Nearly $9B in Online Content and Services for Game Console Makers by 2013

September 23, 2008

This article is included in these additional categories:

Media & Entertainment | Retail & E-Commerce | Videogames | Youth & Gen X

In 2013, online/digital content and services for internet-connected game consoles will generate some $8.7 billion in global revenue for Microsoft, Sony, and Nintendo, the three console manufacturers, according to a new report from Parks Associates.

“The Connected Consoles: Games, Media, and Beyond” report forecasts revenue streams from digital video distribution, downloadable games and content, virtual worlds and avatar-based microtransactions, multiplayer gaming services, and dynamic in-game advertising.

“Broadband connectivity, now a common feature for game consoles, is a key enabler for new business models,” said Yuanzhe (Michael) Cai, director of Broadband and Gaming, Parks Associates. “Among the different online revenue opportunities, digital video distribution and downloadable games and content are the most promising.”

Among the “big three” game console manufacturers, Microsoft dominates the online content and service market, but Sony and Nintendo are gaining ground as they ramp up their base of connected customers and diversify monetization methods, Parks said.

Among those watching video on Xbox Live, movie trailers (65%), music videos (59%) and cartoons (38%) are the top 3 content types. Hollywood movies are fourth, with 35% saying they have watched them on Xbox Live.

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The most telling determinate of game console ownership among households is whether children live there: Seven in ten (70%) of households with children own game consoles. Nearly half of single households also own game consoles.

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Among the study’s forecasts:

  • Together, Xbox 360, PS3, and Wii will generate some $1.2 billion globally in digital content and services revenue this year, mostly from downloadable games and videos. In 2013, the total revenue figure will exceed $8.7 billion.
  • Sony’s and Microsoft’s digital video revenue will exceed $4 billion in 2013.
  • In 2013, 170+ million game consoles will be internet-connected: 74 million Wiis, 60 million PS3s, and 38 million Xbox 360s.
  • In 2013, the three current-gen consoles will together generate $2.5 billion in digital download revenue (full-game downloads and downloadable content).

Other findings:

  • By the end of June 2008, nearly 30 million Wii units had been sold.
  • In July 2008, Microsoft said there were 12+ million registered Xbox Live members.
  • In August 2008, Sony said there were 10 million registered PlayStation Network accounts, with an estimated 50% connection rate globally.

“As game consoles become focal points in tens of millions of households and deliver not only games but also video and music content, service providers need to prepare for potential revenue cannibalization and a new kind of competitor,” the Parks Associates report concludes.

“Initially, cannibalization will be limited to Video-On-Demand services, but as console makers aggregate ad-supported, subscription-based, and eventually linear TV content, the cannibalization impact will increase, especially among younger consumers. Service providers should cooperate with console manufacturers to determine mutually beneficial partnerships.”

(Yuanzhe (Michael) Cai is moderating the session “Games of Tomorrow and the Future of MMOGs,” September 26, at Digital Media Wire’s NY Games Conference.)

About the study: “Connected Consoles: Games, Media, and Beyond” profiles new console-related capabilities, services and business models, including online multiplayer gaming, virtual worlds, dynamic in-game advertising, and digital delivery. It also forecasts revenue growth and market share and examines the impact of game consoles on other industries.

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