Online Gaming Industry Handbook

Online Gaming
Industry Handbook
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©2012 Internap Network Services Corporation. All rights reserved. Internap is a registered trademark of Internap. All other trademarks and brands are the property of their respective owners. 09/12
Table of Contents
3......................................................Introduction
4......................................................History of Gaming
9......................................................Timeline of Online gaming
11......................................................Market Overview
12.....................................................Types of Online Games
14......................................................Gamer PRofiles
17......................................................Market Growth
19......................................................Major Players
21......................................................Market Trends
26.....................................................Conclusion
27.....................................................About Internap
28.....................................................Sources
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2
Introduction
From the age-old arcade favorites like Pac-Man, Donkey Kong and
Pong to the lovable Nintendo Mario Brothers or the highly addictive
World of Warcraft, the culture, technology and business of video games
has slowly filtered down into your living room, your PC and even to
your mobile phone. If you haven’t touched a joystick in a while, you
might be in for a surprise. The technology, graphics and budget behind
blockbuster game titles mimic those of their Hollywood counterparts —
and that’s not all that has changed. The face of gamers has changed
too, and it’s not just because their acne cleared up when they hit 35.
Games like Farmville and Words with Friends have attracted more girl
gamers than ever before. Gaming demographics have also expanded
to include children and their parents playing games together — and
it’s not happening at the family fun centers of the old arcade days.
Today’s gaming is done online.
This eBook will take you through the history of online gaming, define
the segments of the market, growth statistics and offer insights on the
changing demographics of gamers. With a majority of games being
developed and played online for the foreseeable future, new trends in
pricing structures and updated cloud delivery models, developers and
publishers alike need to prepare for the journey ahead. So, in the words
of the old man from The Legend of Zelda, “It’s dangerous to
go alone! Take this.”
3
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History of Gaming
To understand the online gaming market, we’re going to take it way
back — back to the days of Billy Mitchell and Centipede, through
the levels of Sonic The Hedgehog, then warp to the present where
the fastest shooters take down enemy drones in far-off galaxies,
and virtual goods are worth real money. So, “Say fuzzy
“I’ve pointed out to
Steve that he’s the
person he is today
because he came under
the wrath of Bill
Mitchell.
”
pickles,” and get ready.
Billy Mitchell
The King of Kong: A Fistful of Quarters
4
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Arcade Gaming
There was a time when all you needed to play videos games
was a fistful of quarters, but even before that
the first popular “arcade games” were early amusement park
midway games such as shooting galleries, the ball toss and
coin-operated machines, such as those that claimed to tell a
person their fortune or played mechanical music. Amusement
parks of the 1920s, such as Coney Island in New York, were the
forerunners for later arcade
games. Taito’s Space Invaders,
in 1978, proved to be the
first blockbuster arcade video
game. Its success marked the
beginning of the golden
age of arcade video
games. Video game
arcades were literally around
every corner, giving validity
to the term “corner arcade”.
Arcardes could be found in
shopping malls, restaurants,
grocery stores, bars and movie
theaters all over the United
States, Japan and other
countries during the late 1970s
and early 1980s. In 1966,
Sega introduced an electromechanical game called Periscope. It was
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the first arcade game to cost a quarter per play,
which would remain the standard price for arcade games for
many years to come.1 By 1981, the arcade video game industry
was worth $8 billion.2 That is a lot of quarters! Games like
Galazian, Pac-Man and Donkey Kong were among the most
crowd-pleasing, spurring live match-ups and drawing huge mobs
to local arcades around the country. Although, by the 1990s the
arcade game industry had declined, and the video game console
had come on the scene. Sadly, family fun centers and head-tohead competition started to give way as gaming found its way
into the living rooms of households across the globe.
“
I wanted to be a hero. I wanted to be the
center of attention. I wanted the glory, I
wanted the fame. I wanted the pretty girls
to come up and say, ‘Hi, I see that you’re
”
good at Centipede.’
