History of video games

Part of a series on the
History of video games
Early history Early history of video games Early mainframe games
Consoles History of video game consoles Console war 1st generation (1972–1983) 2nd generation (1976–1992) Video game crash of 1983 3rd generation (1983–2003) 4th generation (1987–2004) 5th generation (1993–2005) 6th generation (1998–2013) 7th generation (2005–2017) 8th generation (2012–present) 9th generation (2020–present) Impact of COVID-19 (2023-24 layoffs)
Arcade video games History of arcade video games Golden age of arcade video games Timeline of arcade video game history
Personal computer History of personal computer games
Mobile games History of mobile games
Virtual reality History of virtual reality games
Cloud gaming History of cloud gaming
Other platforms Browser game Emulation
Genres List of genres History of East Asian role-playing video games History of Western role-playing video games History of online games History of real-time strategy games History of tactical role-playing games History of single-player video games History of multiplayer video games History of massively multiplayer online games
Lists List of video games in development
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The history of video games began in the 1950s and 1960s as

As early as 1950, computer scientists were using electronic machines to construct relatively simple game systems, such as

The modern video game industry grew out of the concurrent development of the first arcade video game and the first home video game console in the early 1970s in the United States.

The arcade video game industry grew out of the pre-existing arcade game industry, which was previously dominated by electro-mechanical games (EM games). Following the arrival of Sega's EM game Periscope (1966), the arcade industry was experiencing a "technological renaissance" driven by "audio-visual" EM novelty games, establishing the arcades as a healthy environment for the introduction of commercial video games in the early 1970s.^[5] In the late 1960s, a college student Nolan Bushnell had a part-time job at an arcade where he became familiar with EM games, watching customers play and helping to maintain the machinery while learning how it worked and developing his understanding of how the game business operates.^[6]

In 1966, while working at Sanders Associates, Ralph Baer came up with an idea for an entertainment device that could be hooked up to a television monitor. Presenting this to his superiors at Sanders and getting their approval, he, along with William Harrison and William Rusch, refined Baer's concept into the "Brown Box" prototype of a home video game console that could play a simple table tennis game. The three patented the technology, and Sanders, not in the commercialization business, sold licenses to the patents to Magnavox to commercialize. With Baer's help, Magnavox developed the Magnavox Odyssey, the first commercial home console, in 1972.

Concurrently, Nolan Bushnell and Ted Dabney had the idea of making a coin-operated system to run Spacewar! By 1971, the two had developed Computer Space with Nutting Associates, the first arcade video game.^[7] Bushnell and Dabney struck out on their own and formed Atari. Bushnell, inspired by the table tennis game on the Odyssey, hired Allan Alcorn to develop an arcade version of the game, this time using discrete transistor–transistor logic (TTL) electronic circuitry. Atari's Pong was released in late 1972 and is considered the first successful arcade video game. It ignited the growth of the arcade game industry in the United States from both established coin-operated game manufacturers like Williams, Chicago Coin, and the Midway subsidiary of Bally Manufacturing, and new startups such as Ramtek and Allied Leisure. Many of these were Pong clones using ball-and-paddle controls, and led to saturation of the market in 1974, forcing arcade game makers to try to innovate new games in 1975. Many of the newer companies created in the wake of Pong failed to innovate on their own and shut down, and by the end of 1975, the arcade market had fallen by about 50% based on new game sale revenues.^[8] Further, Magnavox took Atari and several other of these arcade game makers to court over violations of Baer's patents. Bushnell settled the suit for Atari, gaining perpetual rights for the patents for Atari as part of the settlement.^[9] Others failed to settle, and Magnavox won around $100 million in damages from these patent infringement suits before the patents expired in 1990.^[10]

Arcade video games caught on quickly in Japan due to partnerships between American and Japanese corporations that kept the Japan companies abreast of technology developments within the United States. The

The Magnavox Odyssey never caught on with the public, due largely to the limited functionality of its primitive discrete electronic component technology.

These initial home video game consoles were popular, leading to a large influx of companies releasing Pong and other video game clones to satisfy consumer demand. While there were only seven companies that were releasing home consoles in 1975, there were at least 82 by 1977, with more than 160 different models that year alone that were easily documented. A large number of these consoles were created in East Asia, and it is estimated that over 500 Pong-type home console models were made during this period.^[8] As with the prior paddle-and-ball saturation in the arcade game field by 1975 due to consumer weariness, dedicated console sales dropped sharply in 1978, disrupted by the introduction of programmable systems and Handheld electronic games.^[8]

Just as dedicated consoles were waning in popularity in the West, they briefly surged in popularity in Japan. These TV geemu were often based on licensed designs from the American companies, manufactured by television manufacturers such as Toshiba and Sharp. Notably, Nintendo entered the video game market during this period alongside its current traditional and electronic toy product lines, producing the series of Color TV-Game consoles in partnership with Mitsubishi.^[11]

