Video game industry
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Video game industry |
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The video game industry is the
The video game industry has grown from niche to mainstream.[2] As of July 2018[update], video games generated US$134.9 billion annually in global sales.[3] In the US, the industry earned about $9.5 billion in 2007, $11.7 billion in 2008, and US$25.1 billion in[update] 2010,[4] according to the ESA annual report. Research from Ampere Analysis indicated three points: the sector has consistently grown since at least 2015 and expanded 26% from 2019 to 2021, to a record $191 billion; the global games and services market is forecast to shrink 1.2% annually to $188 billion in 2022; the industry is not recession-proof.[5]
The industry has influenced the technological advancement of
Industry overview
Size
In 2017 in the United States, which represented about a third of the global video game market, the Entertainment Software Association estimated that there were over 2,300 development companies and over 525 publishing companies, including in hardware and software manufacturing, service providers, and distributors. These companies in total have nearly 66,000 direct employees. When including indirect employment, such as a developer using the services of a graphics design package from a different firm, the total number of employees involved in the video game industry rises above 220,000.[6]
Value chain
Traditionally, the video game industry has had six connected layers in its value chain based on the retail distribution of games:
- designers, and artists, and their leadership, with support of middlewareand other development tools.
- Publishing, which typically includes both the source of funding the development of a video game, as well as providing the marketing and advertising for a game.
- Distribution, whether through retail or digital channels. Distribution typically includes manufacturing and duplication of game media and packaging for retail games.
- Retailer, storefront where the game is sold.
- Consumers, the purchasers and players of video games
- Hardware platform manufacturers, which can own and place limitations for content on the platform they have made, charging license fees to developers or publishers.
As games have transitioned from the retail to more digital market, parts of this value chain have become redundant. For example, the distributor may be redundant as a function of either the publisher or the retailer, or even in some cases as the case of indie games, the function of the developer themselves.[7]
Roles
Ben Sawyer of Digitalmill observes that the development side of the industry is made up of six connected and distinctive layers:
- Capital and publishing layer: involved in paying for development of new games and seeking returns through licensing of the properties.
- Product and talent layer: includes designers and artists, who may be working under individual contracts or as part of in-house development teams.
- Production and tools layer: generates content middleware, customizable game engines, and production management tools.
- Distribution layer: or the "publishing" industry, involved in generating and marketing catalogs of games for retail and online distribution.
- Hardware (or Virtual Machine or Software Platform) layer: or the providers of the underlying platform, which may be console-based, accessed through online media, or accessed through mobile devices such as smartphones. This layer includes network infrastructure and non-hardware platforms such as virtual machines (such as Java or Flash), or software platforms such as browsers or Facebook.
- End-users layer: or the players of the games.[8]
The game industry employs those experienced in other traditional businesses, but some have experience tailored to the game industry. Some of the disciplines specific to the game industry include:
History
This section may need to be rewritten to comply with Wikipedia's quality standards, as Section should focus on the history of segments of the industry (developers, publishers, etc.) and major events, which may be tied to hardware and software, but this should be less about reiterating the hardware and generations.. (March 2021) |
1940s–1960s
Prior to the 1970s, there was no significant commercial aspect of the video game industry, but many advances in computing would set the stage for the birth of the industry.
Many early publicly available interactive computer-based game machines used or other mechanisms to mimic a display; while technically not "video games", they had elements of interactivity between the player and the machine. Some examples of these included the 1940 "Nimatron", an electromagnetic relay-based
The development of
Between the 1950s and 1960s, with mainframe computers becoming available to campus colleges, students and others started to develop games that could be played at terminals that accessed the mainframe. One of the first known examples is Spacewar!, developed by Harvard and MIT employees Martin Graetz, Steve Russell, and Wayne Wiitanen.[14] The introduction of easy-to-program languages like BASIC for mainframes allowed for more simplistic games to be developed.
