Games industry revenues will double over the next five years: Study

A new study by ABI Research predicts a doubling in size of the videogames market by 2011, estimating revenues of USD 65.9 billion and highlighting a rapid increase in online and mobile gaming.

According to the study, the current hardware platforms (PC, console and handheld devices) will remain significant and continue to generate growth, but it is online, connected and wireless gaming that will drive the industry's expansion in the coming years.

Michael Wolf, principal analyst of broadband and multimedia research at ABI, commented: "The online console gaming market is set to take off, as the new generation of consoles arrives with advanced networking and online gaming capabilities. The ability to download game demos, buy casual as well as full-fledged console games, and access advanced content, including HD video, will result in online becoming the key technology component of gaming for this and subsequent console generations."

Online gaming, access to downloadable gaming and multimedia content and the ability to communicate with friends and family around the world through voice/video chat is a key component of Microsoft's Xbox 360 console, and both Sony and Nintendo have confirmed online functionality will also feature heavily in their plans for the PS3 and Nintendo Revolution. As the companies strive to attract a wider audience than traditional 'hard-core' gamers, the implementation of diverse media functionality for the consoles has become of paramount importance.

"Gaming has become a mass-market entertainment industry on a par with TV, movies and music," adds Wolf. "The ability to play music and media from powerful consoles and handhelds will drive overall industry growth as consumers begin to view gaming devices as one-stop-shop entertainment platforms."

ABI projects 95 per cent year-on-year growth for the online market, including PC online casual gaming, which continues to show positive growth worldwide. Causal games provider PopCap Games and rival RealNetworks have both recently announced European expansion plans to meet the growing desire for quality web-based and connected casual games, and both companies have also expressed ambitions to more comprehensively capture the wireless gaming market - a segment which ABI believes will see substantial worldwide growth over the coming years.

According to ABI, "recent efforts by mobile gaming giants to develop an open gaming architecture in order to reduce development fragmentation will open the doors to more content for consumers and overall higher revenues for game downloads" in the mobile market, and the recent closure of EA's acquisition of mobile giants Jamdat, combined with an increasing consolidation between the traditional videogames market and the wireless sector adds weight to the company's assertions.