Growth of video game arcades and the golden age

After the ball-and-paddle market saturation in 1975, game developers began looking for new ideas for games, buoyed by the ability to use programmable microprocessors rather than analog components. Taito designer Tomohiro Nishikado, who had developed Gun Fight previously, was inspired by Atari's Breakout to create a shooting-based game, Space Invaders, first released in Japan in 1978.^[14] Space Invaders introduced or popularized several important concepts in arcade video games, including play regulated by lives instead of a timer or set score, gaining extra lives through accumulating points, and the tracking of the high score achieved on the machine. It was also the first game to confront the player with waves of targets that shot back at the player and the first to include background music during game play, albeit a simple four-note loop.^[15] Space Invaders was an immediate success in Japan, with some arcades created solely for Space Invaders machines.^[14] While not quite as popular in the United States, Space Invaders became a hit as Midway, serving as the North American manufacturer, moved over 60,000 cabinets in 1979.^[16]

Space Invaders led off what is considered to be the golden age of arcade games which lasted from 1978 to 1982. Several influential and best-selling arcade games were released during this period from Atari, Namco, Taito, Williams, and Nintendo, including

Development costs of dedicated game hardware for arcade and home consoles based on discrete component circuitry and application-specific integrated circuits (ASICs) with only limited consumer lifespans drove engineers to find alternatives. Microprocessors had dropped far enough in price by 1975 to make these a viable option for developing programmable consoles that could load in game software from a form of swappable media.^[20]

The

Another critical development during this period was the emergence of third-party developers. Atari management did not appreciate the special talent required to design and program a game and treated them like typical software engineers of the period, who were not generally credited for their work or given royalties; this led to Warren Robinett secretly programming his name in one of the earliest Easter eggs into his game Adventure.^[24][25] Atari's policies drove four of the company's programmers, David Crane, Larry Kaplan, Alan Miller, and Bob Whitehead, to resign and form their own company Activision in 1979, using their knowledge of developing for the Atari VCS to make and publish their own games. Atari sued to stop Activision's activities, but the companies settled out of court, with Activision agreeing to pay a portion of their game sales as a license fee to Atari.^[26] Another group of Atari and Mattel developers left and formed Imagic in 1981, following Activision's model.^[27]

Atari's dominance of the market was challenged by Coleco's ColecoVision in 1982. As Space Invaders had done for the Atari VCS, Coleco developed a licensed version of Nintendo's arcade hit Donkey Kong as a bundled game with the system. While the Colecovision only had 17% of the hardware market in 1982 compared to the Atari VCS' share of 58%, it outsold Atari's newer console, the Atari 5200.^[28][8]

A few games from this period have been considered milestones in the history of video games, and some of the earliest in popular genres. Robinett's Adventure was inspired from the text adventure Colossal Cave Adventure, and is considered the first graphic adventure game and the first

The fruit of retail development in early video games appeared mainly in video arcades and home consoles, but at the same time, there was a growing market in home computers. Such home computers were initially a hobbyist activity, with minicomputers such as the Altair 8800 and the IMSAI 8080 released in the early 1970s. Groups like the Homebrew Computer Club in Menlo Park, California envisioned how to create new hardware and software from these minicomputer systems that could eventually reach the home market.^[34] Affordable home computers began appearing in the late 1970s with the arrival of the "1977 Trinity": the Commodore PET, the Apple II, and the TRS-80.^[35] Most shipped with a variety of pre-made games as well as the BASIC programming language, allowing their owners to program simple games.^[36]

Hobbyist groups for the new computers soon formed and PC game software followed. Soon many of these games—at first clones of mainframe classics such as Star Trek, and then later ports or clones of popular arcade games such as Space Invaders, Frogger,^[37] Pac-Man (see Pac-Man clones)^[38] and Donkey Kong^[39]—were being distributed through a variety of channels, such as printing the game's source code in books (such as David Ahl's BASIC Computer Games), magazines (Electronic Games and Creative Computing), and newsletters, which allowed users to type in the code for themselves.^[40][41][42]

While hobbyist programming in the United States was seen as a pastime while more players flocked to video game consoles, such "bedroom coders" in the

Handheld electronic games, using all computerized components but typically using

Coupled with inexpensive microprocessors, handheld electronic games paved the way for the earliest handheld video game systems by the late 1970s. In 1979, Milton Bradley Company released the first handheld system using interchangeable cartridges, Microvision, which used a built-in LCD matrix screen. While the handheld received modest success in its first year of production, the lack of games, screen size and video game crash of 1983 brought about the system's quick demise.^[49]

In 1980, Nintendo released the first of its Game & Watch line, handheld electronic games using LCD screens.^[50] Game & Watch spurred dozens of other game and toy companies to make their own portable games, many of which were copies of Game & Watch games or adaptations of popular arcade games. Tiger Electronics borrowed this concept of videogaming with cheap, affordable handhelds and still produces games on this model to the present day.

1980s

The video games industry experienced its first major growing pains in the early 1980s; the lure of the market brought many companies with little experience to try to capitalize on video games, and contributors towards the industry's crash in 1983, decimating the North American market. In the wake of the crash, Japanese companies became the leaders in the industry, and as the industry began to recover, the first major publishing houses appeared, maturing the industry to prevent a similar crash in the future.