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.[15] In the late 1960s, a college student named Nolan Bushnell had a part-time job at an arcade where he became familiar with EM games such as Chicago Coin's racing game Speedway (1969), watching customers play and helping to maintain the machinery, while learning how it worked and developing his understanding of how the game business operates.[16]
1970s
In 1971, the first commercial
Space Invaders was soon licensed for the
1980s
In the early 1980s, the
In the early 1980s,
Video games transitioned from having been showcased at general trade shows like
1990s
Game related technology advances of the 1990s include these:
- The "3D Revolution" where 3D polygon graphics became the de facto standard for video game visual presentation, initially in the arcades during the early 1990s,[35] and then on home systems with 3D consoles and PC graphics cards in the mid-1990s.
- The widespread adoption of CD-based storage and software distribution
- Continuing advancement of CPUspeed and sophistication
- Widespread adoption of Mac OS
- Shrinking of hardware, with mobile gaming
- The emergence of the competitive gaming
Aside from technology, in the early part of the decade, licensed games became more popular,[36][37] as did video game sequels.[38]
The arcades experienced a renaissance in the early 1990s following the release of but the gap between arcade and home systems began narrowing in the late 1990s.
The video game industry generated worldwide sales of $19.8 billion in 1993[46] (equivalent to $41.8 billion in 2023), $20.8 billion in 1994[46] (equivalent to $42.8 billion in 2023), and an estimated $30 billion in 1998[47] (equivalent to $56.1 billion in 2023). In the United States alone, in 1994, arcades generated $7 billion[48] in quarters while home console game sales generated $6 billion[48] Combined, this was nearly two and a half times the $5 billion revenue generated by movies in the United States at the time.[48]
2000s
In 2000s, the video game industry was in heavy development; profit still drove technological advancement used by other industry sectors. Technologies such as
2010s
2020s
The next generations of
As the pandemic wore on from 2020 into 2021, a secondary effect was the impact of the
Economics
Graphs are unavailable due to technical issues. There is more info on
mobile gaming since 2008.Early development costs were minimal, and video games could be quite profitable. Games developed by a single programmer, or by a small team of programmers and artists, could sell hundreds of thousands of copies each. Many of these games only took a few months to create, so developers could release multiple games per year. Thus, publishers could often be generous with benefits, such as royalties on the games sold. Many early game publishers started from this economic climate, such as Origin Systems, Sierra Entertainment, Capcom, Activision and Electronic Arts .
As computing and graphics power increased, so too did the size of development teams, as larger staffs were needed to address the ever-increasing technical and design complexities. The larger teams consist of programmers, artists, game designers, and producers. Their salaries can range anywhere from $50,000 to $120,000 generating large labor costs for firms producing video games Traditionally, the video game monetization method is to sell hard copies in retail store. Cheaper production and distribution methods include online distribution.[64] In the 2010s, the video game industry had a major impact on the economy through the sales of major systems and games such as Call of Duty: Black Ops, which had over $650 million of sales in the game's first five days and which set a five-day global record for a movie, book or video game.[65] The game's income was more than the opening weekend of Spider-Man 3 and the previous title holder for a video game Halo 3.[66] Many individuals have also benefited from the economic success of video games including the former chairman of Nintendo and Japan's third richest man: Hiroshi Yamauchi.[67] By 2014, the global video game market was valued at over $93 billion.[68] The industry wide adoption of high-definition graphics during the seventh generation of consoles greatly increased development teams' sizes and reduced the number of high-budget, high-quality games under development. In 2013 Richard Hilleman of Electronic Arts estimated that only 25 developers were working on such games for the eighth console generation, compared to 125 at the same point in the seventh generation-console cycle seven or eight years earlier.[69]
