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Gaming Consoles a Goldmine for More Than Just Games.

Think gaming consoles are mere toys? Online content and services tied to MicrosoftтЂ™s Xbox, SonyтЂ™s PlayStation, and NintendoтЂ™s Wii will generate more than $8 billion in revenue for those companies by 2013, according to a projection by industry analyst Michael Cai of Parks Associates. тЂњDownloadable games and video are the most important revenue streams, now and in the future,тЂќ said Cai. тЂњDownloadable Hollywood movies and TV shows are already generating $250 million in annual revenue for Microsoft, even though the service is available in only a few markets. The revenue potential for that business model is significant. Other business models, including in-gaming advertising and micro transactions are also becoming increasingly important.тЂќ Cai maintains that Microsoft has the clear lead in this space, thanks to its Xbox Live service, but that Sony and Nintendo are working hard to catch up. Nintendo, for instance, announced a pay-and-play initiative for the Wii at the Game Developers Conference in February, and SonyтЂ™s PlayStation Network boasts nearly 10 million registered accounts. Having three mainstream gaming consoles offering downloadable movies and TV shows could reduce video-only hardware platforms such as RokuтЂ™s Netflix Player and the Vudu Box to niche-player status, according to Cai. тЂњThose guys canтЂ™t compete against Microsoft and Sony,тЂќ he said. тЂњBut I think Roku has a better opportunity than Vudu because itтЂ™s relatively inexpensive and itтЂ™s tied to Netflix. You can download Netflix movies to an Xbox 360, too, but the Xbox is a more expensive solution if youтЂ™re buying one just for downloading movies.тЂќ Will ISP download caps, such as the one that Comast recently announced, put a damper on things? Cai doesnтЂ™t think so. тЂњComcast established a 250GB per month cap,тЂќ he said. тЂњThis will cut back on peer-to-peer activity, but I donтЂ™t think it will impact these legitimate services. IтЂ™m actually a little relieved; I thought theyтЂ™d put the cap at 10- or 50GB per monthтЂ”that would have an impact.тЂќ

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