The video gaming industry is poised to overtake the music industry in the US, with global spending on video games surpassing music spending as soon as this year, according to consulting firm PricewaterhouseCoopers. PwC released the data in its annual "Global Entertainment and Media Outlook" report covering 2007 through 2011, which outlines expected growth in the entertainment, film, music, and video game industries, among others.

The information not only reflects the gaming industry's strong trajectory but also serves as a painful reminder that the music industry continues to suffer. EMI recently reported, however, that sales of its DRM-free songs and albums have been good since the launch of iTunes Plus, with CD sales of those same albums dropping during that time. If the gains made by selling DRM-free music online outpace the losses from CD sales, EMI's decision to go DRM-free will prove to be a good one, and the rest of the industry may follow suit.

The rising penetration of broadband combined with consoles with online capabilities, wireless phones capable of downloading games, and technologically advanced consoles are credited with driving the video game industry's strong growth. PwC says that the gaming industry will see a compound annual growth rate of 9.1 percent between 2007 and 2011, resulting in a $48.9 billion global video game market in 2011, up from $37.5 billion this year.

The US market will grow much more slowly than that, though, going from $10.4 billion to $12.5 billion over the same period (a 6.7 percent CAGR). PwC says that Asia will see the greatest growth during that time and see the largest amount of spending, topping out at $18.8 billion in 2011 with a CAGR of 10 percent. The report also makes note that global spending on console and handheld games will go up from $6.5 billion in 2006 to $7.9 in 2011.

PwC sees in-game advertising as a prime area for growth. While in-game advertising generated $80 million in 2006, the firm estimates that it could grow as high as $950 million in 2011. PwC's Marcel Fenez noted, however, that the $950 million estimate could in fact be a conservative one and that growth in the area could produce even larger revenues in the future due to the changing audience of the gaming industry.