"Explosive growth in the number of online households will continue to drive the new market forward, particularly in Europe where online gaming is only just beginning to take off," said market research company Datamonitor.
The report said online playing will largely be done through personal computers but "new technologies, such as modem-equipped games consoles and interactive digital TV, really have the potential to bring the world of online gaming to a mass market."
The report said most online games players currently paid nothing, visiting such gaming sites as Microsoft's Internet Gaming Zone and Sony's "The Station." Free games have raised the profile of the computer games industry and attracted new players but companies now wanted to generate extra revenue from online advertising and e-commerce.
The market is currently worth around $70m (£42.6m) but will balloon to about $250m (£152.43m) by 2000 and hit $1.4bn (£0.85bn) by 2002, Datamonitor said.