Up in the snow-covered hills, a guild of wizards and a group of blue-skinned dark elves close in on caves of ice. Inside lurk ominous frost spirits and who knows what other monsters in the shadows. The wizards summon their magic. The dark elves prepare for battle. It's showdown time in Norrath.

So let the data flow. After all, Norrath exists solely in the coded world of EverQuest, a best-selling computer game played over the Internet. As its often-fanatical devotees test their mettle in a rich fantasy world of fierce creatures, powerful servers and routers strive to keep up with them in humming computer rooms from California to South Korea.

Published by Sony Online Entertainment in San Diego, the EverQuest franchise is more than a game: it's the game competitors aim to beat in an industry that's becoming a dominant force in the entertainment business. According to the market research firm IDC, in Framingham, Mass., annual worldwide sales of video-game hardware and software will swell to almost US $30 billion by 2008.

In the United States alone, people are spending almost $11 billion per year on video and computer games—more than they spend on movie tickets. That $11 billion bought 248 million computer and video games, according to the Entertainment Software Association in Washington, D.C.—two games for every household. Included in the figure are online games, such as EverQuest, played on personal computers, along with other games played on PCs; console games, such as those played on Microsoft's Xbox; and the various software, graphics accelerator boards, and joysticks that give the games their zing. And as you might expect in a market so vibrant, there's serious technology ferment.

Computer games, not scientific visualization, have been driving the design of graphics chips, some of which have more logic circuitry than state-of-the-art microprocessors. Games are also among the biggest drivers of new and creative software.

Illustration: Sony Online Entertainment

EverQuest and its sequel, EverQuest II, are at the hard-core end of a $5 billion online gaming spectrum that includes games like Blizzard Corp.'s World of Warcraft and Warner Bros. Entertainment Inc.'s The Matrix Online. At the opposite extreme of this spectrum are casual games such as poker and bingo. The people most devoted to EverQuest and its kind—who spend nearly as much time gaming as they do sleeping—are a minority of online gamers, making up about 35 percent of the total in 2003, according to game industry market research firm DFC Intelligence, in San Diego. But it is a lucrative 35 percent, accounting for half of the industry's revenues. By 2009, DFC says, the hard-core gaming segment will not have grown as quickly as the other gamer categories, slipping to 27 percent, but will still account for 38 percent of online gaming's projected $10 billion in annual revenue.

For Sony, the business of immersing people in imaginary medieval worlds has been a bonanza. Six years after EverQuest's release, nearly 600 000 PC gamers are now shelling out $13 to $15 per month in subscription fees, in addition to the onetime fee of around $50 for the CD-ROMs they need to start playing. That's quite a payback for a game that cost less than $3 million to bring to market.