By 2018, the United States video game industry had matched that of the United States film industry on basis of revenue, with both having made around US$43 billion that year.[70][71] Since 2000, the video game industry was considered recession-proof, having thrived compared to other industries during the 2008 Great Recession, and as one of the more profitable industries during the COVID-19 pandemic in 2020 and 2021. Video games are seen as a low-cost vice and entertainment for consumers when approaching recession.[72][73] However, in 2022, atop pandemic economic fallout including chip shortages, supply chain disruption, and consumers preferring outdoor activities, the industry started to indicate recession with global revenues falling for the first time in twenty years.[74] RetailThe industry's shift from Tower Records, and Virgin Megastores. GameStop diversified its services by purchasing chains that repair wireless devices and expanding its trade-in program through which customers trade used games for credit towards new games.[75] The company began to produce its own merchandise and games. In Britain, the games retailer Game revamped its stores so customers would spend time playing games there. It built a gaming arena for events and tournaments.[76] The shift to digital marketplaces, especially for smartphones, led to an influx of inexpensive and disposable games,[77] and lower engagement among gamers who otherwise purchased new games from retail.[78] Customers also shifted away from the tradition of buying games on their first day of release.[79]
Publishers often funded trade-in deals to encourage consumers to purchase new games. Trade-in customers at the Australian retailer Game would purchase twice the games per year as non-trade-in customers. The sale of pre-owned games kept retailers in business, and composed about a third of Game's revenue. Retailers also saved on the UK's value-added tax, which only taxed the retailer's profit on pre-owned games, rather than the full sale on regular games. The former trade-in retail executives behind the trade-in price comparison site Trade In Detectives estimated that the United Kingdom's trade-in industry was about a third of the size of its new games business.[80] They figured that sites such as eBay, which convert used games into cash, compose about a quarter of the UK's trade-in market,[81] but do not keep the credit within the industry. While consumers might appear to receive better offers on these sites, they also take about 15 percent of the selling price in fees. Alternatively, some retailers will match the trade-in values offered by their competitors. Microsoft's original plan for the Xbox One attempted to translate trade-in deals for the digital marketplace, with a database of product licenses that shops would be able to resell with publisher permission, though the plan was poorly received or poorly sold.[80] PracticesVideo game industry practices are similar to those of other entertainment industries (e.g., the music recording industry ), but the video game industry in particular has been accused of treating its development talent poorly. This promotes independent development, as developers leave to form new companies and projects. In some notable cases, these new companies grow large and impersonal, having adopted the business practices of their forebears, and ultimately perpetuate the cycle.
However, unlike the music industry, where modern technology has allowed a fully professional product to be created extremely inexpensively by an independent musician, modern games require increasing amounts of manpower and equipment. This dynamic makes publishers, who fund the developers, much more important than in the music industry. BreakawaysIn the video game industry, it is common for developers to leave their current studio and start their own. A particularly famous case is the "original" independent developer Infogrames ).
Activision was popular among developers for giving them credit in the packaging and title screens for their games, while Atari disallowed this practice. As the video game industry took off in the mid-1980s, many developers faced the more distressing problem of working with fly-by-night or unscrupulous publishers that would either fold unexpectedly or run off with the game profits. PiracyThe industry claims software piracy to be a big problem, and takes measures to counter this.[83]
Digital rights management have proved to be the most unpopular with gamers, as a measure to counter piracy.[84]
The most popular and effective strategy to counter piracy is to change the business model to freemium, where gamers pay for their in-game needs or service. Strong server-side security is required for this, to properly distinguish authentic transactions from hacked transactions.
Creative controlOn various Internet forums, some gamers have expressed disapproval of publishers having creative control since publishers are more apt to follow short-term market trends rather than invest in risky but potentially lucrative ideas. On the other hand, publishers may know better than developers what consumers want. The relationship between video game developers and publishers parallels the relationship between record labels in many ways. But unlike the music industry, which has seen flat or declining sales in the early 2000s,[85][86][87] the video game industry continues to grow.[88]
In the console manufacturer :
In addition, the developer must usually buy development systems from the console manufacturer in order to even develop a game for consideration, as well as obtain concept approval for the game from the console manufacturer. Therefore, the developer normally has to have a publishing deal in place before starting development on a game project, but in order to secure a publishing deal, the developer must have a track record of console development, something which few startups will have. AlternativesAn alternative method for publishing video games is to self-publish using the shareware or open source model over the Internet. Gaming conventionsPenny Arcade Expo, and others .
