Analyst: Casual gaming ready to explode

Pacific Crest Securities' Evan Wilson says the US online casual market will nearly double in the next two years; publishers have misplaced focus on hardcore segment.

Casual gaming has arrived in the US, and is set to double its domestic revenues in just two years, according to a new industry overview from Pacific Crest Securities analyst Evan Wilson. In a 34-page recap of the casual gaming industry released today, Wilson estimates that the US casual business will hit $725 million in 2008, up from a 2006 total of $375 million.

"We expect casual games to be the primary industry growth driver for 2008 and beyond," Wilson wrote, "as well as the best source of [mergers and acquisitions] and [initial public offering] activity and all-around favorite buzzword."

Wilson said the developing field of casual games is pushing the industry forward, helping the business overcome a number of different factors holding it back.

"Gamers are frustrated about slow innovation and the prevalence of sequels in the traditional console game industry, while nongamers are increasingly excluded by the increasing difficulty of games," Wilson notes.

In addition to fostering new business models like digital distribution, ad-supported gaming, and pay-per-item microtransactions, casual games have lower development costs and leave room for experimentation with new gameplay mechanics. They are also proving increasingly adept at building persistent online communities. In tandem, these factors help the business by reducing the cost of entry for consumers, expanding the audience, increasing the "shelf life" of a game, and lessening the effects of piracy.

Wilson singled out Korea as a hotbed of innovation when it comes to the expanding casual market. In particular, he applauded the Koreans for pioneering the pay-per-item model, as well as successfully taking console games and turning them into online experiences. Electronic Arts' FIFA Online is one such success.

"We expect more former console games to see success online in Asia, and expect that they will be monetized through the item-based revenue model," Wilson said. "Eventually we expect that US publishers will explore the same model stateside as part of the overall push to distribute games online and to a broader audience. We expect to see US publishers increase their focus on casual games considerably in the near term, partially due to the success of Korean-based players on US soil."

201 Comments

  • brettneo3012

    Posted Jul 31, 2007 5:46 pm PT

    Well.. Casual gaming will over take the Hardcore market at one time..

  • Mr_arizona

    Posted Jul 31, 2007 5:47 pm PT

    Stupid casuals stop ruening my games!

  • neovalkyr

    Posted Jul 31, 2007 5:55 pm PT

    casual gamers just dont buy many games. they buy what 1 game a year hence being casual.

  • Danold

    Posted Jul 31, 2007 5:56 pm PT

    Casual games? thats weak, just another term for half-assed games.

  • Harden_hawk

    Posted Jul 31, 2007 5:57 pm PT

    Damn you Nintendo!

  • the_real_VIP

    Posted Jul 31, 2007 5:58 pm PT

    Casual gamers should go to the arcades and leave consoles & computer games to hardcore gamers.

  • Pete5506

    Posted Jul 31, 2007 6:00 pm PT

    Casual gamers god.....

  • zakkss

    Posted Jul 31, 2007 6:01 pm PT

    These days I'm the one peering over the shoulders of the old lady fidgeting on her DS during the bus ride and wonder what is so fun about the game she is playing. Boy have the tables turned. : )

  • StuBHoney

    Posted Jul 31, 2007 6:03 pm PT

    Casual games? Spectator comic buyer nearly destoryed the comic industry with alternate covers, etc. Hopefully Video games publishers can look at this same with the faithful gamers. I haven't been "hardcore" since I have my full time job, but I still play as a hobyist of sorts. Still finish games, still love games, I just have to be more selective.

  • I_AM_SOLIDSTATE

    Posted Jul 31, 2007 6:05 pm PT

    but isn't' it that the point VIP? I mean they are bringing the arcade to the consumer. thats the entire point. The company's also are raking it in with the "Casual Gamer."

  • Kekira

    Posted Jul 31, 2007 6:05 pm PT

    Hopefully hardcores gamers will still be supported. This could only be the beginning thanks to NINTENDO and it's Wii. Yeah, they support the hardcore alright. See that sheep?

  • Generic_Dude

    Posted Jul 31, 2007 6:20 pm PT

    Misplaced focus? Ridiculous... focus on the audience that won't abandon you when the next ipod-type fad comes down the pike is who deserves the most focus.

  • xXshadowXx_

    Posted Jul 31, 2007 6:21 pm PT

    well...I probably buy at least ten times as many games as a casual gamer i'm sure most of you all do the same. I wonder what the exact number on hardcore vs. casual game sales actually are.

  • getoconnection

    Posted Jul 31, 2007 6:22 pm PT

    This is exactly what Nintendo needs. This is their market and when they drop their next megaton console it will belong solely to them. Nintendo's next dynasty is upon us!!

