Internet use and online gaming have grown side-by-side. But the big challenge for the industry now is to attract casual gamers and get them to pay for their online gaming experience.
Many gamers are willing to pay online fees because they love the idea of being able to play with people from all over the globe.
Will the casual player be willing to pay for online games?
Online operators want to get extra revenue from games that are either sold at a low cost or given away.
The challenge is to get the balance right.
For some, playing video games online is nothing new. But over the next 12 months, there will probably be a dramatic rise in the numbers of people getting connected, thanks to increasing broadband adoption and a new generation of gaming consoles that all feature online access as standard.
Microsoft already has a head start with their Xbox Live service, although Sony and Nintendo are also moving into the online gaming space.
Many game developers have realised that online gaming is the future.
Magic: The Gathering is a 10-year-old card game that achieved success without any online component, but since going online it has increased its popularity with 200,000 players competing in two million matches monthly.
Nostalgia could play a big part in attracting new online gamers
Justin Ziran from Magic: The Gathering says: "The whole premise is about community. I think online allows people to meet with their friends 24 hours a day, seven days a week, from all around the world.
"You can get on any time you want and always have someone to play Magic with."
Most industry watchers believe casual gaming, which has a wide demographic appeal, is where the biggest growth opportunities lie.
Turner Broadcasting will launch GameTap later this year. It is a mix of classic games and video segments about games.
Nostalgia is a huge part of the attraction, and the company has licensed almost 1,000 games, all available for a monthly fee.
Blake Lewin from GameTap says: "GameTap is our first network for the computer using broadband as a distribution pipe. It is not just about the games but also the packaging, promotion and programming we put around that, very similar to the ways we programme a TV network."
But it is difficult to know yet if casual gamers will be willing to pay for such a service.
More than 23 million people visit the free Yahoo Games site every month and Yahoo benefits from advertising and cross promotion of its other services.
For the moment the games on offer are deliberately colourful, easy to play, and try to appeal to a wide cross section of people who perhaps do not even own a console.
But adding more sophisticated games that appeal to hardcore gamers has not been ruled out.
Geoff Gaber from Yahoo Games says: "We will be able to do bigger and better games. Our games are getting richer all the time.
"We will have web games that are richer and we'll have download games that are richer that we are adding to our portfolio, so you'll see a game for everybody."
Yahoo limits the length of time that each game can be played online, but unrestricted versions can be purchased.
As the gaming industry experiments with multiple business models, it is conceivable that eventually games might be given away, with players signing up to subscription services.
But that might affect how games are developed, marketed and played in the future.
The next generation of console will play a big part in online gaming
Rob Fahey from Gamesindustry.biz says: "I think the concern is a lot of publishers are going to turn around and not finish games, provide games to people in an unfinished stage or finish a game, and take content out of it before putting it on the shelves to then sell to them for premium.
"We are probably going to see some behaviour like that, but the hope is that the consumer will react to that negatively and people will learn not do it and we'll see real added value being put into games instead."
At the moment some online services are free and others are paid for. But it is the big three - Xbox 360, PlayStation 3 and the Revolution - that are the most likely to influence how the online gaming world develops.
Most industry experts agree that we are still on the starting line of a major online gaming revolution.
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