IDC predicts US$ 10.5 billion in console online revenue by 2011

Posted Aug 10, 2007 at 2:17PM EST by QJ Staff

Listed in: Wii, PS3, Xbox 360 Tags: Billy Pidgeon, Microsoft, Sony

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And on the other side of industry news, global industry analysts IDC foretell an optimistic future for the cycle of next generation consoles the world over. They believe that come 2011, the gaming industry could rake in US$ 10.5 billion in online revenue from markets worldwide, thanks to the Internet connectivity of the Nintendo Wii, the Microsoft Xbox 360 and the Sony PlayStation 3.

Their positive views for the online market have obviously been spurred by the growing success in content and service provision over online portals, such as the Wii Shop Channel and Xbox Live. "Gamers' use of connected consoles is expanding the business opportunities and cash flow this console cycle," said Billy Pidgeon, program manager of the Consumer Markets division on games.

It has become a solid belief that online services will become the primary rising revenue for the games industry, notwithstanding the potential market growth in the online sector for PC and Mac games. IDC's report, entitled "Worldwide Connected Console 2007-2011 Forecast: Downloads for Dollars," observed a possibility that online revenue could grow from being 2.5% of the industry's revenue source to 18.6% in four years. That's effectively US$ 981 million to US$ 10.5 billion in less than a regular cycle.

Downloadable content revenue will overtake even in-game advertising revenue, so goes the forecast, reaching only US$ 858 million by 2011 and sharing part of the income from online revenue. Other details that might interest market analysts and investors include:

Subscription revenue for premium online services and games will grow from $476 million in 2007 to over $2.4 billion in 2011.
The share of online console revenue will decline from 48.5% in 2007 (already down from a high of 86.5% in 2006) to 23.2% by 2011.
Downloadable content (DLC) consisting of games and game-related items will become connected consoles' primary revenue source in 2007.
Revenue from DLC will rise from $493 million in 2007 to $7.2 billion in 2011.
In 2011, game-centric DLC will make up 68.6% of online revenue.
Advertising revenue from sponsored services, in-game ads, and product placement in connected consoles will reach $12 million in 2007.
Advertising revenue will grow to $858 million in 2011, with an 8.2% market share of online revenue.

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IDC predicts US$ 10.5 billion in console online revenue by 2011

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