Issue: Volume: 23 Issue: 7 (July 2000)

Into Y2K and Beyond

Carl Machover

As we move into the new millennium, the computer graphics industry continues to evolve and grow. Machover Associates forecasts that year 2000 worldwide revenues will reach $81.7 billion, up from $71.7 billion in 1999. By the year 2005, this figure will reach $149.2 billion, representing a compound annual growth (CAG) of 13%.

These forecasts include hardware, software, system, and service revenues of US and non-US suppliers, and include applications in multimedia (including presentation graphics), CAD/CAM/CAE, graphic arts, art, animation, medical and scientific visualization, virtual reality, and real-time simulation.

As was the case last year, overall sales dollars are highest in the areas of multimedia, CAD/CAM, and graphic arts. But the year 2000 has already witnessed some new phenomena, among them the growth of Web-related computer graphics and Web-based software distribution. For every application, the CAG of Internet-related computer graphics revenues will exceed that of the overall application by the year 2005. Art and animation alone, for example, will see an overall CAG of 16% over the next five years, but an Internet-related CAG of 32%. I estimate that year 2000 computer graphics Internet/ intranet revenues will be $5.2 billion (up from $4.35 billion in 1999), and will grow to $13.9 billion in 2005-an overall CAG of about 22%.
The Web-related portion of the CG industry's CAG will exceed that of the whole by 2005.

A number of revolutions are taking place that are spurring this Web-related growth. The first is Internet and intranet access among users. Research firm IDC (Framing ham, MA) forecasts a CAG rate for US Internet users between 1997 and 2002 of 28.5% (from 30 million to 135.9 million), and a growth rate in the rest of the world that will be twice as fast. I forecast that about 6.4% of the 2000 computer graphics worldwide revenues and about 9.2% of the 2005 CG worldwide revenues will come from Internet/intranet applications and services.

The Internet has also affected vendor distribution techniques, and will continue to do so. For example, Inter net research firm Jupiter Com munications (New York) estimates that 45% of 1999 consumer on-line spending was for hardware and software. One segment of the computer graphics market that has evolved as a result of this trend is collaborative engineering. At last count, there were at least 35 companies offering CAD/CAM/CAE collaborative engineering software and services, and that list seems to be growing daily.

A year ago in this column, I pointed out the aggressive growth of the 3D segment of the market. This trend continues in 2000. Like Web graphics, the 3D segment of the market represents a faster-growing CAG than the overall market. The growth of the 3D segment will be 18% CAG over the next five years, reaching $71 billion in 2005, or about 48% of the total market (up from 38% in 2000). Fueling this growth are two major factors: wider bandwidths becoming available on the Internet so that 3D Web applications become more accessible, and the proliferation of more capable and cost-effective 3D hardware and software.

Overall, the future looks rosy for the industry. Web-related developments, which I noted as an area to watch in last year's column, are coming on strong, and I expect to see this trend continue throughout the next several years.

Carl Machover is president of Machover Associates Corp., a 24-year-old computer graphics consulting firm based in White Plains, New York.

Computer graphics pioneer Dick Mueller, (now with Lakes Gaming), notes that slot mach ines and other gaming consoles are becoming CG workstations. This may be a niche market, but it's an at tractive one. Some 70% of the 500,000 slot machines in the US will be converted into CG platforms over the next five years. Consequently, Mueller predicts, "There will be de mand for 3D designers in this field."