven by video games consoles users, as well as PC-based subscription services. By 2008, it forecasts that the installed base of online-capable video game systems will be over 100 million worldwide.

The other major factor driving online gaming growth is increasing broadband penetration. The number of broadband households in Europe rose by 140% in 2002, according to the report. Separate figures from IDC put the number of European homes with high-speed internet services at 13.4 million (see Broadband Casts Its Net Across Europe).

DFC’s report forecasts that the usage of online games will reach 35 billion hours by 2008, an increase of 450% from 2002, with 198 million people playing online. These users should be divided fairly equally between North America, Asia and Europe.

However, the report warns that growing consumer usage does not always translate into greater revenue and profits.

“While it has been proven that individual online games can generate in excess of $100 million a year with a 50% operating margin, that is the exception not the rule. Many services build a large user base that does not generate revenue. On top of that, there is a serious glut of products on the market,” says David Cole, president of DFC Intelligence.