The online gaming market will rise to $1.26bn by 2001, from $165m this year according to the latest research from DFC Intelligence. That represents a 66% compound annual growth rate. And it will result from games consoles and set-top devices, not just PC-based online games, which makes up almost all of the market at present PC games will continue to make up more than half of sales, contributing around $709m of the $1.26bn in 2001 and the remaining $555m will come from consoles and set-tops. The growth will come as welcome news to online games companies like Los Angeles based Engage Games Online Inc, which had to shed staff earlier this year because the internet-based online games market had not taken off as fast as expected. The business model for online games continues to be a thorny issue. Users are not keen on paying access fees and hourly charges and advertising banners are so far the only acceptable form of revenue that internet users will put up with. Companies like 3DO Co have been tweaking their pricing structures recently. In the summer it announced a move to session-based pricing, which means users purchase a 24-hour session giving them unlimited access for that period. Separately, Microsoft Corp’s Gaming Zone said it planned to bring out pricing based on one day and monthly usage for its online-only games. However, technical problems, especially infrastructure and bandwidth will continue to be the main barriers to the growth of online market.
