Online Gaming Market Numbers

[HaemishM]

PriceWaterhouseCoopers just released a report on Online Gaming.

A new report from PricewaterhouseCoopers predicts that the number of online video game subscribers will more than quadruple between 2005 and 2009, as will online gaming revenues.

The number of online video game subscribers hit 4.4 million in 2004, up from just 400,000 in 2000. The sector will exhibit enormous growth, with subscribers totaling 6.5 million in 2005, 17.1 million in 2007 and 28.5 million by 2009. At that point, 46% of broadband households will contain an online video game subscriber.

Spending on subscriptions is expected to top $3.7 billion by 2009, compared to $647 million in 2004. This will occur even though the average monthly subscription fee will decline steadily over the course of the decade, sitting at $11.00 by 2009, compared to a high of $12.95 in 2002. 

Japan, with its considerably smaller population, spends roughly as much on online games as the US, according to data from Nomura Research Institute. It reports that the online gaming market in Japan totaled 77 billion yen in 2004, roughly $700 million. But the PricewaterhouseCoopers projections show the online gaming market growing substantially faster in the US than in Japan. Nomura projects that the Japanese market will reach 200 billion yen, or about $1.8 billion, by 2009, well short of the $3.7 billion projected for the US by PricewaterhouseCoopers.

Not sure why they think the average subscription price will DECLINE over the next few years, since no MMOG to my knowledge has ever DECREASED the subscription fee (other than AO's year free on the basic game).

I can't reproduce the charts they included, but here are some numbers. In 2003, there were 2.8 million US subscribers of online games, with 11.7% of broadband households holding an OG subscription. In 2004, 4.4 million subscribers in the US, with 13.5% of broadband households having a subscription. Annual subscription spending in 2003 was $420 million and in 2004 was $647 million. Broadband penetration is apparently good for MMOG's.

Remember, these are only US subscribers, and I'm sure it just says that 1 subscription = 1 person, not taking into account people who have accounts in multiple games or multiple accounts in a single game. It's just how many subscribers there are total.

[schild]

The number of parents who won't buy World of Warcraft because of the $15 a month fee is staggering. It's the reason Guild Wars is outselling WoW at my store 2:1. And I wouldn't be surprised if it's like that at many places. So yea, I see subscription prices dropping back down to $10 in the next few years.

As for the rest of the numbers, too much wiggle room. 4.4 million up from 400,000? When did we define online gamer as people that catass in EQ and WoW. Cuz that's what those numbers mean to me. What about the hundreds of thousands playing Counterstrike EVERY WAKING HOUR. Or the 50,000 that are always in a WCIII game. Xbox Live anyone?

All of these people are potential customers for a persistant, console-based, mass-market MMOG that's based on at least some sort of player skill as opposed to a time-sink. A sports MMOG with EA's entire stable accessible from one lobby a la Guild Wars. A persistant-world RTS done by a major company (BHG/MGS, etc).

Meh, anyway. Ignore me. I'm sure the numbers they gave out mean a lot more to other people.

[HaemishM]

Well, it doesn't really qualify what makes an online game, only that it has to be a subscription-based game. That takes out shit like most of the parlor games, but I'm not sure if that constitutes things that we might not think of as an MMOG. It cuts out things like Counterstrike, but then how could you track those numbers anyway?

[schild]

Valve tracks them for you in a bi-annual report I believe. Also, they cover subscriptions? So every Xbox Live game and doesn't Pogo.com have subscriptions? Did they include the stuff Dave Rickey's working on at Orbis. Or the Starport people? What about MtGO or Starchamber. Just saying, there's no way these people did the legwork. The numbers are simply far too low and far too focused.

This goddamn industry needs a big book of accepted definitions.

[Merusk]

The number of parents who won't buy World of Warcraft because of the $15 a month fee is staggering. It's the reason Guild Wars is outselling WoW at my store 2:1. And I wouldn't be surprised if it's like that at many places. So yea, I see subscription prices dropping back down to $10 in the next few years.

Not to mention as the market gets more saturated you'll see companies start to offer lower prices as incentive to subscribe to them over game xyz.  Particularly since so many games ARE rehashes of each other.   If given the choice between $10 for DAOC and $15 for EQ when you were into both games, which would you have chosen?

As for the rest of the numbers, too much wiggle room. 4.4 million up from 400,000? When did we define online gamer as people that catass in EQ and WoW. Cuz that's what those numbers mean to me. What about the hundreds of thousands playing Counterstrike EVERY WAKING HOUR. Or the 50,000 that are always in a WCIII game. Xbox Live anyone?

