Video game consoles and handheld game consoles are greatly expanding the market for online gaming and that market will grow from 3.4 million in 2004 to over 30 million subscribers by 2009, the high-tech market research firm In-Stat says. But the firm claims that for rapid growth in the number of subscribers free-of-charge online gaming services are required.

 “Microsoft is the only console maker so far to launch a paid subscription service,” says Brian O’Rourke, In-Stat analyst. “And we expect the release of the Xbox 360 and additions to its subscription service to accelerate Microsoft to just under 50% annual subscriber growth between 2004 and 2009.”

Sony currently believes that a paid service is too large a barrier to console online gaming, and uses free online play primarily to reinforce customer loyalty. Whether Sony continues to offer free online console subscriptions or goes to a paid subscription service when it releases the PlayStation 3 in 2006 will have a big impact on subscriber growth and revenues over the next few years.

Nintendo has taken a hands-off approach to online console gaming thus far, but is taking a very aggressive approach in handheld console gaming, setting up a network of Wi-Fi hotspots in Japan, North America and Europe to host its free DS online service. Sony launched several networked gaming titles for its PSP handheld console in 2005. However, Sony has not been as active as Nintendo in setting up hotspot networks or marketing the online service.