Walter Day
Founder Twin Galaxies
International Scoreboard
The King of Kong: A Fistful of Quarters
5
Console Gaming
In 1972 Magnavox released the first home video game console
that could be connected to a TV set —the Magnavox
Odyssey, invented by Ralph H. Baer. It was Atari’s
arcade game Pong and eventual home Pong console that helped
put console gaming on the map, however. Early consoles ran off
8-bit processers, with later generations of consoles featuring 16bits, then 32-bits and so on — hence the naming of systems by
bit processing power such as the Nintendo 64. The number of
bits, in addition to improvements like cards, cartridges, advanced
graphics capabilities and distribution methods would categorize
the console into generations. Today there are considered to be
eight generations of consoles, of which generations seven and
eight are still actively marketed and sold.
After the video game crash of 1977 (caused largely from
overproduction of Pong clones), Atari released a conversion of
the arcade hit Space Invaders in 1980 that revived the home
console industry. Many consumers bought an
Atari just for Space Invaders. After another
crash in 1983, Nintendo came to the rescue with its Nintendo
Entertainment System and the Super Mario Brothers characters,
and the console video game market was off again. The still
beloved 8-bit games and characters originally created for this
system are now being recreated for current consoles, PC and
online gaming.
The Magnivox Oddessy was released
in 1972 for a retail price of $99.99.
Frank Sinatra was the spokesperson
for the system in a TV commercial
airing in 1973. Magnavox only sold
100,000 units and then discontinued it. 3
6
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PC Gaming
It took the development of the microprocessor and
microcomputer for personal computers to become a reality, but
even before this computer gaming had been well into play on
mainframes and minicomputers on university campuses and
government networks, as well as corporate computer rooms.
Once the Commodore 64 was introduced in 1982,
however, the door was opened for the proliferation of games that
could be played on a home PC. It quickly became the best-selling
PC of all time with sales totaling between 12.5
and 17 million units.4 Around the same time, the video
game console market was overpopulated with less than stellar
cartridge games created by numerous companies attempting
to capitilize on the home-gaming phenomenon. High hopes for
big releases such as the Atari 2600 adaptations of Pac-Man
and E.T. were dashed as these titles fell flat, meanwhile the
popularity of PCs for education increased dramatically. In 1983,
players’ interests were swayed by computer games and the
console video game following dwindled to historical lows. Early
PC games began gaining commercial success by capitalizing on
the sensation of arcade games with ports or clones of popular
arcade games. Today, online PC gaming still has a place as it
caters to the Massively Multiplayer Online Role
Playing Game (MMORPG) genre, although PC gaming as a
whole has seen a steady decline in recent years due to advanced
console game systems, online and mobile gaming.
“It is pitch black. You are likely to
be eaten by a grue.”
ZOrk
7
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Online Gaming
With the expansion of computer
networks and the advent of
the Internet, a new offshoot of
the video game market soon
emerged — online gaming. Like
other gaming genres, online
gaming had its roots reaching
as far back as the 1970s with
the development of games on
the PLATO time-sharing network
created by the University of Illinois
and Control Data Corporation.
NASA’s Ames Research Center in
California was also a contributor to
early online games. In 1973 Maze War was written by several
high school interns at NASA and is credited as the first
peer-to-peer computer video game, as well as
the first First Person Shooter (FPS) game. In 1979 The Source
and CompuServe began selling access to their time-sharing
systems to individual consumers and small businesses, resulting
in more widespread access to computer networks. This began
the era of the online service provider and was the first exposure
to online games for many outside of university systems and
technical corporations.
Fast forward to more recent times, and we see online gaming
take off as broadband connectivity and advanced web graphics
technologies such as Flash and Java become available,
enhancing the gaming experience and bringing online game play
to the web browser. Online games are most often free-toplay and can include advertising-based models and/or virtual
goods or microtransactions within the game as the primary
revenue model. Today virtual worlds, FPS games and Massively
Multiplayer Online Games (MMOG) abound, while subsets of
online gaming such as social and casual games penetrate new
demographics of gamers and lead the way to the next iteration
of gaming — mobile.
In 1985, CompuServe debuted Islands
of Kesmai, the first commercial
MMORPG. Playing cost was $6 per
hour with a 300 baud modem, $12
for a 1200 baud modem; the game
processed one command every 10
seconds, which equates to 1 2/3
cents per command.5
8
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TImeline of Online Gaming
1973 Empire — thought to be the first ever networked multiplayer game running on the
PLATO network.
1973 Maze War — First peer-to-peer computer video game, as well as the first FPS game.
1978 PLATO adds inter-player messaging, persistent game characters and team play for at
least 32 simultaneous players.
