Corporate Group » The Online Gaming Sector
In the Directors’ opinion, growth in the online gaming sector is and continues to be as a result of:
- an increased level of Internet activity, particularly through broadband;
- the popularity of gaming;
- the increased levels of investment by the online gaming industry; and
- the rapid development of new distribution channels.
As the figures in the above graph show, the global online gaming market has experienced rapid growth since its establishment in the 1990s; although it remains relatively immature.
It is estimated by Global Betting and Gaming Consultants (GBGC) that in 2005 the market generated gross gaming yield of approximately $13 billion, representing approximately 5 per cent. of the total global gaming market (see the graph above). GBGC is a specialist international gambling consultancy which produces the Global Betting & Gaming Report, an annual publication for the gaming industry.
The graph above also illustrates that for the five year period from 2006 to 2010, it is estimated that revenues to be generated by the global online gaming market will increase to approximately $25.2 billion, representing a compound annual growth rate of approximately 14 per cent. On this basis, the global online gaming market would still only represent approximately 8 per cent. of the estimated total global gaming market in 2010. GBGC’s revenue estimate for 2012 indicates that the online gaming sector will increase to approximately $28 billion, with online lotteries providing the majority of the growth.
As Internet, and particularly broadband Internet, penetration increases across the world, it is estimated that online gaming revenue growth rates in regions such as Europe and Asia will exceed those of the United States during the five-year period to 2010 and beyond to 2012.
The Directors believe that the key drivers for the continued growth of the global online gaming market include the following:
Level of Internet and broadband Internet penetration
From 2001 to 2004, the number of Internet users worldwide increased by approximately 59 per cent and the number of broadband Internet users increased by over 350 per cent. In 2004, overall Internet penetration was estimated to be approximately 57 per cent. in the United States, 27 per cent. in Europe and 6 per cent. in the rest of the world. Broadband Internet has enhanced customer experience of online gaming, primarily through faster data transmission and software downloading. As acceptance of e-commerce and Internet and broadband Internet penetration increases across the world, the potential customer base for online gaming is also expected to increase (source: GBGC).
Popularity of gaming
With an estimated revenue of approximately $25.2 billion in 2005, the total global gaming market is significant. The popularity of online gaming, which allows customers to gamble remotely, privately and at the time of their choosing, has increased, driven by, amongst other things, increased television exposure (source: GBGC).
Development of new distribution channels
New distribution channels, such as interactive television and wireless applications on 3G mobile telephones and other handheld devices, represent potential growth opportunities for online gaming operators.