Study: $8 billion in online console revs by '13

More so perhaps than the graphical horsepower or technical processing power, this console generation has been defined by the rise of Internet connectivity in gamers' living rooms. According to a new report by market-research firm Parks Associates, the trend in online console gaming and services is far from petering out, and will play an exponentially increasing role in the big-three hardware maker's strategies going into the next generation of home-gaming devices.

In the report titled "Connected Consoles: Games, Media, and Beyond," Parks Associates notes that by 2013, online-enabled consoles will generate more than $8 billion in worldwide revenue for Microsoft, Sony, and Nintendo. According to a graph provided by the company, 2008 online console revenues are predicted to be somewhere around $1 billion.

If Parks' estimates are correct, online console revenue will be a major part of game companies' income. A June PricewaterhouseCoopers study reported that the global gaming industry saw $41.9 billion in revenue for 2007, a number that is expected to spike at a compound annual rate of just over 10 percent to $68.3 billion by 2012.

Parks Associates notes that the $8 billion figure encompasses far more than just online games offered by the hardware makers. Included in the bevy of services that Parks factors into its equation are digital video distribution, downloadable games and content, virtual worlds and avatar-based microtransactions, multiplayer gaming services, and dynamic in-game advertising.

"Broadband connectivity, now a common feature for game consoles, is a key enabler for new business models," commented Parks Associates' director of Broadband and Gaming Yuanzhe Cai. "Among the different online revenue opportunities, digital video distribution and downloadable games and content are the most promising. Led by Microsoft's success in Xbox Live, all three console makers are dreaming up many innovative offerings to entice console households to get connected and spend more money."