DFC Intelligence  

Press Release

FOR IMMEDIATE RELEASE

Date: August 3, 2004
Contact: David Cole, dcole@dfcint.com
(858) 780-9680


DFC Intelligence Forecasts Significant Growth for Online Games

San Diego, CA -- August 3,  2004

A new report from DFC Intelligence forecasts that the worldwide market for online games will reach $9.8 billion in 2009.  This represents a 410% increase over 2003 revenue of $1.9 billion.  In 2009, the largest market for online games is expected to be the Asia-Pacific region with $4.2 billion in revenue.  Korea and Taiwan are already well established markets and China and Japan are expected to be the two fastest growing countries for online games.

According to David Cole, lead author of the report, the biggest driver of market growth is broadband connections.  “At the end of 2003 an estimated 81 million households worldwide had broadband.  By 2009 we forecast that number reaching 228 million.  It has been proven that the availability of broadband significantly increases online game usage.”  By 2009, DFC forecasts 376 million people worldwide will be playing online games.

What is perhaps even more exciting is the type of consumers that are using online games.  The online game business is notable not only for its geographic diversity, but also its demographic diversity.  Of course, adult males playing massively multiplayer online role-playing games (MMORPG) like EverQuest have received the most attention.  However, it is the numbers for the casual games that are arguably more impressive.  Services like Yahoo! Games, MSN Games at the Zone.com and Pogo attract tens of millions of users and at any given time will have 150,000 to 200,000 simultaneous players each.  On top of that, for many services over 50% of their users are adult females, a demographic that has historically shunned video games.

There is also a growing market of online games for kids.  Content for children includes subscription-based products like Disney’s Toontown, as well as advertising/sponsor supported services like Neopets. Neopets, with over 20 million users, is one of the first examples of online originated content that is spreading to other media.  The traditional video game audience is also slowly starting to get on board the online game bandwagon with services like Xbox Live.

Despite the growth potential, Cole notes that online games are still an immature business.  “Many services are free and dependent on often elusive advertising support.  Online game companies are still grappling with business models.  On the positive side, it has become clear that there are many potential viable business models, with advertising just one part of the mix.”  According to Cole, “free sites have the ability to upgrade consumers via tiered subscription packages, game downloads, on-demand distribution, virtual property sales, mini-transactions, pay-per-play games of skill and other revenue generating models.  The number of potential consumers for online games is so much higher then with the traditional packaged goods business that less revenue per consumer is needed to make online games a really substantial industry.”

The 660-page report, The Online Game Market 2004, contains complete forecasts to 2009 for the online game market in North America, Asia and Europe.  There is also a detailed look at business models, subscription services, advertising, operating costs, digital distribution, online game genres, online console gaming and profiles of leading companies and online game services.  DFC Intelligence is a market research firm focused on video games, PC games, online games and interactive entertainment.  They offer free monthly research briefs to anyone signing up at http://www.dfcint.com/mailing_signup.html

Contact:
David Cole
858-780-9680
dcole@dfcint.com

 KEYWORD: INTERACTIVE / MULTIMEDIA / INTERNET / CONSUMER ELECTRONICS / ELECTRONIC GAMES / ENTERTAINMENT/ VIDEO GAME MARKET RESEARCH/ COMPUTER GAMES 


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