Millions of people are flocking to inhabit virtual online worlds, says research by analysts Screen Digest.
The market for massively multiplayer online games (MMOGs) in the West is now worth more than $1bn (£511m)
Games such as World of Warcraft and worlds like Habbo Hotel are fast becoming "significant platforms" in the converged media world, the report said.
"There's a whole ream of different genres and spaces emerging," said the report author Piers Harding-Rolls.
Revenues from subscriptions to MMOGs will hit $1.5bn by 2011, he said.