Regional distribution
As with other forms of media, video games have often been released in different world regions at different times.[90] The practice has been used where localization is not done in parallel with the rest of development[91] or where the game must be encoded differently, as in PAL vs. NTSC.[92] It has also been used to provide price discrimination in different markets or to focus limited marketing resources.[90] Developers may also stagger digital releases so as not to overwhelm the servers hosting the game.[93] International practicesThe video game industry had its primary roots in the United States following the introduction of arcade games and console systems, with Japan soon following. With the introduction of the personal computer, Western Europe also became a major center for video game development. Since then, the industry is primarily led by companies in North American, Europe, and Japan, but other regions, including Australia/New Zealand, and other East Asian countries including China and South Korea, have become significant sectors for the industry. World trendsInternational video game revenue was over $142B in 2022.[94] This is almost double the revenue of the international film industry in 2023.[95] The largest nations by estimated video game revenues in 2016 are the United States ($46.4B), China ($44B), and Japan ($19.1B).[94] The gaming industry saw strong growth in 2020, the first year of the pandemic, and this trend continued into 2021.[96] Largest marketsAccording to market research firm Newzoo, the following countries are the largest video game markets by annual revenue, as of 2022[update].[97]
According to market research firm Newzoo, the following countries are the largest video game markets by number of players in the top 10 richest video game markets, as of 2022[update].[98]
In general, spending on gaming tends to increase with increase in nominal GDP. However, gaming is relatively more popular in East Asia, and relatively less popular in India. North AmericaCanadaCanada has the third largest video game industry in terms of employment numbers. United StatesThe video game industry got its start in the United States in the late 1970s and early 1980s with the creation of arcade games like The United States has the largest video games presence in the world in terms of total industry employees. EuropeGermanyGermany has the largest video games market in Europe, with revenues of $4.1 billion forecast for 2017.[110] The annual Gamescom in Cologne is Europe's largest video game expo. One of the earliest internationally successful video game companies was FIFA Manager series was also developed in Germany. The German action game Spec Ops: The Line (2012) was successful in the markets and received largely positive reviews. One of the most famed game from Germany is Far Cry (2004) by Frankfurt-based Crytek, who also produced the topseller Crysis and its sequels later.
Other well-known current and former developers from Germany include are among the world's leading browser game and social network game developers/distributors.United KingdomThe UK industry is the third largest in the World in terms of developer success and sales of hardware and software by country alone but fourth behind Canada in terms of people employed.[99] The size of the UK game industry is comparable to its film or music industries.[111] Like most European countries, the UK entered the video game industry through personal computers rather than video game consoles. Low-cost computers like the ZX Spectrum and Amiga 500 led to numerous "bedroom coders" that would make and sell games through mail-order or to distributors that helped to mass-produce them.[112] Coupled with quirky british humour, the "Britsoft" wave of popular games led to a number of influential people and studios in the 1990s.[113] As game programming became more complex and costly in the early 2000s, more traditional studio structures arose to support both personal computers and consoles, with several studios that, in some form or another, remain highly regarded and influential in the present.[114] Some of the studios have become defunct or been purchased by larger companies such as LittleBigPlanet developer, Media Molecule[115] and Codemasters.[116] The country is home to some of the world's most successful video game franchises, such as Tomb Raider, Grand Theft Auto, Fable, Colin McRae Dirt, and Total War. The country also went without tax relief until March 21, 2012[117] when the British government changed its mind on tax relief for UK developers, which without, meant most of the talented development within the UK may move overseas for more profit, along with parents of certain video game developers which would pay for having games developed in the UK. The industry trade body TIGA estimates that it will increase the games development sector's contribution to UK GDP by £283 million, generate £172 million in new and protected tax receipts to HM Treasury, and could cost just £96 million over five years.[118] Before the tax relief was introduced there was a fear that the UK game industry could fall behind other leading game industries around the world such as France and Canada, of which Canada overtook the UK in terms of job numbers in the industry in 2010.