Videogame downloading revenue to triple in 2007

E FOR ALL: Study: 37 million online-capable consoles in homes by 2008

By Susanne Ault -- Video Business, 10/19/2007

OCT. 19 | Online downloading for videogame consoles is exploding in popularity, with revenue tripling to $583 million in 2007 from $133 million last year, according to research firm IDC.

In a study presented during the first Entertainment for All Expo in Los Angeles, IDC predicts that by year’s end, more than 31% of online capable game consoles in North America will be in active online use by 14 million gamers. The North American install base for these consoles, including the Xbox 360, PlayStation 3 and Nintendo Wii, will reach more than 37 million units by 2008.

Although traditional retail software and electronic sell-through content are both expected to surge in sales this year over 2006, the latter will do so at a far stronger rate. Physical games sales will jump 19.5%, and downloaded content will rise 1,029%. Revenue from online subscription sales will jump 158%.

“In 2007, game-related downloadable content derived from manufacturers’ proprietary online console networks will reach $296 million, while subscription revenue will increase from $107 million in 2006 to $277 million,” said Billy Pidgeon, IDC program manager for games. “While [physical] software sales are still significant, increasing from $8 billion in 2006 to $9.5 billion this year, content sold, accessed or downloaded online to videogame consoles over manufacturers’ proprietary networks will remain the industry’s most exciting growth opportunity in this hardware cycle.”

Currently, the dominant online gaming platform is the Xbox Live network.

Additionally, IDG Entertainment presented consumer demographic info of today’s gamers, which should help videogame companies better market their products.

There are five types: core gamers, who see games as their main form of entertainment; status gamers, who need to be the first to try the latest titles; social gamers, who need to play games with other people; active gamers, who need to be out of their chairs during play; and casual gamers, who see gaming as a secondary form of entertainment.

“The key gamer segments differ in their spending habits,” said Simon Tonner, IDGE marketing director. “Status gamers have spent the most on videogames and systems over the past six months and are expected to spend the most in the next six months, with core and active close behind. “In the past six months alone, status gamers have spent $296.20. On the opposite end of the spectrum, casual gamers have spent $82.20 over the same time period.”