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LONDON -- The transition from older 32-bit and 64-bit game consoles to 128-bit consoles like Sony's PlayStation 2 and Nintendo's GameCube is going smoothly, without any serious affect on sales figures, and the market will grow by 18 percent next year, according to industry analysts Screen Digest.

The games market in countries where the PAL (phase alternating line) television standard is used is now bigger than cinema box office takings, video, or DVD sales, said Ben Keen, Screen Digest director, in a talk at European Computer Trade Show here Thursday. PAL is the dominant television standard used in Europe.

"And it's one of the few products, like tobacco, that actually does well when an economy is suffering. People stay at home more," Keen said of the games market.

Screen Digest predicts that 13 million PlayStation 2 consoles, 2.5 million GameCubes, and 1.5 million XBoxes will have been sold by the end of the year, he said.

Helping Out

Wednesday's price cuts can only help, he said. Sony cut the price of a PlayStation 2 console to $259 in the U.K. and to $244 in countries in the Euro zone, while Microsoft reduced the price of an Xbox to $244.

The market for games software will grow by about 22 percent, he said.

New markets will open up over the next few years, as games become available on phones and PDAs, over digital TV and broadband connections. "These will bring new customers and new business models," Keen said.

Screen Digest expects to see 2 million online console-based games subscribers in the PAL region by the end of 2003, most of them with broadband connections. Internet-based PC gaming will also grow, although it's difficult to make money out of this, whether through subscriptions or advertising.

The only exception to that is "persistent world" games like "EverQuest," where gamers are prepared to buy the software and then pay a subscription charge, too, Keen said. "It's a narrow niche, but there are some new games coming soon--including "The Sims Online"--that should boost that market."

Future Plans

Many European broadband ISPs are now looking into games on demand, where users are charged a rental fee to download games or have them streamed over the network.

Wireless games are another area with "massive potential," Keen said. "There's a huge installed base and we know that people do play games on their handhelds and phones. But it's hard to make money, until the industry finds the killer apps and works out how to bill for them."

The Java-enabled phones currently arriving on the market will help this to grow, and there will be 2.2 million active wireless gamers in Europe by the end of this year, he said.

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