1978 Multi-user dungeon (MUD), the first virtual world. Spawned evolution
of MMORPGs.
1979 Beginning of the era of online service providers as The Source and
CompuServe began selling access to their time sharing systems.
1980 MUD1 became the first online multiplayer online role-playing game
as Essex University connected its internal network to the ARPAnet.
1982 Internet Protocol Suite (TCP/IP) was standardized and the concept
of a world-wide network of fully interconnected TCP/IP networks
called the Internet was introduced.
1985 CompuServe debuted Islands of Kesmai, the first commercial
multiplayer online role playing game.
1986 User Datagram Protocol (UDP) support added to SGI Dogfight,
making it the first game to ever use the Internet protocol suite.
1986 Habitat — Online role-playing game developed by Lucasfilm Games.
Considered a forerunner of the modern MMORPGs.
1988 Netrek — First game to use TCP and UDP protocols, first
Internet-aware team game, first to use metaservers to locate open
game servers and persistent user information.
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9
Timeline of Online Gaming
1991 Neverwinter Nights — First graphical 3D MMORPG.
1992 The Shadow of Vsebius — First game to run on a monthly subscription.
1995 Command & Conquer – First Real Time Strategy (RTS) game to feature
four-player online multiplayer. Became the standard against which all RTS
games would be measured.
1996 Quake — Pioneered play over the Internet in FPS games. Internet
multiplayer capability became a standard in almost all FPS games.
1996 Meridian — First Internet game from a major publisher and first MMORPG
to introduce the flat monthly subscription fee.
1996 AOL made online games free, dropping surcharges to play, and the
resulting load caused it to drop online game offerings entirely.
1997 Ultima Online — Popularized the MMORPG genre. First game to reach
over 100,000 subscribers, doing so in just six months.
1999 Everquest — First game to have in-game items sold for real-world money.
1999 Ashron’s Call — First MMORPG to use dynamic load balancing
2000 Diablo II — Awarded Guinness World Record for fastest-selling computer
game with over one million copies sold in just two weeks.
2007 Zynga — 270 million active users across its multiple Facebook games.
2011 72% of American households play computer or video games.7
2012 League of Legends – Officially becomes the most played PC game in the world.16
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10
Online Gaming
Market Overview
The global video game market is predicted to reach $92.5
billion by 2014.8 Online gaming will account for
approximately 27% of this growth as it continues
to gradually overtake traditional PC and console gaming
segments.8 Check out the types of games included in the
online gaming segment, demographics on today’s gamers,
growth statistics and market trends for a snapshot of this
growing industry.
Find out how CipSoft leverages Internap’s hosting
and IP services to deliver one of Europe’s most
successfull online games to a global audience.
11
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Types of Online Games
Massively Multi-Player Online Games
Player Vs. Player
A massively multiplayer online game (also called MMO and
MMOG) is a multiplayer video game which is capable of
supporting hundreds or thousands of players simultaneously.
There are over 15 different types of MMOGs
including, Massively Multiplayer Online Role Playing Games
(MMORPG), Massively Multiplayer Online Battle Arena (MMOBA),
Massively Multiplayer Online Real Time Strategy (MMORTS)…
the list goes on and on. Of course all of these types of games
are played using an Internet connection but aren’t necessarily
limited to PCs. Video game consoles with connectivity
capabilities built-in can also run these games. Additionally, mobile
devices and smartphones based on operating systems such as
Android, iOS and Windows Phone are seeing an increase in the
number of MMO games available.
Player vs. player games, also know as match games,
involve one person pitted against another person or a small
group of people against another small group. Match games are
live action games where players compete against another
human instead of against the computer. These types of games
are in contrast to MMO that have thousands of players,
although player versus player can be a part of an MMO game.
These games can include first person shooters, hand-to-hand
combat games and more.
12
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Social Gaming
There are many definitions of a social game, but at its most basic
level, a social game involves sharing, competing and cooperating with
other players. Social games harness existing social bonds and
networks as part of the game’s fundamental mechanisms of progress
and achievement. Social games are most often associated with social
networks such as Facebook, however play does not always have to
be tied to a specific platform.
Casual Gaming
Casual online gaming is a broad term since casual games don’t fall
into one specific genre. The characteristics they do share, however, are
simple rules, playable in short bursts and they don’t require a
long-term commitment to play. These types of games can be played on a
PC, in a web browser or on a mobile phone. Casual game players
do not normally regard themselves as gamers or fans of video games.