Video game crash of 1983

Activision's success as a third-party developer for the Atari VCS and other home consoles inspired other third-party development firms to emerge in the early 1980s; by 1983, at least 100 different companies claimed to be developing software for the Atari VCS.^[8] This had been projected to led to a glut in sales, with only 10% of games producing 75% of sales for 1983 based on 1982 estimates.^[51] Further, there were questions on the quality of these games. While some of these firms hired experts in game design and programming to build quality games, most were staffed by novice programmers backed by venture capitalists without experience in the area. As a result, the Atari VCS market became watered down with large quantities of poor quality games. These games did not sell well, and retailers discounted their prices to try to get rid of their inventory. This further impacted sales of high-quality games, since consumers would be drawn to purchase bargain-bin priced games over quality games marked at a regular price.^[52]

At the end of 1983, several factors, including a market flooded with poor-quality games and loss of publishing control, the lack of consumer confidence in market leader Atari due to the poor performance of several high-profile games, and home computers emerging as a new and more advanced platform for games at nearly the same cost as video game consoles, caused the North American video game industry to experience a severe downturn.^[28] The 1983 crash bankrupted several North American companies that produced consoles and games from late 1983 to early 1984. The $3 billion U.S. market in 1983 dropped to $100 million by 1985,^[53] while the global video game market estimated at $42 billion in 1982 fell to $14 billion by 1985.^[54] Warner Communications sold off Atari to Jack Tramiel in 1984,^[55] while Magnavox and Coleco exited the industry.

The crash had some minor effects on Japanese companies with American partners impacted by the crash, but as most of the Japanese companies involved in video games at this point have long histories, they were able to weather the short-term effects. The crash set the stage for Japan to emerge as the leader in the video game industry for the next several years, particularly with Nintendo's introduction of the rebranded Famicom, the Nintendo Entertainment System, back into the U.S. and other Western regions in 1985, maintaining strict publishing control to avoid the same factors that led to the 1983 crash.^[56]

The rise of computer games

Second wave of home computers

Following the success of the

These new systems helped catalyze both the home computer and game markets, by raising awareness of computing and gaming through their competing advertising campaigns. This was most notable in the United Kingdom where the BBC encouraged computer education and backed the development of the BBC Micro with Acorn.^[57] Between the BBC Micro, the ZX Spectrum, and the Commodore 64, a new wave of "bedroom coders" emerged in the United Kingdom and started selling their own software for these platforms, alongside those developed by small professional teams.^{[58][59][60][61]} Small publishing and distribution companies such as Acornsoft and Mastertronic were established to help these individuals and teams to create and sell copies of their games. Ubisoft started out as such a distributor in France in the mid-1980s before they branched out into video game development and publishing.^[62] In Japan, systems like the MSX and the NEC PC line were popular, and several development houses emerged developing arcade clones and new games for these platforms. These companies included HAL Laboratory, Square, and Enix, which all later became some of the first third-party developers for the Nintendo Famicom after its release in 1983.^[11]

Games from this period include the first Ultima by Richard Garriott and the first Wizardry from Sir-Tech, both fundamental role-playing games on the personal computer. The space trading and combat simulation game Elite by David Braben and Ian Bell introduced a number of new graphics and gameplay features, and is considered one of the first open world and sandbox games.^[63] Early installments in a number of long-running franchises such as Castlevania, Metal Gear, Bubble Bobble, Gradius, as well as ports of console games and visual novels appeared on Japanese platforms like the PC88, X68000, and MSX.

Games dominated home computers' software libraries. A 1984 compendium of reviews of Atari 8-bit software used 198 pages for games compared to 167 for all others.^[64] By that year the computer game market took over from the console market following the crash of that year; computers offered equal ability and, since their simple design allowed games to take complete command of the hardware after power-on, they were nearly as simple to start playing with as consoles.^{[citation needed]}

Later in the 1980s the next wave of personal computers emerged, with the

The Apple Macintosh also arrived at this time. In contrast to the IBM PC, Apple maintained a more closed system on the Macintosh, creating a system based around a graphical user interface (GUI)-driven operating system. As a result, it did not have the same market share as the IBM PC compatible, but still had a respectable software library including video games, typically ports from other systems.^[66]

The first major video game publishers arose during the 1980s, primarily supporting personal computer games on both IBM PC compatible games and the popular earlier systems along with some console games. Among the major publishers formed at this time included Electronic Arts,^[76] and Broderbund, while Sierra On-Line expanded its own publishing capabilities for other developers.^[77] Activision, still recovering from the financial impacts of the 1983 video game crash, expanded out to include other software properties for the office, rebranding itself as Mediagenic until 1990.^[26]

Early online games

The first user interfaces were plain-text—similar to BBSs—but they operated on large mainframe computers, permitting larger numbers of users to be online at once. By the end of the decade, inline services had fully graphical environments using software specific to each personal computer platform. Popular text-based services included CompuServe, The Source, and GEnie, while platform-specific graphical services included PlayNET and Quantum Link for the Commodore 64, AppleLink for the Apple II and Macintosh, and PC Link for the IBM PC—all of which were run by the company which eventually became America Online—and a competing service, Prodigy. Interactive games were a feature of these services, though until 1987 they used text-based displays, not graphics.

