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Study: Sixfold growth for online games

Though a report from a consulting firm says online gaming is still in its infancy, it projects that the games will garner "significant usage" during the next few years.

Six times as many online games will be played in 2006 compared with the number being played now, according to projections from new research.

The 400-page "Online Game Market 2002" report came from DFC Intelligence, a San Diego-based consulting firm focused on interactive entertainment and video games. David Cole, DFC's president, did not on Thursday immediately provide the number of online games being played.

The report also said that 114 million people worldwide are expected to be playing online games by 2006, compared with the approximately 50 million playing today.

Game players can go online using either PCs loaded with game software or with specially designed consoles such as Microsoft's Xbox and Sony's PlayStation 2--though PCs have the upper hand by far. The DFC report predicts that by 2006, some 23 million consumers worldwide will be playing console games online.

Online strategies for companies like Microsoft, Sony and Nintendo, maker of the GameCube, will also be important as categories become increasingly blurred, Cole said in a statement.

"Microsoft's Xbox Live service is probably the biggest investment in online games yet. It is likely to be a major indicator of the future of console online gaming," Cole said in the statement.

Microsoft said in May that it would spend around $2 billion to develop a subscription-based online gaming strategy.

The DFC report also says that the top online games in 2001 generated revenue in excess of $100 million each. Mythic Entertainment's "Dark Age of Camelot" attracted 200,000 subscribers in just six months, becoming one of the fastest-growing online games ever.

"This could bode well for some of the big-budget online games being released in 2002," Cole said in the statement.

But the online gaming industry is still in its infancy, the report says, predicting that it will take awhile before companies learn how to make it effective. Jeff Brown, vice president of corporate communications for game publisher Electronic Arts, said last month that the business won't mature until 2004 or 2005.

"Online games should garner significant usage over the next few years," Cole said in the statement. "The major question mark is whether individual companies will be able to monetize that usage."

The report also found a significant shift in the industry's view toward advertising.

"In the past, people thought advertising would support online games, but now they realize it would be hard to ever have a big standalone business based on advertising alone," Cole said in an interview.

He predicts that companies will move to a tiered plan, offering free advertisement-supported games alongside a premium subscription-based service.