These types of games can include puzzles, trivia, game
shows and many more.
13
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Gamer Profiles
As the blog gamerstereotype.com describes, “Just the mention
of the word [gamer] seems to conjure images of overweight,
acne-ridden males, living in their parent’s basements, surviving on
a diet of Burger Rings and Redbull. They are smelly, unsociable
cave dwellers; sporting their sweat laden T-shirts with the latest
Internet meme that would only ever make sense to another gamer
that they have no chance of running into, as they never leave their
darkened rooms.” Is this an accurate portrayal of a gamer? Sources
like the Entertainment Software Association confirm the average
game player is still male and 37; however, new gaming genres
like social gaming and casual gaming are breaking the mold.7
The ESA’s 2011 report, “Essential Facts About the Computer and
Southpark portrays a gamer from the episode “Make Love, Not Warcraft”
Video Game Industry” finds that within social gaming, 55% of
gamers are females and the percentage of parents that
play games with their children is also on the rise.7 So, a gamer…
30-something lost boy? Or women and families enjoying new found
entertainment? You decide.
14
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18%
of Gamers are
Under 187
Types of Online Games
Played Most Often7
11%
8%
Other
Persistent
Multi-Player
Universe
47%
Puzzle, Board
Games, Game Show,
Trivia, Card Games
13%
Downloadable
21%
Action, Sports,
Strategy, RolePlaying
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The Average
Gamer is
37
15
U.S. Game Player Gender7
58%
Male
42%
Female
“They [women] are out there – they just don’t speak up
enough. It can be quite intimidating for a female gamer
to make herself known in the gaming community —
particularly when joining the trash-talk and craziness of
online gaming — but the more girls who stick their hand
up and say “Hey, I’m into shooting zombies,
too” — the more it will give other girls the confidence to
try it out. We just need to break down a few of those social
conventions and then it will become more commonplace.”
Stephanie Hex Bendixsen
Australian Broadcasting Corporation’s
TV Show “Good Game”
91%
Of american children between
2 and 17 are gamers9
Social Gamers
who are female7
45%
55%
of Parents Play with
their Children weekly7
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16
Market Growth
The online gaming market is primarily driven by high-speed
broadband connections, increasing Internet penetration and
the growing popularity of social networking sites. These forces
combined with new game genres, new gamers and advanced
technologies are fueling the prediction that the online gaming market
will reach $25.3 billion dollars by 2014, a compound
annual growth rate of 13.9% since 2009.8
Read how Internap helped MovieStar Planet expand
internationally using highly scalable managed hosting.
17
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Business Insights forecasts that online gaming revenues will
increase from $13.2 billion in 2009 to $25.3 billion in
2014, posting a CAGR of 13.9%.8
MMO gaming is the largest segment of the online gaming
industry. It was valued at $6.5 billion in 2009 and is expected
to reach $11 billion by 2014, growing at a CAGR of 11.1%.
However, social gaming will grow the fastest, posting a CAGR
of 27.2% during 2009–14 and growing from $1.2 billion to $4
billion.8
Global advertising and microtransaction revenues in the casual
gaming segment will increase from $2.5 billion to $5.3
billion, at a CAGR of 16.1%. Advertising, trial-to-purchase
and game subscriptions are the major pricing models in casual
gaming.8
Revenue from online games is expected to grow at a
CAGR of 9.9% during the same period. However, advertising
and microtransactions will post the fastest growth at 25.8%, to
more than triple from $600 million in 2009 to $1.9 billion
by 2014.8
Casual gaming revenues were estimated to be around
$5.5 billion in 2009 and will almost double to $10.3
billion by 2014, growing at a CAGR of 13.4% during the
forecast period.8
In the social gaming segment, global revenues from
microtransactions were estimated to be around $0.6 billion in
2009, and are set to quadruple to $2.2 billion by 2014,
growing at a CAGR of 31.7%. This growth is due to demand
for virtual goods, which is a result of ever increasing
numbers of consumers using social networks. Many of these
users are also becoming increasingly interested in enhancing
their gaming experience.8
18
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Major Players
in Online Gaming *
Nintendo
Square Enix
Sony Computer Entertainment
Electronic Arts
Activision Blizzard
Zynga
DeNA
Did you know? Internap serves 1/3 of the world’s largest
online gaming companies including four of the top five
fastest growing.
