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Internet-Capable Game Console Forecast

The video game software business, while currently stuck in a trough, figures to roar back to new heights in the next three years. The next generation consoles now coming to market have Internet access that will allow massively multiplayer online games, where gamers play against each other in a virtual world.

Up to now, interactive MMOGs have been the province of the personal computer format � Sony's EverQuest and Blizzard Entertainment's World of Warcraft for example. "More than 50 percent of all Xbox 360 game consoles worldwide are now connected to Xbox Live, vs. a 10 percent uptake of Internet services for the first Xbox," notes Kagan Research analyst Irina Mulvey.

The next generation consoles with online capabilities are Microsoft's Xbox 360 that launched last November, and Sony's PlayStation 3 and the Nintendo Revolution, scheduled for introduction late this year.

Video game software for the dedicated consoles/handhelds � which generates about $6 billion at the U.S. consumer spend level � fell 3 percent last year (hardware and software combined were $9.2 billion). The slump is due to consumers and software companies focused on next generation hardware, and due to the delayed release of some high profile titles. Kagan Research forecasts console game software revenue will soar 35 percent in the next three years, riding the wave of new generation consoles.

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