Report: Download, In-Game Ad Revenue To See 46% Annual Growth

A new report from market research group In-Stat has said that paid downloadable content and advertising is on the rise as a key strategy to recoup development costs. The report, titled “Online Console Gaming 2006: Downloadable Content and Online Advertising to Become Key Revenue Generators,” has predicted that revenue from paid downloadable content and in-game adds will grow 46 percent annually from 2005-2010. The group also released more of its specifics on the study, saying that between those same years, the number of 'subscribers' able to access such content will grow nearly 41 percent annually. The group also predicts explosive growth in the handheld arena, with 94.2 percent annual growth of potential consumers. Though the industry has yet to capitalize on the market, In-Stat predicts 2007 will see online handheld gaming revenue truly becoming a factor. The fruits of this market are already starting to take hold, with Sony's recent launch of paid downloadable original PlayStation games for their PSP made available through the company's online PlayStation Network. In his report, In-Stat analyst Brian O'Rourke notes positive trends with recent efforts by all three major console providers to make retro and original titles available for download. He also highlights Microsoft's efforts to make the Xbox 360 a movie and television rental and purchase hub -- which, a recent report projects could see revenues of over $92 million by the end of this year, saying "Microsoft continued to be the leader in the online console space in 2006, with its announcement of a video and movie download service for the Xbox 360.”