*Publicly traded
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19
Nintendo manufactures and distributes hardware and
software for video games. The company reported revenues of
$12,888 million (JPY 1,014,345 million) in 2011.
Square Enix produces titles such as Hitman Absolutions,
Tomb Raider and Quantum Conundrum. The company
reported revenue of $1,629 million (JPY 128,281 million) the
last 12 months as of June 2012.
Sony Computer Entertainment (SCE) produces
video game hardware and software. It reported gaming
revenues of $10,228 million (JPY 804,966 million) in 2011.
SCE is capitalizing on the high growth in the online and mobile
gaming segments by focusing more on downloadable content
than game titles.
Electronic Arts (EA) develops and publishes gaming
software for multiple platforms. EA reported consolidated
revenues of $3,589 million in 2011. It is actively building up its
play-4-free portfolio of games and focusing on game launches
for the MMO and social gaming segments.
Activision Blizzard publishes games on multiple
platforms including online, PC and consoles. The company
reported consolidated revenues of $4,755 million in 2011. It
is leveraging on its high margin online gaming business by
expanding its games portfolio.
Zynga is the largest social games developer and publisher.
In 2010, it acquired several companies such as Chinese
studio XPD Media, US music game developer Conduit,
and NEWTOY to build technical centers of expertise and
strengthen its presence in emerging markets such as China.
The company reported revenue of $1,140 million in 2011.
DeNA is the world’s number one mobile games publisher. In
2010, as part of its global expansion strategy, DeNA acquired
the mobile social developer ngmoco to develop a single global
platform for mobile game apps for iOS and Android devices.
The company reported revenue of $1,432 million (JPY
112,698 million) in 2011.
20
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Market Trends
The online gaming industry has come a long way since the days
of time-sharing on university and government networks.
Today’s games are becoming more mobile and are accessible
for play almost anywhere thanks to the widespread availability
of the Internet. The game player is now in charge of game
storylines and there is an actual market for goods that
don’t exist, at least tangibly anyway. We can only wonder
what the next level will bring…
Watch how Hi-Rez Studios supported traffic growth
from 100 gigabits per year to 1.6+ petabytes per month.
21
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Mobile Gaming
On-demand gaming
The first game on a
mobile phone was a Tetris
game on the Hagenuk
MT-2000 device from
1994, although Snake II
was the first ever mobile
multiplayer game to come
stock on a cellular phone.
The Nokia 7100
allowed two players to
play the game through
the phone’s infrared
connections. Mobile gaming has come a long way.
On-demand gaming, also known as cloud gaming, allows
direct streaming of the game from the server to the gamer’s
computer. Instead of processing commands on the player’s
computer, on-demand gaming transmits clicks and text inputs
for processing on the server. The server then sends back the
game’s response to the gamer’s screen. Game content isn’t
stored on the user’s machine and game code execution occurs
primarily at the server so a less powerful computer can be
used than the game would normally require. Cloud gaming also
allows for anywhere, anytime access for the gamer,
no downloads and eliminates the need for a fancy machine.
So bust out your Commodore 64 (well maybe) as only a highspeed Internet connection is needed. It also allows gamers to
use any platform they wish, regardless of operating system. For
publishers, the same benefits of traditional cloud computing
apply: reduced infrastructure costs, scalability, burstability and
pay by the drink.
Today mobile games are usually downloaded via the mobile
operator’s network, but in some cases are also loaded in the
mobile handsets when purchased, via infrared connection,
Bluetooth or memory card. By December 2010, the Apple App
Store had registered $3 billion worth of video
game app downloads, making it the largest contributor to
the mobile gaming market. As of February 10, 2011, 18 of the
top 20 paid apps available on the App Store were games.8
The latest games played on mobile devices use 3G and Wi-Fi
networks for real-time multiplayer games and infuse localization
technology like GPS. Today’s mobile games are also
harnessing the power of social media integration and feature
3D graphics. Online game publishers are also taking note by
building mobile features into already popular titles.
