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The online games market was worth $15 billion in 2009, and will grow to $20 billion in 2010
How much is the online games industry worth?
It’s a tough question, and is plagued by a difficulty of definitions. For example, Inside Social Games estimates that only half of the $1.6 billion they forecast to be spent in the US in 2010 on virtual goods will come from social games. The rest comes from casual games, free-to-play MMOs and also include goods from virtual worlds that are not really games at all.
Global online games revenues 2010
Colin Sebastian, an analyst at Lazard Capital Markets, has put together the most comprehensive forecast of the online games market and he has some very big numbers. Altogether, the online games market was worth $15 billion in 2009, and it will grow by a third in 2010.
That’s a lot of growth. Here’s the chart and my analysis follows.
GAMESbrief analysis of the Lazard online game revenue forecast
Lazard have included almost every sector: the massive growth of Chinese online gaming, revenue forecasts for virtual worlds. MMOs, casual games and console downloads. It’s pretty comprehensive. So let’s try to split some elements out.
“New gaming” is twice as big as “old gaming” online
By Old Gaming Online, I mean taking traditional skills (building games that are products and shipping them) and applying them to the online world. It means revenue that is easy for traditional developers and publishers to understand. it represents a change in distribution channel, not a change in distribution model.
In my definition of Old Gaming Online, I’ve included: World of Warcraft (because it’s a traditional in-the box business model backed by subscriptions), iPhone games/apps (because these games are still mainly products, not services), Xbox Live, PSN, Nintendo, PC Downloads and In-Game advertising.
In total, Old Gaming Online generated $4.6 billion of revenue in 2009, growing to $6 billion in 2010, a growth rate of 30%.
New Gaming Online (China, Asia, Korea and RoW Online, virtual worlds, social networking games, casual games and EA digital) generated $10.6 billion in 2009, growing to $14.1 billion in 2010, a growth rate of 33%.
New Gaming Online is already twice as big as Old Gaming Online ($10.6 bn versus $4.6 bn), and it is growing faster (admittedly not by much). That’s a real problem for traditional games company, who understand the world of Old Gaming Online better then New Gaming.
If some of this growth is coming from cannibalising boxed product sales, rather than growing the demographic (which it is), traditional games companies need to do well in both Old Gaming and New Gaming Online to avoid seeing their market share, and their revenues, falling.
China is only a third of online games revenues
China is often quoted as being the lion’s share of online gaming revenues. That’s true if you are only thinking about virtual goods. But of all online revenues, China represented only 30% of online revenues in 2009, and that share will fall to 28% in 2010.
It’s still a huge market, but it’s only part of the market, and it’s not growing as fast as many of the other online markets.
Activision’s online influence is waning
World of Warcraft represented 10% of global online gaming revenues in 2009. That’s forecast to drop to 8% in 2010, mainly because Warcraft is showing much slower growth than other segments.
These are only forecasts (and my numbers differ slightly from Lazard’s due to rounding errors) but they show a much more comprehensive picture than usual of the many different online gaming segments.
I expect I will refer back to these figures often. Let me know if you find them useful, and also if you see different conclusions from me in the figures.
(Thanks to WorldsinMotion.biz for the heads-up)