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Online Games to Generate One-Third of Game Revenue by 2011

The global online games market is already worth $4 billion and is expected to triple in the next five years, according to the latest Strategy Analytics outlook for the global online games market.

The report, “Online Games: Global Market Forecast,” notes that the rapidly expanding Massively Multiplayer Online Games market, led by Blizzard Entertainment’s World of Warcraft franchise, is blazing the way for electronic sell-through and digital distribution of both PC and console games.

In terms of revenue, the online games category is the largest category out of the three main online entertainment markets - music, games and video - according to Strategy Analytics.

It estimates that the global online games market generated $3.8 billion in 2006 and projects that the market will grow with a compound annual growth rate (CAGR) of 25.2% in the 2007-2011 forecast period to reach $ 11.8 billion - approximately one-third of the total games software market - by 2011.

That’s more than triple 2006’s revenues and double the $5.2 billion anticipated for 2007.

“The rapid growth of the addressable market for digital distribution of both PC and Console games will help clear the way for distribution of mainstream hit titles which has up to now been restricted to the physical retail channel,” said Martin Olausson, director, Digital Media Research at Strategy Analytics.

“The main driver for sustained growth in the online games market will be the continued uptake of broadband services around the world”, said David Mercer, principal analyst at Strategy Analytics. “Additionally, the very lucrative revenue opportunity in both the massively multiplayer segment and the electronic sell through market will continue to attract new entrants into the online games market.”