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Two technical hurdles that are slowing the mass adoption of
cloud gaming currently are Internet latency and advanced
graphics. Many very popular games have some component
of twitch game play and require low latency to make
the gaming experience as fluid as possible. One-hundred
milliseconds packet round trip time is generally considered
the maximum tolerable threshold for latency-sensitive, first
person shooter games. Network latency events for single
Internet backbone providers, however, commonly exceed this
threshold.10
22
Gamification
Serious games
Gamification — it
describes the
practice of applying
game-design
thinking to nongame applications
so people find them
more interesting
and engaging.
Today, companies
are starting to use
common videogame techniques such as points, badges and leader boards to
make their websites more interactive and to reward people for
their contributions — but this is only the start of the inevitable
merging of games and business. Market research firm
Gartner says that 50 percent of companies will
embrace gamification by 2015. 11 Brian Burke,
vice president of research at Gartner stated that “Gamification
could become as important as Facebook, eBay or Amazon.
During 2012, 20 percent of Global 2000 organisations will
deploy a gamified application. IT leaders must start exploring
opportunities to use gamification to increase engagement
with customers and employees, with the aim of deploying a
gamified application next year. Understanding how to apply
game mechanics to motivate positive behavioral change is
critical to success.”12
Falling under the gamification umbrella are serious games.
Serious games are games created for purposes outside of pure
shoot ‘em up, Words with Friends, avatar-loving entertainment.
This can include education, advertising or
political games. Serious games aren’t a new idea.
We’ve seen them before in the military with flight simulators
and in school classrooms with kids playing Math Blaster.
It is more recently, however, the concept of serious games
has been popularized — namely by the Serious Games
Initiative. The initiative seeks to establish an organized
industry of developers and development studios skilled at using
cutting-edge entertainment technologies to solve problems in
areas as diverse as education, health-care, national defense,
homeland security, analytics, corporate management and
more — all in the name of “gaming our way” to a
better world.
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23
User Generated Content
User Generated Content (UGC) allows the gamer to become
the creator. Many games are a great value, but those with the
longest life spans are often those that let you exercise your
own creativity and add to the experience by building your
own game characters, levels and play modes. While UGC does
make for more interesting games, its downfall is the amount of
storage needed in the data center as well as the loss of control
as user’s gain more creative freedoms. Although data storage
challenges are being combatted with advances in the field of
big data. Studios that can balance the challenges with the
rewards of dynamic content will garner the most interest from
gamers.
Thought controlled games
If you’re interested in developing the Yoda in you and lifting
rocks with your mind, thought-controlled games might
be up your alley. Based on developments in neurotechnology, these games attempt to close the gap
between the real world and the virtual world to create a more
realistic experience. A study on human-computer interfaces
at the Massachusetts Institute of Technology Emerging
Technology Conference included visual evidence of test
subjects controlling games via electrodes attached to the
surface of their brains.13
According to a ComputerWorld article, neurotechnology, a
$145 billion market that is growing at 9% annually,
has already achieved key milestones in man-computer
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symbiosis.13
Researchers are
working with the
brain’s alpha waves
— neural oscillations
in the frequency range
of 8 and 12 Hz — to
create rich syntactic
representations
that can be used to
communicate directly
with computers.
The goal of many
companies developing this technology, however, isn’t
necessarily to improve your Doom skills, but rather improve the
way people interface with technology as a whole. Gives a new
meaning to the phrase “what will they think up next,” huh?
Pricing Structure Changes
In the old days of time-sharing, you might pay $12 an
hour for your favorite game — and that was in 1985. That
same hourly rate would equate to $25 an hour in
2012. Current monetization structures are thankfully more
affordable. In the developed markets of North America and
Western Europe, monthly subscriptions are popular while
in the emerging markets of China and Korea hourly based
subscriptions are more prevalent. Monthly subscriptions are
more economical for the player resulting in costs as low as
$10-15 per month.
