Interactive digital entertainment (IDE) includes Internet-based gaming, wireless gaming, online discussion clubs for sports or music fans, and any other form of consumer-to-consumer (C2C) entertainment that involves human-computer or human-human interaction via the Internet (or wireless). According to a recent article in Financial Times (Foremski et al. 2003), the corporate spending on IT has become stagnant in recent years while the market for consumer technologies maintains a strong growth trend. IDE is an especially bright spot among the fastest growing business models targeting the consumer market (Black 2003). For instance, 5 years into the U.S. market, Sony’s popular online game, EverQuest, has already attracted 400,000 subscribers and is expected to earn Sony up to $500 million in 8 years (Hardy 2004). This stellar growth is not without problems: many early business developments on IDE, even the ones from the largest and most experienced game developers such as Electronic Arts, have faltered. These failures can cost IDE companies tens of millions of dollars (Hardy 2004). Past failures and successes seem to suggest that the success of IDE depends not only on solid IDE systems development that deliver competitive technological performance and enduring entertainment content, but also on deep compre- hension of IDE systems adoption and usage by consumers who ultimately decide the fate of any IDE product. Newer generations of IDE systems, such as World of Warcrafts from Blizzard Entertainment, have greatly improved their technological performance by tapping into the latest computing and communication technologies. Nevertheless, huge gaps exist in our understanding of how to make IDE systems and content more entertaining while controlling the development cost. Furthermore, IDE providers often fail to capitalize on their investment. For instance, Internet-based board games, while popular, have contributed little profit to vendors as consumers generally shun fee-based games. Finally, there is a lack of understanding about the roles of IDE com- munities in IDE markets. After all, IDE users typically interact with a community of peers, a feature that distinguish IDEs from stand-alone entertainment or TV-based entertainment. The purpose of this panel is to bring together industry experts and IS researchers to (1) introduce the development of the IDE industry to an IS audience and discuss the problems encountered in this development process, (2) lay out an array of new research venues around IDE systems and communities, and (3) discuss the impact of IDE on individuals and the society.