Paul Loughrey 15:52 (BST)
25/10/2005

Informa Telecoms and Media has revealed details of its fifth Dynamics of Games report, suggesting massive growth for the games industry - spearheaded by next generation consoles and broadband gaming.

The report suggests that the entire games industry will be worth USD 35.3 billion in 2005, which is an increase of 5.3 percent on last year. The staggered release of the next generation of games consoles, which begins with Microsoft's Xbox 360 in November, is predicted as the main catalyst for an unprecedented leap in market growth.

It's unlikely that the console hardware sector will be as clear cut as it has in previous years, however, as co-author of the report, Zenobia Talati, comments: "While we still expect the PS3 to lead the next wave of consoles, it will not be the one- horse race of the previous generation. The Xbox 360 will benefit from first-mover advantage and Nintendo has already revealed some interesting ideas for its Revolution concept."

As part of the next generation console boom, analysts have predicted substantial growth in the broadband gaming market. Co-author Alastair Nash said: "The broadband sector is being assisted by fast growth from Xbox Live! and, to a lesser extent, PS2 online."

"The launch of next generation machines will provide another boost for online games and help the market to settle on its most effective revenue model," he added. But the growth of the broadband, according to the report, will come at the expense of the PC market, which analysts claim is in "irreversible decline".

Revenue from console hardware is predicted to grow from USD 3.89 billion this year to USD 5.77 billion in 2010, with over USD 4 billion increase in console software, which is expected to rise from USD 13.05 billion to USD 17.16 billion. The PC market is expected to continue its decline, with retail PC software dropping from USD 4.31 billion to USD 2.96 billion by 2010.

Informa see mobile gaming as one of the fastest growing sectors, boasting figures of USD 2.57 billion for 2005 and climbing rapidly to USD 11.19 billion over the next five years. Interactive TV (set-top boxes etc) is also expected to show strong growth, increasing from USD 786 million in 2005, to USD 3.04 billion by 2010.

Adam Thomas, media research manager at Informa commented: "We are now talking about the games sector as a near USD 60 billion business, which is an impressive number. But there are still some issues to be tackled. Broadband games are doing well, but will gain at the expense of the PC market which is in irreversible decline. The Interactive TV sector is still looking for a business model and there is also the issue of piracy to consider. We have calculated that the industry will lose $6.6 billion to piracy in 2005 and, if unchecked, that could rise to more than $9 billion in 2010."