Former Sony CEO Chris Deering appeared at this week's Edinburgh Interactive Festival, speaking about the video game industry in its current state, and where he sees it going in the near future. 

In the opening talk, Deering predicted that by 2011, the global market of potential gamers will have reached 2.5 billion.  Splitting this number up by platforms, he puts Nintendo on top with an estimate of 150 million DS owners and 80 million more for the Wii.  Sony's very own PlayStation 3 comes in next with an approximate 70 million, while Microsoft's Xbox 360 or its successor will have a following of 40 million.The PS2 will still be in the race with 90 million active users, while the PSP "and/or its sucessors" place at 70 million like the PS3.  Of course, these are all predictions, meaning they're not at all definite. 

The gaming industry is still high on its rampant success even in the face of declining economies.  Even so, Deering warned that "traditional revenue sources will not be sufficient to fund games development" as the market continues to grow, and studios need to explore new business models in order to support themselves.  He claims that as of now, only 3 in 10 games earn back their development budgets, and soon companies outside the video game industry will be moving in on its markets.

"Something is going to have to be there to make up the difference," Deering said, citing several ideas of his own.  While exciting trends and new technology continue to attract consumers, the industry should be looking to new sources of revenue, such as "creative use of hybrid online/offline advertising" and gambling, which may help support developers indirectly as a new source of income -- it isn't a huge stretch, looking at the addictive nature of both gambling and many video games.

Deering is also encouraging the industry to look at emerging technology and to "make games of" everything, like the internet or "massive mobile social networks."