DFC Intelligence just released a research report titled Will Online Games Decide the Upcoming Video Game Console War?
Their answer was no (more or less).
They took the position that, in spite of Sony’s public posturing, Sony wouldn’t emphasize their on-line service (competing against X-Box Live) very heavily for the coming generation. Particularly striking was this:
However, even with our strong growth forecasts we estimate that less than 25% of the new console systems get connected to an online service by 2011.
For me, this is interesting in thinking about X-Box Live Arcade – the service on X-Box that sells downloadable casual games. Some in the casual industry have been touting it as a potentially huge market in the next 2-3 years. Upon X-Box 360’s launch, with a relatively weak lineup of AAA titles, there was a lot of attention on the Arcade lineup of simple 2D and 3D casual games – Geometry Wars in particular got a lot of attention, and conversion rates were supposedly pretty high.
Like DFC, I’m not entirely convinced that X-Box Live Arcade, and it’s equivalents on the Sony and Nintendo platforms, will eclipse the PC casual/downloadable market in the next couple years. Early adopters of consoles tend to be much more technical – more willing to hook consoles up to the internet and try out odd download services. I think connection rates, download rates, and conversion rates will all fall off significantly as the next-gen installed base goes up.
Maybe it’s just my personal biases. I’ve got all 3 previous gen consoles in my home office, hooked to a nice TV, with a broadband connection 3 feet away. But I’ve never connected any of the consoles. I can get the casual games I want easier through the PC. And so far, the temptation to try sports games on-line against trash-talking twelve-year olds hasn’t tickled my fancy.
If the portals are correct and the biggest market for casual games is 30-50 year old women, then I don’t see that consumer rushing out to buy $500 consoles and hook them to the internet.
Long term – 5 or 10 years from now? Maybe. Would I turn down good opportunities on X-Box Live Arcade in the short term? No. But it’s not going to be a focus of mine in the near term.