From Exuberant Youth to Sustainable Maturity - DTI Home

GAMES MARKET OVERVIEW
2.3.4 Development of new platforms and
e-commerce
One of the major developments beginning to occur in
the games market is the growth of new platforms for
games playing. The PC and console platforms form
the bulk of the market for games at the moment and
are likely to do so for the foreseeable future, other
platforms such as iTV, mobile and the Internet are
now emerging. Although these are not expected to
compete directly with the more sophisticated and
established PC and console markets, they do offer
additional opportunities for different types of games
experiences. However, their business models are as
yet uncertain and it will take some time before these
platforms present a major opportunity for the games
industry.
A detailed analysis of the development of new
platforms for games playing is included in
Appendix B - New Markets. This section contains a
summary of the salient points of our analysis.
a) iTV
Games are amongst the most popular interactive
services delivered through digital TV. For example,
Tetris achieved over a million plays in a 21-day
period on Sky's Open…. (now Sky Active) platform,
at a charge of 25p per game 11 . Currently, around
8.5 million homes receive digital TV, forecast to grow
to half of UK homes by 2005 12 . While PCs have a
comparable level of household penetration, PC
penetration is expected to tail off at 54% of
households compared with 98% for digital TV 13 .
This suggests a significant potential for iTV games.
However, while the UK market is highly developed,
the global market is still relatively immature, business
models are still emerging, iTV set-top boxes have
serious technical limitations compared with consoles
and PCs, and technical standards are far from
established.
The drivers of demand for iTV gaming will be the
availability of games designed to fit around the TV
viewing experience, both a steady stream of new,
simple games and ones based around TV
programming, availability of bandwidth from iTV
platform operators and the development of a
straightforward charging mechanism. Networked
multi-player gaming, as recently launched on the
Static 2358-owned PlayJam channel, is predicted to
be a key driver of consumer uptake in the longer
term, allowing viewers to compete against each other
11 Source: iTV games developer - IIR interactive games conference November 2001
12 Source: Jupiter MMXI - European DTV Forecasts 2001-2007, 25th February 2002
13 Source: Forrester
14 Source: Spectrum games industry forecasts
15 Source: EMC - Mobile Subscriber forecasts to 2005, January 2001
14 Competitiveness analysis of the UK games software sector Main report
in real-time, but remains a niche opportunity for the
present.
We project the value of the iTV games market in
Europe, the US and Japan will grow from £0.38bn in
2001, to £1.75bn by 2005. However, this value will
be shared across multiple players with channels and
pay-TV platform operators keen to gain a slice of a
potentially lucrative market. The anticipated UK
share is 29% in 2001, shrinking to 17% by 2005
once other countries begin to catch up in terms of
digital TV penetration. Europe, in particular the UK,
with its high penetration of digital TV, will be
instrumental in driving growth over the next few
years 14 . (See Appendix C, Market Forecasts)
b) Mobile
Mobile network operators are faced with the need to
develop new applications, beyond voice, that will
stimulate network usage as they seek revenues to
support their investment in new high-speed networks
and offset falling voice traffic prices. While many
different applications are being developed, mobile
games are considered to be a potentially lucrative
area for handset manufacturers and network
operators alike.
In 2001, there were just under 0.9bn mobile phone
subscribers worldwide. 38% of these are
European 15 . Many of these phones are capable of
receiving SMS messages, but fewer are able to
handle WAP and fewer still are GPRS, Java or
UMTS enabled. It will be a number of years before
the current installed base of phones is replaced with
handsets that are more capable and more suited to
games. Many mobile games developers believe that
the capability of the handset - particularly the
introduction of colour screens - will be the strongest
driver of demand for mobile games.
Due to the nature of the mobile device - the small
size, limited processing power and low-resolution
screen - mobile games need to be developed
specifically for this platform. Already, handset
manufacturers like Ericsson have bought licences
from games publishers e.g. Tetris, to enable these
games to be embedded onto the handset. Already it
is possible for users to download new games from
the network, and to pay for them directly via their
phone bill. In addition, network games playing will be
possible, creating valuable network usage revenues
for the mobile operators.