Virtual World Revenues, $6 Billion by 2012

Game industry expert David Cole of DFC Intelligence has been a guiding source for me for years, and he just revealed some astonishing numbers about the MMOG market:

“I can let you be the first person we tell that we forecast the worldwide MMOG market going from $2.2 billion in 2006 to $5.9 billion in 2012,” he e-mails me.

These figures are part of an upcoming DFC report, and they are bullish in the extreme. For proportion’s sake, bear in mind that the entire computer/videogame industry is currently a $7.4 billion business.

“In terms of overall growth,” Cole continues, “the market in both North America and Europe is expected to triple.” Furthermore, over $2.3 billion of that revenue is expected to come from advertising and digital distribution of virtual items/characters etc, not subscriptions.” This would be quite a reversal, for most Western MMOs still rely on a monthly subscription model.

The DFC forecast, it’s worth noting, is pinned to online games, with some ambiguity on how to count revenue from the numerous virtual worlds on the market or about to be launched; many are social hangouts or user-created collaborative spaces, and not games in the strict sense of having pre-defined goals, levels of success, and so on.

“Does MySpace count?” Cole asks rhetorically. “Every free site that has an avatar?” (Many online worlds are free to the user, and depend on external advertising deals for revenue.) DFC’s solution for virtual worlds, he goes on, was to only count user-to-company payments.

“If you can get them to pay a subscription fee or get them to buy items in a virtual world… for those consumers that starts to become a game.” With those services, he says, “[W]e would count the subscription and virtual item revenue, but not any ad revenue they generate.”