Monday, September 24, 2007

Underestimate of the moment

According to a new study, online game revenue will account for a third of all game industry revenue by 2011. Now, I'm not sure if they mean only games that live online like Wow or if they include all games that touch online, including digital distribution and console games that can be played online (Warhawk). If the latter, then I believe this estimate to be way off.

Four years is an eternity online. Think back to 2003 and the offerings we had at that time and think of the breadth of online gaming now. The fall of traditional console and hardware distribution will happen quick and fierce and my own gut feeling is that it'll happen in two years. It would be more realistic to think that online game revenue will be over 50%. This will include pure offerings like Wow but also downloaded content. Folks, the Wii isn't offering classic games just for the nostalgia or the minor revenue, they're testing a digital distribution model. The Xbox360 and PS3 are already offering full titles online. It won't take long before all titles move online.

By the way, this isn't only for the obvious reasons. Sure, you'll save money on getting rid of the pesky middle man (retailers) but think about the iTunes model. Offering a full suite of titles online will make more games available and tap into the long tail revenue potential of titles that never got a chance at retail.

Over 50%, mark it.

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