GartnerG2 Says Xbox Just Scratches the Surface

Release of the next-generation game consoles such as Microsoft’s Xbox combined with increasing penetration of broadband in the home will drive an explosive growth in Net access not just for gaming but for other applications as well, a new study released Thursday by GartnerG2 says.

Revenues for online gaming will increase from $138 million in 2002 to $2.3 billion in 2005, the study says. That dramatic increase will occur even as the costs charged to consumers for online gaming decreases.

“Although the average amount spent per online console household will drop from $167 in 2003 to $157 in 2005, the number of users will dramatically increase,” said Mike Cruz, senior analyst for GartnerG2. “Online console gaming will be a bonus feature of games in 2002, but it will become an assumed feature in 2005.”

Increasingly, game consoles will perform a variety of tasks such as enabling subscriptions to online music services and streaming video, the report notes. Since the consoles increasingly have hard drives and broadband access, they increasingly will be useful for non-gaming services, the report notes.

One necessity for this growth is the increasing acceptance of in-home networking since broadband access is typically located near PCs, the report notes.

“Until wireless broadband access is widely available and reasonably priced, there will be some tripping over wires in households as broadband connections run from the PC to the TV area and into the game console,” said P.J. McNealy, another GartnerG2 senior analyst.

The findings are part of the study: “U.S. Online Console Gaming: Xbox Starts the Slow March Uphill.”

Dave Haskin is managing editor of

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