All of these people are potential customers for a persistant, console-based, mass-market MMOG that's based on at least some sort of player skill as opposed to a time-sink. A sports MMOG with EA's entire stable accessible from one lobby a la Guild Wars. A persistant-world RTS done by a major company (BHG/MGS, etc).

Meh, anyway. Ignore me. I'm sure the numbers they gave out mean a lot more to other people.

You're too close here and looking at this as someone who actually knows shit about games and the industry.  Look at it like someone who has an MBA and fucks his neighbor's wife after work instead of playing on XBL, MTG or Guild Wars.  Like everything else business related, nobody cares about numbers that don't generate regular income.  XBL is probably counted as an 'online gamer' because they generate fees. You sell one box of WC3 or CS, and that's it for revenue generated.  Nobody cares if they play it online or shove it up thier ass because that's all the cash the stockholder will ever see from it.

[Paelos]

I agree, increased competition will bring a drop in sub prices. Good competition might even lead to move innovative ideas to grab a growing market. We can only hope.

[schild]

There are SO MANY possible MMOGs. SO MANY. The sheer amount of money that could be generated from licenses from Wizard, EA, and other companeis creating pay-by-the-month online games that are nothing more than a virtual lobby (like Shot Online or Gunbound) to connect other games to eachother is STAGGERING. How fucking cool would it be for a game that had Star Wars Galaxies crafting and housing system but all the items were Magic cards and homes were private dealers for the cards? You craft cards from resources, build your decks and everything is PvP. This is why I say all MMOGs are still first-generation. There's a ridiculous number of ideas that haven't even remotely been touched on, yet they're already talking about prices dropping due to competition. The number of genres that could be infected with this payment scheme and MMOG trappings is mindbending.

It needs to move to consoles. Once it comfortably hits the couch and games that don't need a keyboard and mouse are created with an easily used chat system (very controlled voice chat), the possibilities are endless. ENDLESS. But who am I kidding. Every single large MMOG company is making Just Another MMOG at the moment (as far as I know) and it's starting to wear. Very thin.

[WindupAtheist]

How fucking cool would it be for a game that had Star Wars Galaxies crafting and housing system but all the items were Magic cards and homes were private dealers for the cards? You craft cards from resources, build your decks and everything is PvP. This is why I say all MMOGs are still first-generation.

Uh... erm... ah...

Umm...

No?

[WayAbvPar]

I would have laughed until I was sick if Haemish's post was a link to the infamous chart.

[schild]

How fucking cool would it be for a game that had Star Wars Galaxies crafting and housing system but all the items were Magic cards and homes were private dealers for the cards? You craft cards from resources, build your decks and everything is PvP. This is why I say all MMOGs are still first-generation.

Uh... erm... ah...

Umm...

No?

Say it with me: Every game is not for everyone.

[HaemishM]

I would have laughed until I was sick if Haemish's post was a link to the infamous chart.

Despite it's probably inaccuracies, it's still a better barometer than that fucking chart.

[NiX]

Say it with me: Every game is not for everyone.

Ouch. The irony. It hurts.

[Margalis]

28 million means 1/10 people. I find that very difficult to swallow.

[shiznitz]

Not sure why they think the average subscription price will DECLINE over the next few years, since no MMOG to my knowledge has ever DECREASED the subscription fee (other than AO's year free on the basic game).

All Access Pass = effective price decrease.

[WindupAtheist]

Say it with me: Every game is not for everyone.

That's fine, Schild.  But next time you talk about how Game X is the suck, and how we're still stuck in the first generation, I'm going to remember that your idea of the second generation was SWG + MAGIC CARDS = MONEYHATS.   :-D

[tazelbain]

Combine the best part of SWG with the best part of MtGO sounds like a good Idea.
At least better than EQ-lite retread number 87.

[Alkiera]

Combine the best part of SWG with the best part of MtGO sounds like a good Idea.
At least better than EQ-lite retread number 87.

The best part of SWG was the easy account cancellation process.

Alkiera

[schild]

I'm going to remember that your idea of the second generation was SWG + MAGIC CARDS = MONEYHATS.   :-D

If Wizards had the balls to license out their rulesets, you'd have to eat your shoes. But it won't happen.

[Trippy]

28 million means 1/10 people. I find that very difficult to swallow.

There have been approximately 32 million PS2s and somewhere around 15 million Xboxes sold here in the US. If you assume that roughly 50 - 60 million PS3 and Xbox 360s will be sold by 2009 it's not hard to imagine that roughly half of them will be paying for some sort of subscription-based gaming.

[Hoax]

I didn't see anything in the article that said MMOG's would stop sucking some time soon, and no if they make 28million eq clones they will all still suck...

