British research firm Ovum is forecasting that digital game revenues worldwide will hit $24 billion for 2011, an increase of 16% over last year. They predict that overall revenues will continue to climb, reaching $53 billion in 2016 as more casual, social and mobile games hit the market, with the increasing popularity of the free-to-play (F2P) business model.
This trend, along with the increasing use of constant connections and even data streaming with services like OnLive, will put pressure on telecommunications companies to keep up with bandwidth demands, which Ovum notes can hit over 3 GB of data an hour. Ovum suggests that telcos can upsell gaming customers to higher bandwidth.
Ovum notes trends that contribute to their forecast, such as what they refer to as the “casualization” of hardcore games. Their example is the Kinect, which they feel has helped make games like Forza 4 accessible to casual gamers and helped Xbox Live revenues grow 19% against last year. Ovum credits casual games for fueling the growth of mobile games, and they expect mobile gaming revenues to grow at a compound annual growth rate of 26% between 2011 and 2016.
Ovum notes that digital distribution has delivered a number of benefits, not the least of which is the reduction of costs and boosting margins from the 20-30% range to 50-75% on digital games. Digital distribution has also helped in other ways. “The use of 'online passes' that are increasingly required for network gaming are also reducing the threat posed by pre-owned games,” Ovum notes.