24
Even more cost effective for the player are free-toplay games, but unlike AOL’s free-to-play debacle in 1996,
publishers today have come up with an alternative revenue
stream to support the traffic loads. Due to the growing
popularity of free social and casual games, many publishers
are using some combination of free-to-play and subscriptionbased models or have abandoned the subscription model
altogether. Instead, these publishers are relying on monetizing
premium content and virtual goods. By offering virtual goods
against small payments to enhance the gaming experience,
publishers are able to offer the gamer a taste of the game
while keeping costs down. Although, those small transactions,
or microtransactions, certainly add up over time. One quarter
of consumers purchased a virtual good in 2011 (a
100% increase over 2009), and in the US alone, virtual good
purchases totaled $2.3 billion — proving that even in a
recession online gaming is growing.14
In-game advertising is another popular revenue stream
for gaming publishers. Whether it’s an Axe billboard or the
McDonald’s logo as a flower patch within the FarmVille game,
in-game advertising is certainly on the rise. In the MMO games
category, advertising and microtransactions provide the largest
proportion of revenues and are expected to grow at a CAGR of
13.8%, from $2.8 billion in 2009 to $5.3 billion in 2014.
Social gaming advertising revenues are growing even faster at a
predicted CAGR of 24.3% from 2009 to 2014.8
25
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Conclusion
Where will the online gaming market go from here? Thoughtcontrolled gaming, alternate realities, real-life avatars?
The sky is the limit — unless you purchase a virtual flying
cape. The gaming market as a whole is constantly evolving
as technologies change and new methods of delivering game
entertainment emerge. As Andrew Rollings and Earnet Adams
accurately noted in their book Fundamentals of Game Design,
online gaming is a progression of technological advances rather
than a particular class of games. From arcade family fun centers
to the television set and the first video games available for play
on the TV, to the advent of the personal computer and the
Internet, technology has been fundamental to
the advancement of gaming — and it’s the one thing that will truly
remain persistent in the world of online gaming.
“
Online gaming is a technology
rather than a genre, a mechanism
for connecting players together
rather than a particular pattern of
gameplay.
”
Andrew Rollings &
Earnest Adams
Fundamentals of Game Design
26
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About Internap
Online Gaming Solutions Sheet
Transform your IT Infrastructure into a competitive advantage
with IT IQ from Internap, intelligent IT Infrastructure
solutions that combine unmatched performance and platform
flexibility. Our unique trio of route-optimized enterprise IP,
TCP acceleration and a global content delivery network improves
website performance and delivers superior end-user experiences.
Our scalable colocation, hosting, private cloud, public cloud
and hybrid offerings provide enterprises the flexibility
to adapt to changing business needs and future-proof their
IT Infrastructure. Since 1996, thousands of companies have
entrusted Internap with the protection and delivery of their
Looking for an IT Infrastructure to support your
worlds or realms? Check out our online gaming
solutions sheet for an overview of supporting
architecture models.
online applications.
Stay tuned for part two of our eBook series — the IT
Infrastructure behind online gaming.
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Sources
1. Steven L. Kent (2000), The First Quarter: A 25Year History of Video Games, p. 83, BWD Press, ISBN
0-9704755-0-0Reimer, Jeremy. “Personal Computer Market
Share: 1975-2004.”
2. The Philadelphia Inquirer. “Can Lasers Save VIdeo
Arcades?”. February 1984. “Last year, arcade game
revenues were approximately $5 billion, compared to $8
billion in 1981 and $7 billion in 1982.”
3. http://www.playerschoicegames.com/magnavoxodyssey
9. The NPD Group, “The Video Game Industry is Adding 2-17
Year-Old Gamers at a Rate Higher than that Age Group’s
Population Growth,” news release, October 11, 2011.
10. ACM, “Latency Can Kill: Precision and Deadline in Online
Games,” February 2010.
11. CIO, “For CIOs, the Games Are Just Beginning,” May 31,
2011.
12. http://gamification.co/2011/11/11/weekly-recap-businessedition/
4. http://en.wikipedia.org/wiki/Commodore_64
5. http://en.wikipedia.org/wiki/History_of_online_games
6. http://visual.ly/history-online-gaming
13. Computerworld, “Thought-controlled computers may soon
be a reality,” October 19, 2011.
14. Larry Magid and Associates, Inc. on Behalf of Playspan,
“Virtual Goods Trends: Emerging Trends.”
7. Entertainment Software Association, “2011 Sales,
Demographics and Usage Data: Essential Facts About the
Computer and Video Game Industry.” Washington, DC.
15. Image Credits: CipSoft GmbH, Hi-Rez Studios, Kixeye,
MovieStar Planet, Zynga
8. Business Insights, “The Video Gaming Industry Outlook,”
May 2011.
16. Forbes, “Riot Games’ League of Legends Officially
Becomes Most Played PC Game in the World,” July 2012
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