There are allot of cool things that can come out of this though, its like those toys they make that would be really cool if everyone you knew had one.  The create-a-monster who will fight anyone else who is carrying the devices monster, personal laser tag, stuff like that.

[MahrinSkel]

Sorry, I'm going to have to SirBruce this a bit.

Not sure why they think the average subscription price will DECLINE over the next few years, since no MMOG to my knowledge has ever DECREASED the subscription fee (other than AO's year free on the basic game).

More "Niche" and "Boutique" games making up a larger segment of the market could do it.  ToonTown is $9.95 a month.  Other business factors can get involved too (ToonTown is $8.95/month for Comcast Subscribers, AO is free for people willing to see ads).

I can't reproduce the charts they included, but here are some numbers. In 2003, there were 2.8 million US subscribers of online games, with 11.7% of broadband households holding an OG subscription. In 2004, 4.4 million subscribers in the US, with 13.5% of broadband households having a subscription. Annual subscription spending in 2003 was $420 million and in 2004 was $647 million. Broadband penetration is apparently good for MMOG's.

Their numbers are about 10% higher for the historical data than what I've been using, but close enough (*IF* they are including Europe, otherwise their figures make little or no sense).  Their projections, on the other hand...They're projecting continued 50-60% annual growth.  I think that we've hit the end of exponential growth, and we're going to be on a linear track with 2 million +/- 25% being added per year for the next 7 years or so.

Broadband uptake is *extremely* high for MMO players, between 85% and 90% in 2003, when less than 20% of homes were wired for it.

--Dave

[Trippy]

The numbers are for the US and they are for all subscription-based gaming, not just MMOs. Here's another summary of the report :

http://www.emarketer.com/Article.aspx?1003462

[MahrinSkel]

So he's including XBLive, which I generally don't.  It's going to get confusing for my numbers when the XBL "Premium" services open, but I'll still try, just because regular XBL doesn't tell me anything useful about the kind of subscriber I'm interested in.

--Dave

[Venkman]

As Dave said, more niche/boutique with lower fees could do it. People ignore games like Runescape, which has no fee front end, yet is hugely popular with the people that'll be ranting about this shit a decade from now.

Also, Guild Wars is a good example. There's simply not enough there to charge a monthly fee, so they didn't bother. I'm sure their business model was based on selling enough boxes initially to fund the server maintenance for a year or more. I highly doubt they'll depend on everyone buying expansions because far less than everyone will. Either that's occured to them already or NC Soft had to smack it into them, but regardless, GW stands as proof that you can have an experience analogous to "semi/maybe/slightly-massive online" (read: massive enough) without charging for it.

Less world > more game > less cost > no fee.

[magicback]

I think the growth rate is sustainable for the next few years, but I think the average "subscription" will be lower then their projections as there will be more games without the traditional subscription model and the growth will come from more casual games.

For example, based on a Lehman Brother research report on NCSoft published back in Jan 05, GW is expected to make about $50m and $70m in revenue globally, all without a monthly subscritpion.

However, if we exclude games without traditional subscription model, then I'll go with Dave's subscriber numbers.

My rationale:  parents and kids are happy to spend $60 every month to get a "box", but will think twice about giving out credit card info and such to get a monthly subscription.

[HaemishM]

So he's including XBLive

X-Box Live is the first true virtual world.





Discuss.

[schild]

Jesus. That's a loaded remark. I just woke up and I've got an essay in my head. I'll be back later.

And if it is the first true virtual world, there's too many wiggers.

[HaemishM]

Of course it's a loaded question. That doesn't make it an invalid point. 

[schild]

Of course it's a loaded question. That doesn't make it an invalid point. 

But why is it stickied? 

[HaemishM]

Don't ask me. It was that way when I got here this morning.

[MrHat]

Of course it's a loaded question. That doesn't make it an invalid point. 

But why is it stickied? 

Hot moderater love?

[schild]

Hot moderater love?

Remind me to never ask what something is "stickied with." Now, /derail. Time for everyone to keep their eyes on the prize.

[chinslim]

I see many people comparing video gaming to the movie and entertainment industry.  But if i had to put my money anywhere(or could), I'd bet on movies still.  Why?  If a video game flops, it'll gather dust in the bargain bins.  But a poorly-received box-office flop can still make you a buck or break even in the DVD market.

[magicback]

And movies don't become abandonware either.

But seriously, a few equity reseach anaysts are hot and bothered by XBox 360.  For example, a June 21st research report from Morgan Stanley projects XBox 360 to outsell PS3 in 2006 and 2007.

Will you join the MTV crowd?

[HaemishM]

Don't forget, those analysts are probably PAID analysts. Or they are just trying to hype a stock their firm thinks will sell.