  • getoconnection

    Posted Jul 31, 2007 6:26 pm PT

    Most playstation 2 fans were casual gamers.. wtf is everyone talking about? Devs will just have to start competing with Nintendo again. It's as simple as that.

  • AnubanUT

    Posted Jul 31, 2007 6:28 pm PT

    Finally someone recognizes that games are just becoming to hard for most of us ... man I hate all these elitest gamers on this site ... I am so glad that casual gamers are finally being recognized and will finally be able to participate in the video game craze without feeling intimidated by the complex control mechanisms and super difficult boss fights that are so rampant in todays game. I am so sick of hearing all this "I beat the game on the hardest setting crap" so hopefully the focus will get back to including everyone in gaming and not just catering to a few snotty acting individuals.

  • chibi-acer

    Posted Jul 31, 2007 6:29 pm PT

    Maybe a quarter of the games I've purchased in the past year are casual gamer accessible. They're just fun. Expanding the market is good for all involved. Once everyone owns a Wii and/or 360/PS3, the "hardcore" market will have an even bigger audience to play around in.

    Sure, Bob and his wife may not want to pay $250 for a Wii just so they can play Metroid Prime, but if they get one for other games, now it's just $50 to see what all the gamers are talking about. And once they're hooked, they'll be back for more. Muahahaha!!! =)

  • stu_godd

    Posted Jul 31, 2007 6:34 pm PT

    peaple who make 1st p shooters will still make shooters!! i think this means the industry will grow there will probably be alot more games released. the persentage of proper games will drop but still the same number made.and more crappy arcade stuff for the "Casual Gamer".ontop of the shooters and rpg's etc

  • henry4th

    Posted Jul 31, 2007 6:34 pm PT

    The biggiest obstacle of casual gaming is websites such as (gasp) GAMESPOT, IGN and all the other self claimed professional gaming sites. They constantly rate casual games (or games that's easy) with lower scores simply because the games are too easy, or have not enough complexities.

    Take games such as old school slash and hack for example. Every old school hack and slash game gets lower rating (unless it's a re-release of an original hack and slash game) because gamespot editors think old game mechaniques with new graphics are just flash with no substance.

    But guess what, the so call substance is nothing but unneeded complexity for casual gamers.

  • demollyon

    Posted Jul 31, 2007 6:34 pm PT

    Analysts know nothing.

  • swyg

    Posted Jul 31, 2007 6:40 pm PT

    Oh, so this is why games haven't been groundbreaking as much as they were in the 1980's-1990's.

    Stupid pop culture has to ruin everything, first music (in general), movies, tv shows, and now video games?! This.................needs......................to..................stop.

  • Nintendo_Man

    Posted Jul 31, 2007 6:43 pm PT

    Causal gaming has been surging for the past 5 years and as i have said many times, hardcore gaming market will become almost irrelevant. In Australia the average gamer is expected to be 42 by 2014 and some might ask how can this happen, well if you play online game sites such as MSN Zone and Yahoo Games, you realise that thousands of casuals play games there and most are 40+

    When gaming became mainstream the market would be owned by casuals. Stop blaming Nintendo for what is happening, the fact is that the PS1 and PS2 has brought casuals into video games, Nintendo is now using that to their advantage.

  • coolcole1

    Posted Jul 31, 2007 6:43 pm PT

    these people don't know squat they also predicted sony the winner right off the shoot. look how that turned out. But i do see america starting to take on japa ese tendencies

  • getoconnection

    Posted Jul 31, 2007 6:46 pm PT

    henry4th
    ----------------------------------------------------------------------------------
    Excellent point. This trend should spawn websites especially aimed at the casual market.

  • Narroo

    Posted Jul 31, 2007 6:48 pm PT

    Pay...Per...ITEM?!?!?!? APPLAUDED!!! AUGH!! I HATE THAT SYSTEM!!
    Maybe it's good for the company but it's bad for everyone else!

  • getoconnection

    Posted Jul 31, 2007 6:51 pm PT

    Nintendo_Man

    Causal gaming has been surging for the past 5 years and as i have said many times, hardcore gaming market will become almost irrelevant. In Australia the average gamer is expected to be 42 by 2014 and some might ask how can this happen, well if you play online game sites such as MSN Zone and Yahoo Games, you realise that thousands of casuals play games there and most are 40+

    When gaming became mainstream the market would be owned by casuals. Stop blaming Nintendo for what is happening, the fact is that the PS1 and PS2 has brought casuals into video games, Nintendo is now using that to their advantage. ------------------------------------------------------------------------------------------
    Right. Sony gave Nintendo that market. They used the lemons to make lemonade. All those years of being the "family oriented" console has paid off.

