Web sites such as YouTube, MySpace, Facebook, and Bebo are often in the news as growing in popularity, with well-known people such as Prince William, Nicole Richie, Paris Hilton, and Lindsey Lohan all known to use them. But gaming is actually the most popular online activity, a new report titled "Casual Gaming Market Update" from Parks Associates has found.

The report found that in an average week, 34 percent of US adult Internet users play online games, compared to 29 percent who watch short online videos such as those found on YouTube, while 19 percent visit social networking sites.

All these figures were up over those found in the second quarter of last year, when 19 percent were playing games, 13 percent were watching short video clips online, and 13 percent were using social networking sites such as Facebook.

James Kuai, a research analyst at Parks Associates, said that the success of online gaming has largely been driven by casual games. He said, "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."

However, the casual gaming industry "cannot afford to rest on its laurels," says Kuai, "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 monetise its existing audience."