Business | Technology

Online gaming gets new high score

Software developers to make a killing as industry grows in leaps and bounds

  • By Naushad K. Cherrayil, Staff Reporter
  • Published: 00:00 March 31, 2012
  • Gulf News

  • Image Credit: Supplied

Dubai: The market value of the global gaming industry is expected to rise 20 per cent this year to $90 billion (Dh330.57 billion) compared to $75 billion last year, Shalini Verma, principal analyst at Consumer Services Research, Gartner, told Gulf News.

By 2015, she said the market value is expected to be more than $110 billion.

"[A] big chunk of the revenue comes from gaming software while 24 per cent of the revenue comes from hardware and accessories. Out of the 24 per cent, two-thirds of the revenue comes from consoles," she said.

Big developers see digital delivery as the main opportunity for growth.

Dedicated gaming devices are coming "under threat". General gaming devices like consoles with motion sensors and WiFi are also gaining momentum.

The interactive entertainment industry has been trying to cope with the rapid growth of online and mobile gaming for a few years, but now even the companies making games are finding it harder to turn a profit.

Heavy ad spending

Also, young companies that are not as big as Zynga or Electronic Arts are finding it difficult to stand out in crowded app stores on mobile devices without spending heavily on advertising.

In online gaming, mobile phones and tablets will see strong growth. In the next-generation iPad, one of the elements showcased was gaming. With iPad touted as the next great gaming device, tablets will likely pose a major threat to consoles.

Juniper Research's latest report shows that the rapidly increasing tablet user base and the unique form factor of this device will push total end-user games revenues on tablets to $3.1 billion by 2014, up from $491 million in 2011.

The report shows that the large screen size and excellent graphics capabilities of tablets will encourage users to purchase games and in-game items.

Intel, NVIDIA, Google and Qualcomm are out in force to attract new developers and promote the latest chips and processors that are enabling game makers to create more console-like interactive experiences on tablet devices.

"We believe we are already at console-quality level with games," said Raj Talluri, vice-president of product management at Qualcomm.

"I definitely believe that TV is the largest and highest screen size for gaming. Tablets give better flexibility. Broadband TV is also going to be a platform, but is still in its infancy," Verma said.

"The introduction of the new iPad and the next wave of Android tablets will usher in even more immersive gaming experiences," P.J. McNealy, a videogame analyst at Digital World Research, said.

Next wave

McNealy said new technologies have become part of the gaming experience, such as accelerometers and gyroscopes.

The next wave is sensor bars, driven by built-in cameras.

"We haven't seen many tablets yet take advantage of built-in cameras, or voice response, but my gut feeling is that the camera-driven wave is next for mobile gaming."

Verma said personal cloud is going to be the future. Users want to get games on any device.

"When I am in the living room, I want it on my TV, when I am in the bedroom I want to get it on my tablet, no matter how I get it, those options will exist. That will be challenging. Streaming of contents need to be integrated seamlessly."

There is a massive shift in gaming behaviour, she said. Earlier, only teenagers played games. But now even adults have started playing consoles and PC games.

App stores have seen big monetisation due to smartphone gaming, because you pay only once for the download of apps. What app developers need to do, she said, is to focus more on social gaming.

Golden year

This is the golden year for game developers because they have many platforms to cater to. They don't need to go to publishers.

"It's no secret what's behind this overnight evolution in the gaming industry. These profound changes in the way people interact electronically are attracting millions of new and non-traditional gamers and disrupting the established monetisation flow," Verma said.

Dubai Sales of digital games are forecast to soar to $1.2 billion (Dh4.4 billion) in the Middle East and Africa this year, a growth of more than 33 per cent due to the high smartphone use in the region, an industry expert said.

"The popularity of smartphones and tablets will be major drivers of digital games in the region," Mark Little, principal analyst at research company Ovum, told Gulf News.

Digital games include those that are played online (on PCs or game consoles) or on mobile devices such as smartphones and tablets.

He added that with the addition of more and more casual gamers, the market is no longer the sole preserve of the teenage male hardcore gamer.

Gaming is fast establishing itself with a much wider mainstream audience, with serious ramifications for other rich media entertainment such as TV, video and music.

"Casual-type games are driving growth in value. Console gamers are moving to mobile phones… through streaming services and downloads," he said.

As casual games are often easier to learn and simpler to play, they are ideal for spontaneous gaming experiences that work well on mobile phones and tablets.

Consequently, he said, casual games are playing a critical role in driving mobile gaming revenues, which Ovum expects to grow at a compounded annual growth rate of 26 per cent between 2011 and 2016.

During this period, the mobile gaming industry in the region is expected to grow at an annual rate of 32 per cent.

In the region many gamers are creating local content, which is the one of the key drivers of growth.

As gamers are a growing customer segment, he said there is also an opportunity for telcos to bundle game subscriptions with broadband packages.

This adds value by bundling a gaming platform with a connection that is optimised for low latency.

These types of partnerships will provide telcos with an excellent way to upsell broadband access and reduce churn.

"Opportunities for mobile games developers are massive because they have three platforms to cater to — Apple, Android and Microsoft. Angry Birds are still popular on mobile phones, but it keeps varying," he said.

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