Meanwhile, schools and other institutions gained access to ARPANET, the precursor to the modern internet, in the mid-1980s. While the ARPANET connections were intended for research purposes, students explored ways to use this connectivity for video games. Multi-User Dungeon (MUD) originally was developed by Roy Trubshaw and Richard Bartle at the University of Essex in 1978 as a multiplayer game but limited to the school's mainframe system, but was adapted to use ARPANET when the school gained access to it in 1981, making it the first internet-connected game, and the first such MUD and an early title of massively multiplayer online games.^[78]

The home console recovery

8-bit consoles

A Nintendo Entertainment System or NES (top) and an NES Zapper (bottom), one of the consoles' various accessories

While the 1983 video game crash devastated the United States market, the Japanese video game sector remained unscathed. That year, Nintendo introduced the

NEC released its PC Engine in 1987 in Japan, rebranded as the TurboGrafx-16 in North America. While the CPU was still an 8-bit system, the TurboGrafx-16 used a 16-bit graphics adapter, and NEC chose to heavily rely on marketing the system as a "16 bit" system to differentiate it from the 8-bit NES. This ploy led to the use of processor bit size as a key factor in marketing video game consoles over the next decade, a period known as the "bit wars".^[93]

Sega released its next console, the

Among other aspects of the console war between Sega and Nintendo, this period brought a revolution in sports video games. While these games had existed since the first arcade and console games, their limited graphics required gameplay to be highly simplified. When Sega of America first introduced the Genesis to the United States, it had gotten naming rights from high-profile people in the various sports, such as Pat Riley Basketball and Joe Montana Football, but the games still lacked any complexity. Electronic Arts, under Trip Hawkins, were keen to make a more realistic football game for the Genesis which had the computation capabilities for this, but did not want to pay the high licensing fees that Sega were asking for developing on the Genesis. They were able to secure naming rights for John Madden and reverse engineer the Genesis as to be able to produce John Madden Football, one of the first major successful sports games.^[95] Electronic Arts subsequently focused heavily on sports games, expanding into other sports like basketball, hockey and golf.^[76]

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The 1990s were a decade of marked innovation in video games. It was a decade of transition from raster graphics to 3D graphics and gave rise to several genres of video games including first-person shooter, real-time strategy, and MMO. Handheld games become more popular throughout the decade, thanks in part to the release of the Game Boy in 1989.^[97] Arcade games experienced a resurgence in the early-to-mid-1990s, followed by a decline in the late 1990s as home consoles became more common.

As arcade games declined, however, the home video game industry matured into a more mainstream form of entertainment in the 1990s, but their video games also became more and more

In addition to the transition to optical media, the industry as a whole had a major shift toward real-time 3D computer graphics across games during the 1990s. There had been a number of arcade games that used simple wireframe vector graphics to simulate 3D, such as Battlezone, Tempest, and Star Wars. A unique challenge in 3D computer graphics is that real-time rendering typically requires floating-point calculations, which until the 1990s, most video game hardware was not well-suited for. Instead, many games simulated 3D effects such as by using parallax rendering of different background layers, scaling of sprites as they moved towards or away from the player's view, or other rendering methods such as the SNES's Mode 7. These tricks to simulate 3D-rendeder graphics through 2D systems are generally referred to as 2.5D graphics.

True real-time 3D rendering using polygons were soon popularized by

Home video game consoles such as the PlayStation, the Sega Saturn, and Nintendo 64 also became able to produce texture-mapped 3D graphics. Nintendo had already released Star Fox in 1993 which included the Super FX graphics co-processor chip built into the game cartridge to support polygonal rendering for the SNES, and the Nintendo 64 included a graphics coprocessor on the console directly.

On personal computers,

The 1991 release of

PC Gaming

With the introduction of 3D graphics and a stronger emphasis on console games, smaller developers, particularly those working on personal computers, were typically shunned by publishers as they had become risk-averse.^[122] Shareware, a new method of distributing games from these smaller teams, came out of the early 1990s. Typically a shareware game could be requested by a consumer, which would give them a portion of the game for free outside of shipping charges. If the consumer liked the game, they could then pay for the full game. This model was later expanded to basically include the "demo" version of a game on the insert CD-ROM media for gaming magazines, and then later as digital downloads from various sites like Tucows. id Software is credited with successfully implementing the idea for both Wolfenstein 3D and Doom, which was later used by Apogee (now 3D Realms), Epic MegaGames (now Epic Games).^[123]

Several key genres were established during this period. Wolfenstein 3D and Doom are the formative games of the

Sony's introduction of the first PlayStation in 1994 had hampered both Nintendo and Sega's console war, as well as made it difficult for new companies to enter the market. The PlayStation brought in not only the revolution in CD-ROM media but built-in support for polygonal 3D graphics rendering. Atari attempted to re-enter the market with the 32-bit Atari Jaguar in 1993, but it lacked the game libraries offered by Nintendo, Sega or Sony. The 3DO Company released the 3DO Interactive Multiplayer in 1993, but it also suffered from a higher price compared to other consoles on the market. Sega has placed a great deal of emphasis on the 32-bit Sega Saturn, released in 1994, to follow the Genesis, and though initially fared well in sales with the PlayStation, soon lost ground to the PlayStation's larger range of popular games. Nintendo's next console after the SNES was the Nintendo 64, a 64-bit console with polygonal 3D rendering support. However, Nintendo opted to continue to use the ROM cartridge format, which caused it to lose sales against the PlayStation, and allowing Sony to become the dominant player in the console market by 2000.^[129]

Final Fantasy VII, as previously described, was an industry landmark title, and introduced the concept of role-playing games to console players. The origin of music video games emerged with the PlayStation game PaRappa the Rapper in 1997, coupled with the success of arcade games like beatmania and Dance Dance Revolution.^[130] Resident Evil and Silent Hill formed the basis of the current survival horror genre.^[131] Nintendo had its own critical successes with GoldenEye 007 from Rare, the first first-person shooter for a console that introduced staple features for the genre, and The Legend of Zelda: Ocarina of Time, one of the most critically acclaimed games of all time.

