Online Gaming Will be $20 Billion Business in 2012, Says ABI Research

By Ashok Bindra December 22, 2010

Driven by North American, European and Asia Pacific markets, online gaming continues its steady growth, and the latest study from ABI Research forecasts revenues of slightly more than $20 billion in 2012. Technology developments will mean new opportunities for connected devices beyond the computer.

The Asia-Pacific region, especially China, will be the engine behind much of this growth. However, in China, due to generally lower levels of personal PC ownership, the business models are evolving a little differently. According to industry analyst Michael Inouye, “World of Warcraft, for instance, generates significant revenue for Activision in Europe and North America on a subscription basis. But in China, despite a large ‘subscriber’ base, the revenues are far smaller: it's more of a pay-as-you-go model (prepaid game cards). This also creates a greater reliance on ‘cloud’ or server-based games.”

Another difference in Asia is regulation. According to the analyst, “In China, Korea, Vietnam, and elsewhere the rules are more exacting in what they allow. Some games for instance, have had to alter their content: using WoW again as an example, the developers had to remove the virtual blood.”

The increasingly varied and range of connected devices will also permit gaming on more platforms, says ABI. For example Free, a French broadband and IPTV provider, has partnered with Intel to develop a very advanced set-top box (Freebox Revolution). The STB includes an Intel Atom processor, controller with gyroscopic inputs, Blu-ray player, powerline adapters, WiFi, and a game controller. While these games might be more locally-based for now, they point to the potential for opening this up to multiplayer and massively multiplayer online (MMO) gaming.

ABI Research’s “Gaming in the Cloud” study shows that the overall online game market is expected to surpass $14.5 billion in 2010 and grow to just over $29 billion by 2015, a 14.8 percent CAGR. Of this revenue, casual gaming is expected to account for nearly $7 billion of the 2010 revenue and over the course of the five-year forecast window, it is predicted to grow at a 16.8 percent CAGR to eclipse $15 billion. The MMO market is expected to be larger in 2010 at $7.6 billion, but will show a lower CAGR of 12.8 percent, reaching almost $14 billion by 2015. The casual market is expected to grow faster due to the wider audience appeal, but the Asia-Pacific region in particular will help drive the MMO market.

With the continued strong growth of connected devices, the revenue potential for online gaming beyond the computer is likewise promising, although a number of issues surrounding this market could create hurdles. Despite a strong CAGR, online gaming over connected devices is still expected to represent less than 10 percent of the overall online game market. If the market addresses many of its issues, then growth could accelerate, says ABI Research.

Ashok Bindra is a veteran writer and editor with more than 25 years of editorial experience covering RF/wireless technologies, semiconductors and power electronics. To read more of his articles, please visit his columnist page.

Edited by Tammy Wolf

TechZone360 Contributor

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