RESEARCH firm DFC Intelligence in a recent study has suggested that companies pursue offerings through digital distribution if they intend to grow their business in the online gaming industry.

The report, entitled Online Game Market Forecasts 2007, noted that by 2012 revenues from advertising, digital distribution and virtual item selling or trading will be equal to revenues from game subscriptions.

Likewise, in 2006, subscriptions were the leading revenue source for online games but the fastest growing segment of the market was digital distribution and virtual item sales.

Broadband penetration will increase by 48 percent from 2006 to 2012 in several countries that have large online gaming communities. This would also parallel the growth of online gamers to 51 percent growth from 2006 to 2012.

DFC Intelligence also said in its report that revenues from online games will reach $13.1 billion by 2012, from $4.5 billion in 2006. While online PC games will dominate the market, console-based online games will also show significant growth as well.

Massively multiplayer online games and casual online games will be the two leading categories for the online gaming market worldwide. Surprisingly, DFC Intelligence said first-person shooters and sports or racing games will show the fastest growth in terms of market share from 2006 to 2012.

In terms of geography, the company said North America will remain the largest market for online game advertising. It also said console systems will account for 35 percent of online game advertising in this region.

Japan will also show the fastest growth in terms of online game subscription revenue.

East Asia will be the leading market for virtual item sales and is expected to continue to be the leading market for digital distribution in 2012.

However, between 2006 and 2012, Europe is expected to be the fastest growing market for digital distribution and virtual item models.