Parks Associates Blog

Tuesday, December 15, 2009

Pay-TV providers missing the middle market for gaming

Premium pay-TV gaming features do not currently maximize the market’s revenue potential, according to a new report from international research firm Parks Associates.

Many pay-TV providers, including Comcast, Cablevision, DISH Network, and DirecTV, offer premium packages that include simple, single-player games. Gaming ARPU: Games & the Service Provider finds roughly 5% of broadband households in North America and Western Europe are willing to pay about $5 per month for a premium gaming feature, the current average cost per game.

The number of subscribers would increase threefold if cost per game were lowered to $2.50. In the U.S. in particular, the boost in adoption rates would push annual revenues for single-player TV games over $300 million. Every country surveyed had similar growth in interest except the U.K., where the adoption increase would not compensate for the lower price point.

“Pay-TV providers are leaving money on the table,” said John Barrett, Director, Research, Parks Associates. “The industry’s attention is split between free gaming and more expensive, advanced features. Between the two extremes is an opportunity that has not been fully exploited.”

Despite this finding, Barrett predicts providers will continue to focus their efforts elsewhere. “Most service providers are giving up on the middle ground in gaming because the results have been unimpressive so far. It’s ironic because the rest of the gaming industry is trying to follow the success of the Nintendo Wii and target a more moderate gamer.”

Gaming ARPU: Games & the Service Provider analyzes the market potential for integrating TV and gaming services through pay-TV providers, connected TVs, and game consoles.

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