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Multi-Player Gaming and Micro-Payment Offers

As increasing numbers of gamers participate in multi-player gaming and community features enabled by their consoles' online service offerings, a growing percentage of their gaming budgets will go towards the purchase of in-game virtual assets such as maps, game related add-ons, casual game titles and eventually full core console titles.

According to a new study from ABI Research, micro-payments for consoles alone will account for over $833 million by 2011, as console vendors and their publisher partners look to monetize both in-game and game-related assets beyond initial game purchases.

"The market is evolving from one in which over 90 percent of software monetization occurs at time of game purchase through standard retail channels, to one where a significant portion will take place through digital distribution," says research director Michael Wolf. "All of the big-three console vendors are working closely with their publisher partners, both internal and third party, to push as much content through digital distribution as possible. In offering original titles and after-market content, publishers will be able grow the average revenue they receive for a single gaming title."

ABI Research believes that Microsoft currently has the leading online gaming service, in Xbox Live. The company's strong focus on casual game distribution through its Live Arcade and new features such as Video Marketplace have kept its momentum despite new offerings from its competitors.

Nintendo, however, could challenge in the online casual game space with its strong library of legacy titles in its Virtual Console. Sony's PlayStation Network, while lacking in content today, will likely see higher attach rates as both Sony and its studio partners expand the online offerings.

"By establishing their consoles as connected devices with tens of millions in installed base and established online commerce services, these vendors will also look to move beyond gaming content to sell digital entertainment such as movies and music," said Wolf. "We believe that video and music downloads to game consoles will reach $1.1 billion annually by 2011."

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