  • kevo14

    Posted Jul 31, 2007 7:04 pm PT

    @demollyon

    Analysts know nothing. - well they don't really know nothing they just know basicly a little more then what we do. In fact most people can become analysts

  • AnFangs_Endes

    Posted Jul 31, 2007 7:08 pm PT

    "Casual's are frustrated about the difficulty of games," Wilson notes."


    Fix'd

  • JackLumber

    Posted Jul 31, 2007 7:11 pm PT

    Damn. This dude is a maniac. Talk about stepping out on a limb. Now that Nintendo is making more money than God, he feels safe saying exactly what they've been saying for the last 2 years or so.

  • Latinbro1

    Posted Jul 31, 2007 7:15 pm PT

    I think Nintendo's stance on casual gaming is great. Is it a bad move? not really, unless they overdo it; and that's what worries me. I think that Wiifit and the peripherals (staring wheel and zapper) is overdoing it I think MS and Sony will give you the hardcore games and also say "hey you want to take a break from the long games or from life? well, have fun with these short games" and offer these online, family oriented/pickup & play games for cheaper than a Wii title. However, they might not offer as much casual games. Either way it's up to consumers. My stance is different to others and for me I am still looking for my long/involved games and then small pickup&play games

  • omegacis

    Posted Jul 31, 2007 7:21 pm PT

    Hardcore Gaming = National Football League
    Casual Gaming = Little League Bingo

  • DerekLStinson

    Posted Jul 31, 2007 7:23 pm PT

    "Gamers are frustrated about slow innovation and the prevalence of sequels in the traditional console game industry, while nongamers are increasingly excluded by the increasing difficulty of games," Wilson notes.

    Is this person dumb? Yes there are sequels, but there is also a lot of inovation happening. I can't believe the kind of stuff they are putting in games now! And games are freaking easy compared to what they used to be. Back when I had nintendo I could hardly even beat a game. Now, I beat about every game I buy. If I don't get bored of it first.

  • DJSMITH007

    Posted Jul 31, 2007 7:24 pm PT

    Hardcore is better...

  • delcidanddarth

    Posted Jul 31, 2007 7:25 pm PT

    Point of information: The vast majority of casual games (at least according to whatever definition this analyst bloke is talking about) is NOT nintendo related. The huge explosion we are seeing are the downloadable ones we have seen on the internet for awhile now, Bejeweled being one of the most recognizable. The consoles are getting in on it now, with the handful of games you can buy online from each console's respective online store, but I think the largest cashflow is happening on PCs and phones, coming from Yahoo and sites like it.

    So don't worry about the console game developers, this is just another source of money for them (they probably all already do this), and the "hardcore" games will continue being made. Hell, with the additional revenue, the hardcore games might even get better, because they can't make too many casual games. At least in my opinion, the market is just about saturated with numbers of games, but the revenue will increase with more and more people getting online.

  • treelog187

    Posted Jul 31, 2007 7:25 pm PT

    This analyst might of had something if he would have thought through the next logical step. What do these new casual gamers do when theyr'e ready for the next step? They move on to more "hardcore" or "complex" games. Imagine you have never been into games at all, then all of a sudden you find some quirky little game that hooks you in. Wouldnt you want to learn more about what games are out there? None of us started out knowing about all these different games, but found at least one that appealed to us and lead us to other titles and so forth and so on.

    In the long run this should generate even more hardcore gamers, not just a bunch of tards with no taste as this analyst suspects.

  • getoconnection

    Posted Jul 31, 2007 7:26 pm PT

    omegacis

    Hardcore Gaming = National Football League
    Casual Gaming = Little League Bingo
    -------------------------------------------------------------------------------------------------
    Ya know there are more casual spectators that attend a football game than the nut jobs you see wearing face and body paint...you fail.

  • jab692

    Posted Jul 31, 2007 7:27 pm PT

    Casual games are good for the industry, but that's no reason to stop selling hardcore games that have been making good money for years. I want my sequels!

  • jkocher

    Posted Jul 31, 2007 7:31 pm PT

    "Casual's are frustrated about the difficulty of games," Wilson notes."

    LOL ever heard of easy difficulty?

  • Panzer88mm

    Posted Jul 31, 2007 7:36 pm PT

    I wonder how many of these "analysts"' even own a gaming console.