2000s

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The 2000s (decade) showed innovation on both consoles and PCs, and an increasingly competitive market for portable game systems. The impact of wider availability of the Internet led to new gameplay changes, changes in gaming hardware and the introduction of online services for consoles.

The phenomenon of user-created

In China, video game consoles were banned in June 2000. This has led to an explosion in the popularity of computer games, especially MMOs. Consoles and the games for them are easily acquired however, as there is a robust grey market importing and distributing them across the country. Another side effect of this law has been increased copyright infringement of video games.[132]^[133]

The changing home console landscape

Sony's dominance of the console market at the start of the 2000s caused a major shift in the market. Sega attempted one more foray into console hardware with the

Sony released the PlayStation 2 (PS2) in 2000, the first console to support the new

The PS2 remained the leading platform for the first part of the decade, and remains the best-selling home console of all time with over 155 million units sold. This was in part due to a number of critical games released on the system, including Grand Theft Auto III, Metal Gear Solid 2: Sons of Liberty, and Final Fantasy X.^[137] The Xbox was able to gain second-place to the PS2 sales, but at a significant lost to Microsoft. However, to Microsoft, the loss was acceptable, as it proved to them they could compete in the console space. The Xbox also introduced Microsoft's flagship title, Halo: Combat Evolved, which relied on the Xbox's built-in Ethernet functionality to support online gameplay.^[138]

By the mid-2000s, only Sony, Nintendo, and Microsoft were considered major players in the console hardware space. All three introduced their next generation of hardware between 2005 and 2006, starting with Microsoft's

Nintendo still dominated the handheld games market during this period. The Game Boy Advance, released in 2001, maintained Nintendo's market position with a high-resolution, full-color LCD screen and 32-bit processor allowing ports of SNES games and simpler companions to N64 and GameCube games.^[142] The next two major handhelds, the Nintendo DS and Sony's PlayStation Portable (PSP) within a month of each other in 2004. While the PSP boasted superior graphics and power, following a trend established since the mid-1980s, Nintendo gambled on a lower-power design but featuring a novel control interface. The DS's two screens, with one being a touch-sensitive screen, proved extremely popular with consumers, especially young children and middle-aged gamers, who were drawn to the device by Nintendo's Nintendogs and Brain Age series respectively, as well as introducing localized Japanese visual novel-type games such as the Ace Attorney and Professor Layton series to the Western regions. The PSP attracted a significant portion of veteran gamers in North America and was very popular in Japan; its ad-hoc networking capabilities worked well within the urban Japanese setting, which directly contributed to spurring the popularity of Capcom's Monster Hunter series.^[143]

MMOs, esports, and online services

As affordable broadband Internet connectivity spread, many publishers turned to online games as a way of innovating. Massively multiplayer online role-playing games (MMORPGs) featured significant PC games like RuneScape, EverQuest, and Ultima Online, with World of Warcraft as one of the most successful.^[144] Other large-scale massively-multiplayer online games also were released, such as Second Life which focused mostly on social interactions with virtual player avatars and user creations, rather than any gameplay elements.^[145]

Historically, console-based MMORPGs have been few due to the lack of bundled Internet connectivity options for the platforms. This made it hard to establish a large enough subscription community to justify the development costs. The first significant console MMORPGs were

In the late 1990s and early 2000s, Internet accessibility and new online technologies flourished, such as Java and Adobe Flash. Though Adobe Flash was initially intended to be a tool to develop fully interactive websites, Flash lost favor in this area but individual developers found ways to use the tool for animations and games, aided by the ease of the development tools for this purpose. The website Newgrounds was created to help people share and promote their Flash works. Though these Flash games lack the complexity of gameplay of games on consoles or computers, they were available for free and sparked creative ideas that would carry forward; for example, Crush the Castle directly inspired the popular mobile game Angry Birds, while the founder of Newgrounds, Tom Fulp, teamed with animator Dan Paladin to create Alien Hominid as a Flash game, which they later built upon into the more complete Castle Crashers under the studio The Behemoth.^[149]

Flash and other in-browser platforms created a new trend in

The use of Apple's and Google's app storefronts for gaming applications quickly took off with early successes like Angry Birds and Bejeweled.^[166][167] When Apple introduced in-app purchases (IAP) in October 2009, a number of developers found ways to monetize their mobile games uniquely compared to traditional games, establishing the freemium model where a game is usually free to download and play but players are encouraged to speed up their progress through IAPs. Games like Candy Crush Saga and Puzzle & Dragons, both in 2012, established this approach as highly-profitable business models for mobile games.^[168] Many of the social network game developers worked to either integrate a mobile version with their existing version, or completely shift their game to the mobile platform, as mobile gaming became more popular. A further rise in the popularity of mobile games was from China, where most residents do not own computers and where imported consoles were banned by the government starting in 2000, though eventually eased in 2014 and completely lifted in 2015.^[169] Instead, most players in China used mobile phones or accessed subscription-based games through PC cafes. Mobile games also proved popular and financially-successful there as well, with a ten-fold growth of China's video game market between 2007 and 2013.^[170][171]

