The Future of Internet Gaming: Industry Growth and Trends

Introduction: The Rise of Online Gaming

The Internet has come a long way from the days of UNIX commands and inter-office emails. Beyond the burden of endless spam mail, the Internet has become a staple in households across the world, where people can shop from the comfort of their own homes and educate themselves on world events and cultures.

In the new millennium, with online gaming evolving at a remarkable pace, the industry is growing at an alarming speed (Bahlmann, 2002) and shows no signs of slowing. According to CNet (Becker, 2002a), the then-current $210 million gaming industry was projected to reach $1.8 billion by 2005. Interestingly, there was no single dominant company in online gaming at the time — a fact reassuring to a public that already found itself with limited operating software options.

It is hard to imagine the economy being in decline when the gaming industry was posting such incredible figures. The long-term effects the gaming industry would have on overseas travel and box office sales were expected to fluctuate over the following few years, with factors related to job preservation ultimately deciding how people would spend their discretionary income.

Market Size and Industry Players

It is no secret that electronic games are big business. In 2001, $6.35 billion worth of video and computer games were sold at retail. An additional $196 million came from subscription fees to online games (Croal, 2002a). Popular free and pay-to-play services on sites like Yahoo! and MSN offered everything from board games to multiplayer arenas for commercially purchased PC games. In these spaces, players could connect with others around the world — often competing in games such as SWAT 3, the hugely popular Half-Life: Counter-Strike, or racing titles like Hot Pursuit.

A number of service providers joined the market, including AOL, which launched a service allowing its members to play new game releases exclusively before they became available to the general public (Moran, 2002). Unlike the free offerings from Yahoo! and MSN, these games were specifically designed for the online environment and would no doubt encourage avid gamers to subscribe to AOL in order to access them.

Sony's PlayStation 2 was projected to account for 72% of global console sales by the end of 2002 (Greenspan, 2002), with the average user being 23 years old. Games were being actively marketed toward an age bracket that included teenagers, and within a few years it would become clear which demographic was dominating Internet usage — and online gaming in particular. Teenagers were expected to remain a significant revenue source, especially as more DVD releases were timed to coincide with game launches, such as Reign of Fire, which carried a Teen rating.

Broadband, Consoles, and Accessibility

The onset of broadband technology helped open doors for major companies such as EA and Sony, which were already entering the online gaming arena with user-friendly gaming websites and the PlayStation 2's ability to connect to the Internet. Sony's EverQuest series received significant media attention in connection with the death of 21-year-old Shawn Woolley, who committed suicide shortly after playing the game (Miller, March 2002).

One might have expected such early negative publicity to dampen public interest, but EA found itself spending twice as much per game as it had six years prior (Salter, 2002), with its revolutionary approach to graphics drawing fans of sports simulations and first-person shooter titles.

Broadband and DSL connections made it easier to play high-resolution graphics online, and companies like Sony and Microsoft were making internet gaming more accessible to their console markets (Becker, 2002b). More than likely, a large crossover of console games appearing on the Internet would follow, with titles potentially available for free (Burnham, 2002). How this would affect the relative cost of console games versus PC games remained to be seen.

References

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Miller, S. A. (2002, March). Death of a game addict. Milwaukee Journal Sentinel.

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