In-Stat/MDR Finds Online Gaming is to TV What Talkies Were to Silent Pictures

SCOTTSDALE, Ariz.--(BUSINESS WIRE)--June 8, 2004--The advent of advertising-based revenue promises to bring noticeable growth to Online Gaming (OLG) according to In-Stat/MDR (http://www.instat.com). A recent report from the high-tech market research firm projects that, as OLG providers begin to tap into the revenue opportunities that advertising has historically bestowed upon TV networks, the total OLG market will approach $4 billion by the end of 2008, up from just over a billion dollars in 2003.

According to Eric Mantion, a senior analyst with In-Stat/MDR, "To this point, OLG has been stifled by the fact that a typical gamer is currently paying over a dollar an hour to play video games, whereas the typical TV viewer is paying about 13 cents an hour." Mantion believes that advertising sales will be able to lower end-user costs in the online gaming world in the very same fashion it has done for commercial television. "When the costs of OLG per hour starts to approach the level of TV, you can expect people to spend a comparable amount of time gaming."

“The secret strength of online games will be when the volumes of people playing grow to the point where advertisers will start buying ads that will not only be interactive, but also targeted at specific demographics of players.”

In-Stat/MDR isn't the only company that knows this revolution is imminent. The foremost authority in TV ratings -- Nielsen -- has started to develop metrics to analyze the use of ads in games. Once the metrics are in place, the revenues will follow, said Mantion. "The secret strength of online games will be when the volumes of people playing grow to the point where advertisers will start buying ads that will not only be interactive, but also targeted at specific demographics of players." As the cycle starts to build on itself, where more ad sales lowers the cost to game, thereby driving up the number of gamers, which will in turn increase ad sales, OLG data traffic will grow to account for almost one-third of the U.S. backbone by 2008.

In-Stat/MDR has also found that:

-- While only about a sixth of the U.S. population currently plays games online, that number will grow to nearly half the population by 2008.

-- Xbox Live missed forecasted subscriber growth from last year by about 41% because of a 40% price increase compared to 2002, but it is still slated to reach nearly 2 million subscribers by the end of 2004.

-- Sony has nearly a million people playing one online game, SOCOM II: Navy SEALs, scoring nearly 2 million hours of game play a week. There will be more than 100 online-enabled games available for the PS2 by the end of 2004.

-- While there are millions of people who play games online over consoles, there are still 20 times that number playing OLGs over the PC. The PC will remain the dominant method to game online for the foreseeable future.

-- More than 6 million people worldwide participate in Massive Multiplayer Online Role Playing Games (MMORPGs), but due to the high annual cost of the activity ($150 to $200), MMORPGs that charge monthly fees are only expected to grow slightly over the next five years.

The broad-reaching report, "Online Gaming: Where the Lost Boys Are" (#IN0401178IA), covers a wide breadth of topics and forecasts many aspects of the Online Gaming phenomenon, such as: The Paid Online Console market (Xbox Live), The Free Online Console market (PS2 & GameCube online), Total Online Console data transfers (in Petabits per month), MMORPG markets (both US and Worldwide), Summary of all OLG data usages, Projections for the total US backbone traffic, Broadband growth in the US, Total revenues for the OLG market, Detailed analysis of how advertising dollars will be an adrenaline shot OLG revenues and How service providers can capitalize on OLG and minimize its negative impacts. To purchase this report, or for more information, please visit: http://www.instat.com/catalog/pcatalogue.asp?id=95 or contact Courtney McEuen at 281-246-4668; cmceuen@reedbusiness.com. The report price is $3,495.

About In-Stat/MDR

In-Stat/MDR (http://www.instat.com) offers a broad range of information resources and analytical assets to technology vendors, service providers, technology professionals and market specialists worldwide. The company stands alone in its ability to integrate both supply-side and demand-side research methodologies into a single comprehensive view of technology markets and products. This capability relies on a unique ability to cover the entire value chain from engineering-level technology, through equipment, infrastructure, services and end users.

In-Stat/MDR is part of the Reed Electronics Group, a division of Reed Elsevier (www.reedelsevier.com), a world-leading publisher and information provider. With more than 38,000 employees worldwide, Reed Elsevier operates in the science & medical, legal, education and business-to-business industry sectors, providing high value and flexible information solutions to professional end users, with increasing emphasis on the Internet.