[119] AsiaChinaChina had not been a major factor in the global video game market early on due to economic factors, governmental oversight, and a black market for foreign products. The government initiated a ban on video game consoles in 2000 that lasted through 2014, during which China's video game market grew for personal computer games, particularly subscription-based and microtransaction-based ones that were amenable to use in PC cafes, and later into mobile games. Media publishers like Tencent and NetEase focused on these types of games, growing successfully during the 2010s to become leading international companies. As of 2015, China's video game market revenue exceeds that of the United States, and is the largest country by both revenue and number of players.[121][122] China is also the largest contributor towards esports in both revenue and in the number of professional players from the country.[123] The industry, like most media in China, is tightly controlled by the government, with strong restrictions on what content may be in games,[124] and incorporation of anti-addiction measures to limit playtime.[125] It is home to Asia Game Show, the largest game convention in the world by attendance.[126] JapanThe Japanese video game industry is markedly different from the industry in North America, Europe and Australia. Japan initially trailed the United States in entering the video game sector as its companies followed trends set by their American partners, but started to pioneer their own ideas soon after. Several Japanese-developed arcade games, such as Space Invaders, helped to usher in the golden age of arcade video games from 1978 to 1982. The 1983 video game crash that affected the North American market did have small but short-term effects in Japan, as most companies involved in the business were well-established and could weather the disruption. Nintendo took the opportunity to push the Nintendo Entertainment System, a rebranding of its Famicom system, into the Western markets after the crash, implementing technical and business practices to avoid the factors that created the 1983 crash but also secured its control on what games were published for the system. Japan became the dominant home for consoles and console games through the early 2000s, challenged only by the incorporation of large publishers in the West and the Xbox line of consoles from Microsoft. Nintendo along with companies like Sega, Sony Interactive Entertainment, and Capcom are dominant leaders in the Japanese video game industry. Nintendo themselves are recognized for having created some of the most positively-reviewed and best-selling video game series such as Mario, Donkey Kong, The Legend of Zelda, Metroid and Pokémon. In recent years, consoles and arcade games have both been overtaken by downloadable free-to-play games on the PC and mobile platforms.[127][128] South KoreaThe video game industry in South Korea generally followed the same early trends as the Japanese market, but players started focusing on massively-multiplayer online games (MMO) and other games that could be played at esports in the 1990s and 2000s, and today a large number of professional esports players originate from South Korea.
BangladeshVideo gaming is a relatively new sector in Bangladesh. Games have been developed since 2002, mostly independently. However, from 2014, some IT companies have started to develop video games commercially. Some research has been carried out at various universities to improve the video game development sector.[129] IndiaVideo gaming in India is an emerging market since India is experiencing strong growth in online gaming, making it one of the top gaming markets in the world. Over the past few decades, the Indian gaming industry has gone from close to nonexistent in the 1990s to one of the top markets globally in the late 2010s. In 2019, the online gaming market in India was estimated at ₹6,200 crore (US$780 million) with an estimated 300 million gamers, a 41.6% increase from 2018.[130] As of 2021, it is one of the top five mobile gaming markets in the world. The industry is projected to reach 510 million gamers by 2022.[citation needed] OthersAfricaThe video game industry is still in its infancy throughout the African continent, but due to the continent's young population and increasing technological literacy, the sector is growing rapidly. African countries such as mobile game development, both within their country and internationally,[131] but due to limited funding and a market overcrowded with Western games, success has thus far been minimal.[132]
Australia and New ZealandAustralia and New Zealand have an active video game industry, with several standalone developers as well as additional studios from other major developers across the globe. Conventions, trade shows, and conferencesGaming conventions are an important showcase of the industry. These typically provide the means for developers and publishers to demonstrate their games directly to video game players and consumers and obtain feedback. New games are frequently introduced during these events. Some examples of each conventions include the annual Gamescom in Cologne, and numerous PAX events. Some publishers, developers and technology producers also have their own regular conventions, with BlizzCon, QuakeCon, Nvision and the X shows being prominent examples. National trade groups that support their local video game industry often will hold ChinaJoy (China) and the annual Game Developers Conference .
