GAMING INDUSTRY KICKING ASS... VIDEO GAMES NOT GAMBLING
Game Industry Leads Race for Digital 'Uberdevice'

One of the most heavily touted concepts of the Internet boom was "convergence"--the notion that practically all consumer technologies, from television to instant messaging, would be housed in a single box.

Special report by News.com above. Interesting how quickly technological trends have changed over the past few years. My first startup in 1998 was a video-on-demand company and during those times most people thought convergence would come through the cable set-top box... video-on-demand, e-commerce, email, etc.

Others thought it would be the PC, but various surveys have proven Americans like lazy interactivity and I really can't see people pulling up their lay-z-boys to their PCs to watch movies or TV. I believe Korea was the only major global economy where a vast majority (70% or more) of its people preferred their PCs to TVs. If you watched Korean TV or cable, you probably would play with your PC more too. The content on the tube really sucks here.

Anyway, the darkhorse candidate for convergence, the gaming console, now appears to be the possible frontrunner with Sony and Microsoft leading the charge. It is also how amazing the video game industry has grown. Last year it surpassed the movie industry in terms of overall revenues, and continued growth on the only thing on the horizon for the gaming industry.

Korea has a unique subsector of the global gaming industry. This nation is the leader in online gaming worldwide. In terms of user numbers and financial performance, Korean gaming companies kick ass. The typical profile of the top companies are US$60 million in annual revenue with net profit margins of 40%. 40%!!

Since broadband is so widespread in Korea, it has allowed new industries such as online gaming to develop and flourish. 95% of Internet users have broadband access and over 60% of broadband users play games. Cheap access is probably more important with inexpensive monthly ISP costs or 80 cent per hour rental fees at one of the 20,000+ PC rooms, and has allowed for rapid growth and extremely inexpensive marketing and distribution for many gaming companies in Korea. Additionally, the micro-payment infrastructure allows people to pay 50 cents to a few dollars to play casual inexpensive games (e.g. poker, tetris, pool) or hardcore games (e.g. fantasy role-playing games). All these factors combine to give Korea the edge and leadership in the global online gaming industry.

I believe once broadband becomes more prevalent in other countries you will see similar developments occur in Internet services and online games as it has occurred in Korea. Specifically in the U.S., I believe once the infrastructure is laid down online gaming will rapidly grow since gaming is such a large part of American culture.