  • man_alive

    Posted Jul 31, 2007 7:42 pm PT

    i'm guessing 'casual' gamers don't buy that many games and probably haven't invested in a console. they just want to play free flash versions of Bejeweled. i bet there's a lot of money in that.

  • gameguy6700

    Posted Jul 31, 2007 7:49 pm PT

    "i'm guessing 'casual' gamers don't buy that many games and probably haven't invested in a console. they just want to play free flash versions of Bejeweled. i bet there's a lot of money in that."

    Yeah, that's what a report said that came out a few weeks ago (its on GS somewhere). They broke down the gaming population into kids, varying kinds of casuals, and hardcore gamers. The results showed that hardcore gamers buy double the amount of games as all the other groups combined. So I'd say it would be pretty stupid for developers to forsake the hardcore segment.

    Anyway, the day the industry focuses on the casual gamer is the day I quit gaming.

  • Phazevariance

    Posted Jul 31, 2007 7:56 pm PT

    The day that Pay-Per-Item comes to US and Canada is the day I officially quit playing games. I'm sorry, but I refuse to buy a game for $20 and then having to pay for each item, such as a racing game, having to pay for new cars and tracks to race on and actually paying for upgrades to your cars. Turning what would normally be a $50 game into a $120+ game. Why doesn't the music industry torun to a per-note payment, or the movie industry change to a per-second payment on movies... it's greedy and wrong.

  • bacchus2

    Posted Jul 31, 2007 7:57 pm PT

    I don't know what everyone is complaining about. From a 'hardcore' perspective, there seems to be an abundance of awesome games for next gen systems from now until Christmas. As someone else said earlier, the 'hardcore' will still get games aimed at them for years; as the casual market continues to grow, it will just be a smaller percentage of the overall industry.

    You could say that companies that would normally develop 'hardcore' games might shift their focus to developing casual games, but as they are generally cheaper to make, they will probably be more like side projects, money spinners that can help them invest in groundbreaking new 'hardcore' titles. In the long run, I think this will allow companies to take more risks with 'hardcore' games and offer us innovative gameplay.

    I've had friends who are 'non-gamers' who are more than happy to pick up the Wii Remote, and they have a blast, when they wouldn't touch the 360 controller with a 10 foot pole.

  • -Anticrash-

    Posted Jul 31, 2007 7:58 pm PT

    ""Gamers are frustrated about slow innovation and the prevalence of sequels in the traditional console game industry, while nongamers are increasingly excluded by the increasing difficulty of games," Wilson notes."

    Why is some dumbsh*t who probably doesn't even own a console telling the world lies about what we think? We don't even think remotely near to that. You want innovation? Bioshock, Army of Two, Mass Effect, Assassin's Creed, list continues. I don't give a sh*t about casual games, if a game is too hard for me I'm going to continue playing it until I get better.

  • xBlitzerx

    Posted Jul 31, 2007 8:01 pm PT

    sniff sniff

  • Rimsa_Laded

    Posted Jul 31, 2007 8:04 pm PT

    And it took professional analysts to predict this?

  • skirlnik

    Posted Jul 31, 2007 8:06 pm PT

    Why do you all immediately go to the negative? A) Complaining never really helps anything, and B) use your critical reasoning skills! Many of you like hardcore games, the type that are supposedly deeper, and one hopes that implies a little critical reasoning.

    Here's what I hope will happen: casual gaming will cause industry growth. The "hardcore" market will be even better served, because the money that casuals have brought in can be used to fund other projects of a type that the more involved gamers will find more appealing. Sequels will still be released, and gaming will be better for it.

    New IP's are announced on this site and people scoff without even knowing a name or a premise. THAT is bad for gaming, not a rise in casual games.

  • GabuEx Site moderator

    Posted Jul 31, 2007 8:06 pm PT

    @ gameguy6700:

    "Yeah, that's what a report said that came out a few weeks ago (its on GS somewhere). They broke down the gaming population into kids, varying kinds of casuals, and hardcore gamers. The results showed that hardcore gamers buy double the amount of games as all the other groups combined. So I'd say it would be pretty stupid for developers to forsake the hardcore segment."

    They bought a lot of games, but the "hardcore gamers" also only made up 2% of the overall gamer market. I calculated it out, and the number of games bought by them was only around 16% of the total number of games bought in total.

    So it would also be even more stupid for developers to forsake the casual segment.

  • Mush_Mouth

    Posted Jul 31, 2007 8:23 pm PT

    Lately the casual stuff is the only kind of game I can get people to play with me. Personally, I only want a hardcore game if it'll actually be worth $60 and not be some overhyped marketing product. With that said, bring on more of the casual stuff.

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