Coupled with the growth of mobile games was the introduction of microconsoles, low-cost home consoles that used the Android operating system as to take advantage of the large library of games already made for mobile devices.^[172] However, mobile gaming also displaced the handheld console market: both the Nintendo 3DS and the PlayStation Vita (both 2011 releases) had major drops in sales from their predecessors, the Nintendo DS and PlayStation Portable respectively (both 2004 releases), following the rapid growth of mobile gaming. Sony has since exited the handheld console arena.^[173]

The AAA video game industry and the emergence of indie games

Video games began seeing increasing larger budgets for development entering the 2000s; Final Fantasy VII had an estimated $40−45 million budget excluding marketing,^[174] while the first Shenmue game was estimated to cost $47–70 million.^[175] Larger developers began approaching games comparable to Hollywood filmmaking, not only considering the aspects of development, distribution, and marketing, but incorporating budgets for both in-game cinematography, including professional actors and licensed properties, and larger promotional elements. These new approaches further extended game budgets.^[176] Similar to blockbuster films, the video game industry began calling these high-budget games and the publishers and developers behind them "AAA" or "triple A" by the late 1990s and early 2000s.^[177]

As a result of the larger budgets and better technology, new narrative-driven games emerged to incorporate larger stories as more direct components of gameplay, such as by eliminating pre-rendered cut scenes in favor of scenes carried out within the game's engine.

Hobbyist and homebrew game development had been in place since the first home computers in the late 1970s and 1980s, with the shift to shareware by individuals and small development teams in the 1990s, but the importance of console gaming and the rise of 3D game technology had made it initially difficult for individual developers to participate competitively in game development. The growth of AAA games with large budgets further made publishers risk-averse to support smaller games with non-standard or more experimental gameplay.^[181]

Independent games, or indie games, gained a significant share of the market in the latter half of the 2000s that continued into the 2010s, and generally seen as a result of the industry looking for innovation beyond the safe, non-risky approaches that AAA development had centered on.^[181] Interest in indie games grew out from the booming Flash game industry of the mid-2000s which had drawn attention to individual and small developers normally overlooked by the media.^[149][182] Further, smaller developers were highlighted by the rapid growth in the mobile game industry, allowed them to complete equally on mobile app stores with larger developers.^[149][183] Crowdfunding through sites like Kickstarter became a viable pathway for indie developers to gain funding in the late 2000s, explosively growing in popularity into the mid-2010s,^[184] while early access distribution, where players purchase a not-yet-final version of a game to help play, test and provide feedback, was successfully demonstrated with Minecraft in 2009 and used as a model for some indie games since.^[185] On personal computers, Valve opened up their digital content platform Steam to allow indie games to be listed alongside triple-A games, and several other similar digital storefronts.^[181] Microsoft launched the Xbox Live Arcade (XBLA) in 2004 which they used to publish games for the Xbox and later the Xbox 360 from smaller publishers and independent teams. Sony and Nintendo followed suit with similar indie game publishing programs in the early 2010s.^[186][187] Several indie games gained the media spotlight in this period, including Super Meat Boy, Fez, and Braid.^[188][189]

2010s

In the 2010s, the traditional model of racing to a five-year console life cycle was reduced.^[190] Reasons included the challenge and massive expense of creating consoles that were graphically superior to the then-current generation, with Sony and Microsoft still looking to recoup development costs on their current consoles and the failure of content creation tools to keep up with the increased demands placed upon the people creating the games.

On June 14, 2010, during E3, Microsoft revealed its new Xbox 360 S or Slim. It is smaller and quieter, with a 250GB hard drive and 802.11n WiFi.^[191] It started shipping to US stores the same day, and in Europe on July 13.

The OnLive cloud-based gaming system is one of the first cloud gaming services.^[192]

High-definition graphics in video game hardware

Cathode ray tube-based display units had begun to phase out in the 2000s, replaced by inexpensive flat-screen televisions and monitors which had far higher screen resolution and refresh rates. Video game hardware began introducing support for the new High-Definition Multimedia Interface (HDMI) standard, allowing for resolutions up to 4K (3840 × 2160 pixels), which itself stressed the need for more powerful GPU cards with faster processors and larger memory. Game engines such as Unreal, Unity, and DirectX have added support for improved texture mapping to support high-resolution textures to give photorealistic graphics in games.

Microsoft and Sony both released their next console generations, the Xbox One and PlayStation 4, in 2013. Both expanded on features from their previous consoles with the added support for high-resolution graphics, and more support for digital distribution of content with additional storage space. The Xbox One had an initial flubbed launch, as Microsoft wanted to require users to be always connected to the Internet, along with persistent use of the Kinect motion sensor, which in turn would have given certain benefits to players. However, these decisions were met with negative feedback in the months prior to release over their privacy concerns, and Microsoft revamped their policies. The Kinect, though initially bundled with the Xbox One, was made optional, and a year after launch, Microsoft opted to end Kinect's production for the Xbox One.

