Playing games is still a more popular online activity in the U.S. than watching short video clips or visiting social networking websites, according to Casual Gaming Market Update, a new report from Parks Associates. Thirty-four percent of U.S. adult Internet users play online games on a weekly basis, compared with 29% who watch short online videos and 19% who visit social networking sites with the same frequency.

"Despite the growing popularity of YouTube, MySpace, and Facebook, gaming remains the king of online entertainment, driven largely by casual gaming activities," said James Kuai, a research analyst at Parks Associates. "Gaming also has business advantages. Unlike sites for social networking and video streaming, which rely solely on advertising revenue, casual gaming has more mature and heterogeneous revenue models, including web-based and in-game advertising, try-before-you-buy, subscriptions, and micro-transactions."

The year-over-year growth rate for frequent online gamers was 79%, significantly higher than the growth rate for users of social networking (46%). However, the growth rate for frequent users of video streaming sites was 123%, which could pose a significant challenge to the gaming industry in capturing the online leisure time of Internet users.

"The casual gaming industry cannot rest on its laurels," Kuai said. "In order to counter the growing competition from other online activities, the industry needs to continue to grow its fan base and find ways to better monetize its existing audience."