Gartner predicts boom in gaming spending

By end 2011, company says gaming spend will exceed $74bn up from $67bn in 2010

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Gartner predicts boom in gaming spending Gartner has predicted that worldwide spending on the gaming ecosystem will exceed $74 billion in 2011.
By  Georgina Enzer Published  July 5, 2011

Worldwide spending on the gaming ecosystem will exceed $74 billion in 2011, up 10.4% from 2010 spending of $67bn, according to Gartner.

Gartner says that the gaming ecosystem is undergoing major technology and business model transitions that will last beyond 2015, by which time, spending will have reached $112bn.

Gartner has estimated that overall, the gaming software component will represent $44.7bn in 2011, and will continue to dominate the overall gaming market in the next five years as it absorbs almost two-thirds of consumers' gaming budgets.

"This large market size means that many consumers embrace gaming as a core piece of their entertainment budget and will continue to play as long as game publishers deliver compelling and fun games," said Fabrizio Biscotti, research director at Gartner.

In 2011, the spend on gaming software will be followed by gaming hardware and online gaming, reaching $17.8 billion and $11.9 billion, respectively.

Gartner has predicted that mobile gaming will see the greatest growth over the next five years, increasing its market share from 15% in 2010 to 20% in 2015.

"As the popularity of smartphones and tablets continues to expand, gaming will remain a key component in the use of these devices. Although they are never used primarily for gaming, mobile games are the most downloaded application category across most application stores," said Tuong Nguyen, principal research analyst at Gartner. "For this reason, mobile gaming will continue to thrive as more consumers expand their use of new and innovative portable connected devices."

The largest revenue earner in 2010 was video game consoles - both hardware and software - which in 2010 generated two-thirds of the gaming ecosystem revenue. Gartner predicts that this revenue will increase 4% in 2011.

"Users have become multichannel-oriented by choice and expect vendors to continue to deliver quality content and experiences by extending their gaming possibilities across multiple platforms," said Brian Blau, research director at Gartner. "If today's mobile technology does not evolve quickly enough, the gaming industry is set to see the rate of innovation severely decline. Alternatively, it will provide opportunities in technology and content genres that we can't foresee today."

Gartner has also predicted that the gaming hardware market share will remain the same over the next five years, but software spending will lose market share to online gaming spending, which is the fastest growing gaming segment.

Gartner estimates consumer spending on subscriptions and microtransactions for global online gaming will see a compound annual growth rate of 27% through 2015.

"We find that subscription fees are giving way to ‘freemium' models, in which the game is provided for free to gamers but is monetised through advertising [both in-game advertising and display advertising] and in-game microtransactions, such as the sale of value-added services or virtual-good purchases," said Blau. "This trend is prevailing given the rise of social gaming, in which online gaming is connected to social networking sites and social networking platforms."

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