Gaming Software Spending Dominates but Online Gaming Growing Fastest Over the Next Five Years

Dubai, UAE. 5 July, 2011 -- The gaming ecosystem is undergoing major technology and business model transitions that will last beyond 2015. Gartner, Inc. estimates that worldwide spending on the gaming ecosystem* will exceed $74 billion in 2011, up 10.4 percent from 2010 spending of $67 billion. By 2015, spending will reach $112 billion.

Overall, Gartner estimates that the gaming software component will represent $44.7 billion in 2011, and it 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 gaming software spending will be followed at a distance by gaming hardware and online gaming, reaching $17.8 billion and $11.9 billion, respectively (see Table 1).

Table 1: Total Gaming Market Spending, 2010-2015 (Millions of Dollars)

2011

2013

2015

Gaming Hardware

17,797

24,621

27,354

Gaming Software

44,730

51,129

56,512

Online Gaming

11,899

21,453

28,298

Total

74,426

97,204

112,163

Source: Gartner (June 2011)

Within the gaming software market, mobile gaming will experience the largest growth opportunity with its share growing from 15 percent in 2010 to 20 percent 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 segment that will drive the largest revenue will come from video game consoles (hardware and software). In 2010, it generated more than two-thirds of the gaming ecosystem revenue, and Gartner predicts revenue to grow 4 percent in 2011.

Over the next five years, gaming hardware's market share will remain constant while software spending will lose share to online-gaming spending, the fastest-growing segment. Gartner estimates consumer spending on global online gaming (subscriptions and microtransactions) will show a compound annual growth rate of 27 percent through 2015, with consumer spending on subscription fees slightly declining while spending on virtual goods will grow exponentially.

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

"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 Mr. Blau. "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."

Additional information is available in the Gartner report " Market Trends: Gaming Ecosystem, 2011" at http://www.gartner.com/resId=1724014.

-Ends-

* The gaming ecosystem includes:

-       Gaming console manufacturers (e.g., Sony, Nintendo and Microsoft)

-       Software for dedicated game consoles or platforms (such as PlayStation 2, PlayStation 3, Xbox 360 and Wii)

-       Handheld video game consoles (such as Game Boy Advance, Nintendo DS and DSi, and Sony PSP)

-       PC/notebook gaming software

-       Mobile gaming, which includes using mobile phones, tablets and smartphones as a gaming platform

-       Online casual and social gaming segment

About Gartner
Gartner, Inc. (NYSE: IT) is the world's leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. From CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is a valuable partner to 60,000 clients in 11,500 distinct organizations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, U.S.A., and has 4,500 associates, including 1,250 research analysts and consultants, and clients in 85 countries. For more information, visit www.gartner.com.

Current Biography: Fabrizio Biscotti
Fabrizio Biscotti is a research director for the enterprise software team within the Technology & Service Provider Research organization. He is responsible for coverage of studies of the application integration and middleware markets from a worldwide perspective and with a focus on Europe, the Middle East and Africa (EMEA). Mr. Biscotti is also responsible for coordinating and supervising market studies for the overall enterprise software marketplace in EMEA.

Before joining Gartner, Mr. Biscotti performed postgraduate studies, and he completed research projects for RHOSS, an Italian manufacturing company, and for Officine Forgiarini, which participates in the production of industrial automation.

Current Biography: Tuong Nguyen
Tuong Nguyen is a principal analyst with Gartner's Consumer Research group, where he is part of the Consumer Insight team. Mr. Nguyen has extensive experience in the research and analysis of the mobile handset and service markets of North America and Latin America. He also focuses on a number of key issues, including terminal forecasting, regional market share tabulation, mobile entertainment and wireless data, mobile gaming, and mobile virtual network operators (MVNOs). Mr. Nguyen is a lead analyst for mobile devices in Latin America.

Previously, Mr. Nguyen was an associate analyst in charge of inquiry and research for the Gartner North American Telecommunications group, where he covered a broad range of telecommunications issues. He has collaborated on several internal and external research consulting projects. In addition, he has provided inquiry and research support for the Strategic Advisory Program for Telecommunications, targeted at telecom executives worldwide.

Current Biography: Brian Blau
Brian Blau is a research director in Gartner's Consumer Technology and Markets group. He covers consumer technologies and markets as they relate to social media, mobile devices and technology, the connected consumer, and consumer applications and services. He also covers areas such as user interfaces, computer graphics, video games, and software and application development.

Mr. Blau has previously held diverse technical and leadership positions in the computer graphics and games industry. He has made significant contributions in the areas of technology-driven in-game advertising, developer-supported social networks, and visual simulation and animation tools. He also has extensive software development experience as a software development manager and developer advocate, as well as a startup founder and business manager.

Mr. Blau was an early VRML pioneer and helped establish early network-based 3D tools and technologies. In addition, he has produced trade and technical conferences, including the Electronic Theater, and other major venues at the annual SIGGRAPH conferences. He also has judged art shows and film festivals, has been published, and likes to give industry talks.

© Press Release 2011