UPDATED 14:07 EDT / MARCH 06 2012

NEWS

2011 Provides a Record Year for PC Video Game Sales, Cloud and F2P Dominate

As an industry and entertainment avenue video games intersect across numerous layers of human life, so when the PC Gaming Alliance (PCGA) came out with their “Horizons” research report, it really wasn’t a surprise that 2011 was a record year for the growth of PC gaming sales. Sales have been bolstered not just by the impact of cloud-based services such as Valve and even social-based free-to-play gaming venues like Zynga and Nexon.

A summary of their report, posted as a press release on Business Wire, reveals an increase in revenue across the board for the PC gaming industry as a whole—and 2012 is going to be a fairly good year for all PC gamers as multiple big titles are coming out such as Diablo and Mass Effect 3.

During 2011, US gaming industry sales reached a record US $18.6 billion, 15% over growth in 2010.Chinahas grown at nearly twice the rate of the rest of the world, with 27% growth and US $6 billion in revenue. Whereas the mature markets of Korea, Japan, U.S., U.K., andGermanyalso showed significant 11% growth in 2011 for US $8 billion.

Also just behind us are multiple huge IPOs such as social-gaming company Zynga and free-to-play MMO company Nexon—both of which are free-to-play and social venues that have brought in a great deal of interest into the PC gaming market:

The substantial investment in the PC game space seen in 2010 continued through 2011, with concrete signs that these investments are paying off. The year was capped by December IPOs of Zynga and Nexon at a valuation of around US $7 billion each. Zynga revenue in 2011 almost doubled to US$1.1 billion – about the same as that of Nexon. Both companies earn most of their revenue from PC games.

The Zynga IPO also put a spotlight on a rapidly growing opportunity in PC games: Free-to-Play (F2P). Germany-based Bigpoint, a provider of browser-based F2P games, raised US $350 million in 2011 as the company continues to expand outside its home territory. According to DFC analyst David Cole, “A large portion of the US$10.1 billion revenue inAsiais generated from the F2P model. Companies like Zynga and Bigpoint are now successfully building on that model in North America and Europe.”

The mention of Germany-based Bigpoint makes for good reading to my ears because they’re a gaming engine behind the hugely popular Wargaming.net, developer of World of Tanks (and the upcoming World of Warplanes) that made a world of record in Russia during 2011. The free-to-play MMO gaming model has been pushing a great deal of money into the industry as well as the social-gaming model that connects social media (such as Facebook and G+) to more potential customers.

In 2011 we also saw Sony Online Entertainment’s DC Universe Online go free-to-play and see 700% leap in revenue as a result. In the same year, EverQuest 2 saw their player base increase by 300% after switching to free-to-play. Further research into the slow wedding of this model into the social arena shows that it really pays, with studies revealing that games such as these often make an average of $60 per user per month.

The report from PCGA concludes that at this rate of growth the PC gaming industry has a very bright future.

They expect the business to grow an estimated 37% to approximately US $25 billion by 2015. They cite this growth as receiving a booster shot from growing access to broadband connections—thus increasing the pool of cloud-capable and social-media customers who can join these games—also that there will be niches opening up in payment processing and digital distribution.

No doubt, cloud-based and -streaming services will become the vanguard of this growth.


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