By William Jackson

GiN editor at large

The big guns of the gaming industry are targeting online subscription services as a way to boost revenue and promote brand loyalty, according to a recent analysis by In-Stat, a high-tech market research firm.

Last year was a good one for video game makers, but the hardware side of the business is costly, not to mention fiercely competitive. But game console customers also are proving to be good online customers as well, and the study predicts major growth in the subscription market.

"The primary differences among Nintendo's, Sony's, and Microsoft's online efforts are mainly of scope," said In-Stat analyst Stephanie Ethier. "Microsoft is looking to create a number of revenue streams through its Live service, including its subscription service, paid casual games, and additional paid content. Sony is following a model similar to that of Microsoft's, except for the subscription service. Nintendo is limiting its revenue to paid downloads for Nintendo and partner games."

A survey by In-Stat of Xbox and Xbox 360 owners showed that 32 percent already subscribed to Xbox Live. The report predicts that annualized growth in console subscribers will be nearly 43 percent between 2004 and 2011, and growth among handheld subscribers will be 37 percent. Dynamic in-game advertising is also seen as another area of revenue growth.

The report, "Online Gaming: Worldwide Subscriber Growth Expected for Both Free and Subscription-Based Online Services," focuses on subscription console gaming rather than on online PC play or casual gaming. It also contains forecasts for number of consoles in use each year through 2011 and predictions for revenues from subscriptions, paid downloads and advertising.

For more information on this research or to purchase it online, visit http://www.instat.com/sales.asp. The price is $3,495 (US).