Nintendo still kept to its own path. The company decided that the Wii may have lost a portion of its core gamers and developed the Wii U to draw this group back in. The Wii U, released in 2012, included a tablet-like Wii U GamePad that included controls and a touchscreen display that acted as a second screen during gameplay, along with support for Wii Remote controllers, and included backward compatibility with Wii games. The Wii U was a commercial failure for Nintendo following the Wii; while the Wii had sold more than 100 million units, the Wii U only sold about 13 million in its lifetime. Nintendo attributed this to both the marketing of the Wii U which failed to make clear the purpose of the GamePad and which made consumers believe it was just another tablet system, and to the lack of third-party support on the console which dropped off quickly once initial console sale numbers were obtained.^[193][194] and marketing reasons.^[195]

Nintendo had already been working on its next console once the Wii U had been released, but pushed ahead as to get another console to release sooner to financially recover from the Wii U.^[196] Again, staying with their past blue ocean strategy to focus on innovation rather than technical superiority of their competitors, Nintendo released the Nintendo Switch in 2017, one of the first hybrid consoles, with the ability to be played as a handheld device but also can be placed into a docking station connected to a television and played like a home console. The Switch uses a detachable Joy-Con which function as both regular controllers and as motion-sensing devices like the Wii Remote. Alongside the Switch, Nintendo sought out third-party support for the console from both triple-A studios and indie developers. The Switch proved to be very successful, as of 2022, it is Nintendo's best-selling home console, succeeding the Wii, and helped Nintendo regain position in the hardware market.

The handheld market began to wane in the 2010s as mobile gaming supplanted it. Nintendo continued to refine the DS line; it released the

In personal computers, the graphics card market centered on progress made by industry leaders NVidia and

Until the 2010s, online play for most platforms was limited to players on that same platform, though some games such as Final Fantasy XI had experimented with limited models. As new gaming consoles converged in design to personal computers and with common middleware libraries, it became technically feasible to allow for cross-platform play between different platforms, but business objectives by Microsoft, Nintendo, and Sony, looking to maintain control on their online services, initially rejected this, most notably by Sony who had stated they wanted to maintain a family-friendly environment for its online services.^[199][200] Epic Games' Fortnite Battle Royale first released in 2017, proved an instrumental driver of cross-platform play. Fortnite had quickly gained popularity in its first few months of release, and Epic had been able to prove the ease with which cross-platform play could be implemented between the Xbox, Windows, and mobile platforms with its backend libraries. Nintendo followed by allowing cross-play on the Switch, and eventually, by 2018, Sony agreed to allow selected games such as Fortnite to have cross-platform play.^[201] Since then, numerous games have gained or were released with cross-platform play support across consoles, computers, and mobile devices.^[202]

The first cloud gaming services emerged in 2009. These services allowed players to play games where the processing power was performed on a computer system at a hosted location, while the game's output and player's input were sent to that system over the Internet, using the power of cloud computing. This eliminated the need for a costly console or dedicated gaming computer for players. Early services like OnLive and Gaikai showed that cloud gaming was possible but was very much tied to the player's latency, as a slow network could easily stall the game's performance.^[203][204]

Cloud gaming became more refined in the 2010s as total network capacity around the world increased with higher bandwidths made available to consumers, in addition to new technologies to try to overcome the latency issue. Sony acquired both OnLive and Gaikai in the mid-2010s, and used the former as the basis for its PlayStation Now cloud gaming service, allowing players to play older PlayStation games on newer consoles. Other players in the cloud gaming arena that emerged in this period include NVidia's GeForce Now, Microsoft's xCloud, Google's Stadia, and Amazon Luna.^[205]

New revenue models for video games

With game development budgets for triple-A games growing larger, developers and publishers looked for ways to gain additional revenue for games beyond the first sale of the game. Multiple factors from the prior decade including the growth of the mobile game market and the introduction of in-app purchases, subscription-based games such as MMOs, and the digital distribution market, led to new avenues for recurring revenue by treating games as a service (GaaS).^[206]

Larger expansions and downloadable content had existed prior to the mid-2000s, and players had become accustomed to the subscription-based model for MMOs by that point. Microsoft enabled developers to offer microtransactions, content sold at a small price point typically under $5, for their games on the Xbox 360 around 2005, with one of the most well-known examples being a horse armor package for The Elder Scrolls IV: Oblivion in 2006. While mostly a cosmetic item in the game, the armor pack was one of the most popular items sold in for Oblivion by 2009, and cemented the idea of microtransactions.^{[207][208][209]}

