Online gaming is an industry revolving around video and live games played partially or primarily through the internet or other computer network. Online games are commonly played on personal computers, laptops, gaming platforms, and mobile devices. Online gaming has a large range of categories, including but not limited to strategy, first-person shooter, mobile app, massive multiplayer online role-playing (MMORPG), and gacha games.
Online gaming has continuously grown since the advent of computer networks in the 1970s, with large increases in popularity coming with the surge of personal computers in the late 1990s and mobile devices in the 2000s.
The first video and computer games came in the 1950s, with the release of NIMROD in 1951 and OXO in 1952. As computing advanced, games evolved with the invention of local networks and eventually online networks. Most of the early online games were simple, single-player games on university networks which didn't require or allow multiplayer. As these networks developed, games were improved and able to incorporate more than one person and involve graphical interface (video games).
The internet was created on January 1, 1983, opening the door to online gaming. Sega released an online video game service for the Genesis in 1990, marking one of the first console platforms to allow internet access. Nintendo released Satellaview in 1995, using satellite to allow Japanese customers online play as well.
As the 1990s wound down, online games were ramping up. The first massive multiplayer online role-playing games (MMORPGs) began to spring up, allowing many individual players spread out to play together in connected video game worlds such as EverQuest. The early 2000s saw huge growth in online gaming, with games like Runescape and World of Warcraft dominating the online gaming market for most of the decade.
Since then, computing and network costs have risen as more game developers have joined the market. A Mordor Intelligence report estimates online gaming revenue to reach over $295 billion USD by 2026, an over 10% increase from the $162 billion expected to be raised in 2021. A NPD Group study shows 32 million more people played video games in 2020 than 2018, with the average amount of time spent per week gaming jumping from 12 to 14 hours per week.
Smartphone gaming has increased heavily since 2015, in part due to the advent of virtual reality and cloud gaming, with over 200 million mobile game players in the US in 2020. The emergence of mobile cloud gaming has led to new and old game developers to create products for smartphones. Jagex, the developer of popular 2000s MMORPG Runescape, has recently ported the original game to mobile platforms, allowing gamers to play the 2006 version on their phones for a $15 USD per month subscription. The release prompted a resurgence of players, with the game reaching an all-time record number of 1.2 million paid subscribers in 2020.
In-game purchases are a significant revenue generator for the gaming industry, especially in mobile gaming where mobile devices are often linked to common payment portals. Advertising on freemium and casual games also contribute significantly to the mobile gaming market, allowing developers to eliminate the payment barrier to entry while still raising revenue. In-app advertising revenue has grown from 21.1 to 51.4 billion USD from 2015 to 2020, accentuating the growing use of advertising in mobile gaming.
Cloud-based online gaming is a sector that is expected to grow rapidly. While the majority of online games utilize local computer systems to render and operate the game, they use very little web service. The only processes that actually utilize internet connection are the positional data between players and inputs between the separate machines.
Cloud-computing allows the majority of computational processes to be operated in an external server, reducing the need for large game files to be stored and processed by the user. Not only does this eliminate the need for expensive, high-powered systems like modern gaming systems, it also creates less lag between online interactions due to player inputs being processed in the same server environment.
Online game streaming has increased with the constant rise of online gaming, influenced by a wider range of social media platforms and the emergence of content providers during the COVID-19 pandemic. The most popular online gaming streaming platform, Twitch, has risen to host over two million viewers at any given time of any day. The service hosts 91% of all video game streaming, despite the growing number of competitors that include YouTube and Facebook. First-time downloads of Twitch rose 14% in the US since the epidemic in March, and 41% in Italy during that time.
Due to multiplayer often requiring coordinated actions and communication between players, online gaming communication channels are a key facet of the industry. While some platforms have built-in communication services, like Xbox Live or the Playstation Network, others do not and require third-party applications for players to communicate. As online gaming continues to grow and small and large companies enter the space, communication services have grown as well. Discord, a popular voice and text service, has over 140 million users as of 2021, showing the popularity of third-party platforms.