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July 5, 2011

Worldwide spending on gaming to cross $74bn in 2011: Gartner

Gaming software is estimated to account for $44.7bn in 2011

By CBR Staff Writer

The worldwide spending on the gaming ecosystem is estimated to exceed $74bn in 2011, up 10.4% from 2010 spending of $67bn, according to IT research firm Gartner.

The spending on the gaming ecosystem, which is undergoing major technology and business model transitions that will last beyond 2015, will reach $112bn in 2015.

Out of the total amount, the gaming software is estimated to account for $44.7bn in 2011, and it will continue to dominate the overall gaming market in the next five years.

According to Gartner, the software component absorbs almost two-thirds of consumers’ gaming budgets.

The gaming software spending will be followed by gaming hardware and online gaming, reaching $17.8bn and $11.9bn, respectively, in 2011.

Largest growth opportunity within the gaming software market will be experienced by mobile gaming with its share growing from 15% in 2010 to 20% in 2015.

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Gartner principal research analyst said Tuong Nguyen although smartphones and tablets are never used primarily for gaming, mobile games are the most downloaded application category across most application stores.

The largest revenue in this segment will come from video game consoles (hardware and software) with expected growth of 4%, as it was revealed that in 2010, it generated more than two-thirds of the gaming ecosystem revenue.

The fastest-growing segment, online-gaming spending will have an effect on the software spending which will lose its share over the next five years, while gaming hardware’s market share will remain constant.

An estimated compound annual growth rate of 27% will be seen consumer spending on global online gaming (subscriptions and microtransactions) through, with consumer spending on subscription fees slightly declining while spending on virtual goods will grow exponentially.

Gartner research director Brian Blau said they find that subscription fees are giving way to ‘freemium’ models, in which the game is provided for free to gamers but is monetized 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.

"This trend is prevailing given the rise of social gaming, in which online gaming is connected to social networking sites and social networking platforms," Blau said.

Blau said, "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."

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