Jupiter: Online Game Sector Ad Revenues Set to Improve
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Citing 1997 as a dismal year for online game companies, a recent Jupiter Communications report says the $8 million advertising market for those sites will increase to $465 million by 2002, and will do so by appealing to a much more youthful demographic.
With the overall market pegged at $1.1 billion in five years, the Jupiter report, released to clients of its Strategic Planning Services (SPS) program, projected that 60% of the audience for online games will be under 18 by 2002--up from a mere 7% today.
Although subscription-based revenues for online game sites were strong in 1997, the proliferation of free, ad-supported sites had far more momentum in terms of growth.
New York City-based Jupiter said it believes that services with ad-supported and subscription elements will dominate in the future as game aggregators and portals bundle subscription packages to consumers--resulting in cost savings for the user and increased revenue potential for businesses that can successfully collect and distribute a wide variety of games.
"Though advertising will account for the greatest source of revenue by 2002, subscription revenues run a close second," said Mark Mooradian, group director, Consumer Content at new media research firm Jupiter. "And this still won't guarantee that games sites realize a profit. Companies need to redefine their business plans to attract the predominant demographic and must phase out pay-per-time and pay-per-play revenue models, except as options to a subscription plan."