Separate from online PC game revenue and traditional retail sales, the report says connected consoles have also resulted in three new business models: subscription fees for premium services, paid downloadable content, and a “fledgling” advertising market. Billy Pidgeon, program manager of IDC Consumer Markets: Games, said, “Gamers’ use of connected consoles is expanding the business opportunities and the cash flow this console cycle. This emerging sector has huge potential. Getting gamers online and enticing them to spend on content and services is crucial for vendors and publishers.”
Revenue from connected consoles in 2007 is projected at $981 million, representing 2.5 percent of total videogame market revenue worldwide; by 2011, connected console revenue is expected to account for 18.6 percent of revenues. Income from subscription services will grow, but its share of the market is actually predicted to decline from 48.5 percent to 23.2 percent; game-related downloadable content will become the new dominant source of income, generating 68.6 percent of online revenue.
“Revenue streams enabled by active online consoles in this cycle show the strongest growth in the sectonr and will not only determine the future success of the console vendors but also be crucial to the success of many third-party publishers,” according to the report.