Games that followed Oblivion found ways to include additional microtransaction content to games to extend per-game earnings.^[209] Publishers that produced games with online content created special online passes, such as Electronic Arts' "Project Ten Dollar", which required purchase to gain access to online features; this was also intended to stall secondary sales of games. This approach was heavily criticized by consumers and players, and abandoned by 2013. Instead publishers offered the season pass model, first appearing in games like L.A. Noire and Mortal Kombat. Without a season pass, players would still have access to all fundamental features of a game including online play, but the season pass gave access to all planned expanded content for single player modes and new characters or items and cosmetics for online modes, all planned to be released typically within a year's period, typically at a discount compared to purchasing each individually. A game could thus offer repeating season passes year after year and generate revenue this way.^[209] A related concept to the season pass is the battle pass, first introduced in Dota 2. Within a battle pass are a number of in-game items that a player can earn at various levels of the battle pass, but requires them to complete in-game challenges as to earn the levels within the pass. Some battle passes include a free tier of items but most incorporate a tier that requires purchase of the pass. Battle passes can be cycled like season passes, offering a fresh set of items with new challenges on a regular basis, and supply recurring revenue for a game.^[209]

From mobile and free-to-play games,

China's impact in monetization played a key role during this period, which exceeded over 500 million players by the mid-2010s. While the console ban had been lifted, China's government still required that imported hardware be sold through Chinese companies, and requires Chinese operators to manage online games as to uphold the country's laws on censorship and gameplay limitations for minors. Chinese companies that were already publishing games within the country began to make partnerships or other arrangements with foreign firms to help bring their games and hardware into the company through the complex approvals process. Such companies include NetEase and Perfect World, but the largest mover had been Tencent, which made numerous investments into foreign firms over the 2010s, which included full acquisition of Riot Games and partial ownership of Supercell and Epic Games, as well as minority stake in publishers Ubisoft, Activision Blizzard and Paradox Interactive. In exchange, Tencent had helped these companies refine their monetization approaches using their past experience with their own games.^[210]

Mixed, virtual and augmented reality games

Virtual reality (VR) systems for video games had long been seen as a target for VR technology and had been in development as early as the 1990s, but had been hampered by their high cost and impractical for consumer sales. One of the initial attempts, Nintendo's Virtual Boy in 1996, used a monochromatic stereoscopic display to simulate 3D, but the unit was impractical and failed to gain developers, leading it to be a commercial failure for Nintendo. Breakthroughs in consumer-ready VR hardware came in the early 2010s with the development of the Oculus Rift by Palmer Luckey. The Rift was demonstrated at trade shows in 2013, and proved popular enough to lead Facebook to purchase the company and technology for $2 billion in 2014. Shortly afterward, Valve and HTC announced the HTC Vive, first released in 2015, while Sony released its PlayStation VR in 2016. Valve later developed its own VR hardware line, the Valve Index, released in 2019. While numerous VR games took advantage of VR effectively over "flat-screen" games (those lacking VR capabilities) for immersive experience, VR's "killer app" came by way of Half-Life: Alyx, released by Valve in 2020. Half-Life: Alyx brought several new ideas for integrating first-person shooter gaming into a VR app, and spurred sales of the Index.^[211]

Augmented reality (AR) games, where the game takes a real-time video game image and renders additional graphics atop it, had also existed before the 2010s. Some PlayStation console games used the EyeToy, PlayStation Eye, or PlayStation Camera as part of the gameplay, as well as Xbox 360 and Xbox One games using the Kinect. Most of the games were more experimental since cameras were fixed and limited what interactions could be made. As handheld consoles including the PSP and the Nintendo DS line, and mobile phones incorporated video camera capabilities, new AR possibilities opened up on portable devices. Initial games were still more experimental and toys without comprehensive gameplay loops. AR-based games took off with the release of Pokémon Go in 2016, which combined AR with location-based games. Players would use their mobile device to guide them to where a virtual Pokémon may be found, which they searched for and attempted to capture using AR atop their device's camera.^[212]

2020s

Ray-tracing and photorealistic graphics

NVidia and AMD introduced graphics cards in 2020 with hardware support for real-time

The metaverse, blockchain and NFT games, and video game acquisitions

Moving into the 2020s, the concept of the metaverse grew in popularity. Similar in nature to the social spaces of Second Life, the concept of a metaverse is based on using more advanced technology like virtual and augmented reality to create immersive worlds that not only can be used for social and entertainment functions but as well as for personal and business purposes, giving the user the ability to earn from participation in the metaverse.^[213] Roblox is a more recent example of an open world game that allows players to build their own creations within game with the potential to earn money from these creations.^[214]

The metaverse in the early 2020s was not yet well defined but those developing the nascent technologies recognized that a financial system would be tied to these systems. Avoiding the pitfalls of prior game currency systems, the development of cryptocurrency-based games and systems that used decentralized blockchain technologies started to grow in popularity. These blockchain games were frequently based on the trading of non-fungible tokens that players created and improved through the game, mimicking how metaverse content would function.^[215] Some video game companies have expressed strong support for using blockchain and NFTs in their games, such as Ubisoft, but there has been generally negative feedback from players and game developers that consider cryptocurrency and NFT a scam.^[216]

Regardless of these developments, interest in the metaverse had led to a large number of major acquisitions in the video game industry at the start of the 2020s as large publishers gathered more studios and other publishers within their folds as to be able to offer their properties within the parent's version of the metaverse, diversify their offerings, and preparate for futures where gaming platforms shift away from traditional systems.

• Chronology of real-time strategy video games
• Chronology of real-time tactics video games
• Game On (exhibition)
• International Center for the History of Electronic Games

References