The development of video games is also a topic of academic and professional interest, leading to a number of D.I.C.E. Summit run by the Academy of Interactive Arts & Sciences in February of each year at Las Vegas, Nevada.
Media coverage and archivingThe coverage of the video game industry started off with several magazines covering the topic, but as the Internet became widely available to support Gamasutra, IGN, Eurogamer, Polygon and GameSpot. More recently, the effect of social media influencers, video game players that create online videos or stream themselves playing games through services like Twitch , have also become a significant source for coverage of video game news from the consumer point of view.
Another facet of tracking the history of the video game industry is video game preservation, a process that is complicated due to game hardware technology that can become obsolete, dependencies on decommissioned online servers, and issues over intellectual property that legally restricts preservation efforts. Much of the industry's history prior to the 1983 crash has been lost, as companies affected by the crash simply threw material away, leaving little to recover today. There is better awareness of video game preservation into the 21st century, and several groups and museums have been established to collect and preserve hardware and software for the industry.[133] Recognition within the industryThe video game industry has a number of annual award ceremonies, commonly associated with the above conventions, trade shows, and conferences, as well as standalone award shows. Many of the dedicated video game journalism websites also have their own set of awards. Most commonly, these ceremonies are capped by the top prize, the "Game of the Year". Trends
Players become fourth-party developers, allowing for more modifications (mods), which in some cases become just as popular as the original game for which they were created. An example of this is the game Counter-Strike, which began as a mod of the video game Half-Life and eventually became a very successful, published game in its own right.
While this "community of modifiers" may only add up to approximately 1% of a particular game's user base, the number of those involved will grow as more games offer modifying opportunities (such as, by releasing source code) and the video user base swells. According to Ben Sawyer, as many as 600,000 established online game community developers existed as of 2012. This effectively added a new component to the game industry value chain and if it continues to mature, it will integrate itself into the overall industry.[8] The industry has seen a shift towards games with multiplayer facilities. A larger percentage of games on all types of platforms include some type of competitive online multiplayer capability. In addition, the industry is experiencing further significant change driven by convergence, with technology and player comfort being the two primary reasons for this wave of industry convergence. Video games and related content can now be accessed and played on a variety of media, including: cable television, dedicated consoles, handheld devices and smartphones, through social networking sites or through an ISP, through a game developer's website, and online through a game console and/or home or office personal computer. In fact, 12% of U.S. households already make regular use of game consoles for accessing video content provided by online services such as Hulu and Netflix. In 2012, for the first time, entertainment usage passed multiplayer game usage on Xbox, meaning that users spent more time with online video and music services and applications than playing multiplayer games. This rapid type of industry convergence has caused the distinction between video game console and personal computers to disappear. A game console with high-speed microprocessors attached to a television set is, for all intents and purposes, a computer and monitor.[134] As this distinction has been diminished, players' willingness to play and access content on different platforms has increased. The growing video gamer demographic accounts for this trend, as former president of the Entertainment Software Association Douglas Lowenstein explained at the 10th E3 expo, "Looking ahead, a child born in 1995, E3's inaugural year, will be 19 years old in 2014. And according to Census Bureau data, by the year 2020, there will be 174 million Americans between the ages of 5 and 44. That's 174 million Americans who will have grown up with PlayStations, Xboxes, and GameCubes from their early childhood and teenage years...What this means is that the average gamer will be both older and, given their lifetime familiarity with playing interactive games, more sophisticated and discriminating about the games they play."[135] Evidence of the increasing player willingness to play video games across a variety of media and different platforms can be seen in the rise of casual gaming on smartphones, tablets, and social networking sites as 92% of all smartphone and tablet owners play games at least once a week, 45% play daily, and industry estimates predict that, by 2016, one-third of all global mobile video game revenue will come from tablets alone.[ See also
References
Further reading
External linksLook up video game industry in Wiktionary, the free dictionary. Wikimedia Commons has media related to Video game industry. |