Study: Online gaming to reach $4.9b in 2004

Thanks in part to the popularity of Internet role-playing games and dedicated gaming consoles like Sega's Dreamcast, online gaming will grow to almost $US5 billion in the next five years.

The combined western European and US market for online gaming will grow to $US4.9 billion by 2004, according to a new study by London-based market researcher, Datamonitor.

The online gaming market will eventually be a close to even split between the two regions, the study also reported. The US gaming market is now worth $57 million, while the western Europe market is only worth $24 million. By 2004, the divide will be less drastic, with the regions being worth $2.8 billion and $2.1 billion respectively, according to the report, "Online Games and gambling in Europe and the US, 1994-2004 3rd edition."

Fee-based Internet gaming has been extremely successful. For example, the two-year old Ultima Online boasts 134,000 subscribers in 50 countries, each paying $9.95 per month to play with other users over the Internet. Electronic Arts and Origin Systems have announced that they are currently developing the sequel, Ultima Online 2.

Ultima Online accounts have actually become liquid assets for some, with online "property" and "money" attracting bids well over $1,000 on eBay's online auction site.

Internet penetration is the largest driver of the online gaming market, but Internet-enabled game consoles such as Sega Enterprises' Dreamcast will also build market share through telephone access fees, according to Frederic Diot, senior analyst at Datamonitor. Users pay a per-minute dial-up fee to their telecommunications carrier to play such games on consoles throughout Europe, since all calls, even local calls, are metered in Europe.

A small number of games will also be responsible for a large portion of the revenues, Diot said. "The games played by the hard-core gaming segment are Quake II, Ultima Online, EverQuest and Half-Life," Diot said. "The next big things online will probably be Quake III and Unreal Tournament," he added.

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