Much of the current wave of enthusiasm for the gaming industry centers around online gaming, which was responsible for $500 million in sales last year, largely due to the popularity of online role playing games like Sony's "Everquest" and Electronic Arts' "Ultima Online."
The future of this market depends on the widespread home adoption of broadband-DSL or cable modems. IDC predicts that, by 2003, nearly a third of U.S. homes will have broadband Internet access, which is good news for start-ups that can get in now and hold on for a while.
Unfortunately, the competition is stiff in an industry dominated by behemoths like Microsoft, Sega and Sony. Chances are, start-ups looking for an in will have better luck taking a b2b approach. New York City-based Gamegate.com, for example, makes more than $1 million in annual sales developing online Java Internet games for Microsoft, SEGA, Star-media, AOL Europe and Infospace.com.