The Power of e-Games

30% growth in a year, world-level tournaments, gaming addiction counseling
sessions quadrupling…

Online gaming is not new. What is new is
how it is growing with leaps and bounds, becoming a cultural phenomenon, and
giving rise to innovative business models.

This is most prominent in Asia Pacific
region where the online game market is booming. At a CAGR of 19.7% from 2005 to
2009. IDC predicts that the online gaming market in this region will be more
than double its current market size in 2009. Excluding Japan, it generated $1.1
bn in subscription revenue in 2004, a 30% increase over 2003. Korea takes the
crown at $533.4 mn in subscription revenue with a growth of 24%. China and
Taiwan follow, though not too close behind. The massive growth of online gaming
in the Asia Pacific region is the result of high broadband penetration. For
instance, Korea has three-fourths of its total households on the broadband.
Result, South Koreans are using it heavily to play online games, and are willing
to pay for it.

Considering that an increasing
number of games are being developed in India there is no reason why we
should not see boom times ahead

Wanting to get a bigger piece of the
growing market pie, game service providers are coming up with newer and
innovative business models to increase revenues. One such example is insertion
of ads of real-products in the game play. In an experiment, the Israeli-based
in-game advertising firm Double Fusion inserted in-game ads of car wash,
daily-use items, and others in the game on billboards, sides of the trucks as
interactive elements. A joint study by Nielson Interactive Services and Double
Fusion found that 50% of the gamers say in-game advertising makes the games more
realistic, while 21% disagree. Also, they found that interactive 3D objects
inserted in the game were twice as effective as ads on the billboards.

As an example of convergence we have
telecom companies adding exciting content-including games on phones. In the
‘gaming countries’ the game takes a different turn. The big game providers
have a solid backbone with backend infrastructure, and CRM and billing systems
in place. With high subscription numbers to back them up, some of these
companies in Korea and China are looking at becoming telcos by adding voice to
the existing infrastructure.

And if it is games, can tournaments be
far behind? The growing popularity can be judged from the fact that we have now
world-level game tournaments. In the World Cyber Games 2005, 67 countries
participated and more than 700 participants competed in the grand final in
Singapore in November. In sync with the popularity of online gaming, the finals
featured six online games and two console games. It spent $435,000 or two crore
in prizes. The high influx of tourists and cheerleading teams of different
countries are estimated to have benefited the local economy to the tune of $50

Online gaming is becoming a cultural
phenomenon in the Asia Pacific region. Good game players in Korea are becoming
popular. Maybe not stars yet, but getting there. On the negative side, the
industry is seeing an increase in the number of cases being treated for gaming
addiction. South Korea treated 2,243 cases in 2003, which jumped up to 8978
sessions in 2004. The first seven months of 2005 had 7649 sessions, according to
a research by ZDNet.

India is a new entrant in this market.
Some action in online gaming here happened in mid-2004. The market has a high
growth potential for obvious reasons of the sheer number of people that we have.
The full potential of this industry will be visible only when broadband comes of
age. That continues to be the biggest limitation for this industry. 
Considering that an increasing number of games are being developed in
India there is no reason why we should not see boom times ahead.

Here’s Happy New Year to all the gamers out there. The
2006 will surely have a lot for you.

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