Video game industry

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Video game industry
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{{pp-pc|small=yes}}{{Use mdy dates|date=August 2016}}{{Lead too short|date=January 2018}}{{VG Industry}}The video game industry is the economic sector involved in the development, marketing, and monetization of video games. It encompasses dozens of job disciplines and its component parts employ thousands of people worldwide.Zackariasson, P. and Wilson, T.L. eds. (2012). The Video Game Industry: Formation, Present State, and Future. New York: Routledge.


The computer and video-game industry has grown from focused markets to mainstream.{{cn|date=March 2019}} They took in about US$9.5 billion in the US in 2007, 11.7 billion in 2008, and 25.1 billion {{as of | 2010 | alt = in}} 2010 (ESA annual report).Modern personal computers owe many advances and innovations to the game industry: sound cards, graphics cards and 3D graphic accelerators, faster CPUs, and dedicated co-processors like PhysX are a few of the more notable improvements.Sound cards were developed{{by whom?|date=March 2019}} for addition of digital-quality sound to games and only later improved for music and audiophiles.WEB
, Didi Games, Research on Video Games
, Bob Johnstone, Didi Games
, April 1, 2009
, Early on, graphics cards were developed for more colors. Later, graphics cards were developed{{by whom?|date=March 2019}} for graphical user interfaces (GUIs) and games; GUIs drove the need for high resolution, and games began using 3D acceleration. They also are one of the only pieces of hardware to allow multiple hookups (such as with SLI or CrossFire graphics-cards). CD- and DVD-ROMs developed for mass distribution of media in general; however, the ability to store more information on cheap, easily distributable media became instrumental in driving their ever-higher speeds.

Game industry value chain

Ben Sawyer of Digitalmill observes that the game industry value chain is made up of six connected and distinctive layers:
  1. Capital and publishing layer: involved in paying for development of new titles and seeking returns through licensing of the titles.
  2. Product and talent layer: includes developers, designers and artists, who may be working under individual contracts or as part of in-house development teams.
  3. Production and tools layer: generates content production tools, game development middleware, customizable game engines, and production management tools.
  4. Distribution layer: or the "publishing" industry, involved in generating and marketing catalogs of games for retail and online distribution.
  5. 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 now includes network infrastructure and non-hardware platforms such as virtual machines (e.g. Java or Flash), or software platforms such as browsers or even further Facebook, etc.
  6. End-users layer: or the users/players of the games.
, Flew
, Terry
, Humphreys
, Sal
, Terry Flew
, New Media: an Introduction (Second Edition)
, Oxford University Press
, 2005
, 0-19-555149-4
, Games: Technology, Industry, Culture
, 101–114


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: game programmer, game designer, level designer, game producer, game artist and game tester. Most of these professionals are employed by video game developers or video game publishers. However, many hobbyists also produce computer games and sell them commercially.{{Citation needed|date=March 2009}} Game developers and publishers sometimes employ those with extensive or long-term experience within the modding communitiesweblink



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 electromagentic relay-based Nim-playing device designed by Edward Condon and built by Westinghouse Electric for the New York World's Fair,WEB,weblink The Priesthood At Play: Computer Games in the 1950s, They Create Worlds, Smith, Alexander, 2014-01-22, 2015-12-18,weblink 2015-12-22, no, Bertie the Brain, an arcade game of tic-tac-toe, built by Josef Kates for the 1950 Canadian National Exhibition,NEWS, Marlene, Simmons, Bertie the Brain programmer heads science council,weblink Ottawa Citizen, 1975-10-09, 17, 2015-12-18, and Nimrod created by engineering firm Ferranti for the 1951 Festival of Britain,BOOK, (Replay: The History of Video Games), Donovan, Tristan, Yellow Ant, 2010-04-20, 978-0-9565072-0-4, 1–9, The development of cathode ray tube—the core technology behind televisions—created several of the first true video games. In 1947 Thomas T. Goldsmith Jr. and Estle Ray Mann filed a patent for a "cathode ray tube amusement device". Their game, which uses a cathode ray tube hooked to an oscilloscope display, challenges players to fire a gun at target.WEB,weblink Video Game History Timeline | The Strong,, 2018-06-05, 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.WEB,weblink One, Two, Three, Four I Declare a Space War, They Create Worlds, Smith, Alexander, 2014-08-07, 2015-12-18,weblink 2015-12-22, no, The introduction of easy-to-program languages like BASIC for mainframes allowed for more simplistic games to be developed.


File:Magnavox-Odyssey-Console-Set.jpg|thumb|right|The Magnavox OdysseyMagnavox Odyssey{{see also|First generation of video game consoles|Video game crash of 1977|Golden age of video arcade games|Second generation of video game consoles}}In 1971, the arcade game, Computer Space was released.WEB,weblink The Gaming Industry – An Introduction, Cleverism, The following year, Atari, Inc. released the first commercially successful video game, Pong, the original arcade version of which sold over 19,000 arcade cabinets.BOOK, Computer and Video Game Law: Cases and Materials, Ashley S. Lipson & Robert D. Brain, Carolina Academic Press, 2009, 1-59460-488-6,weblink April 11, 2011, 9, Atari eventually sold more than 19,000 Pong machines, giving rise to many imitations. Pong made its first appearance in 1972 at "Andy Capp's," a small bar in Sunnyvale, California, where the video game was literally "overplayed" as eager customers tried to cram quarters into an already heavily overloaded coin slot., {{inconsistent citations, }} That same year saw the introduction of video games to the home market with the release of the early video game console, the Magnavox Odyssey. However, both the arcade and home markets would be dominated by Pong clones, which flooded the market and led to the video game crash of 1977. The crash eventually came to an end with the success of Taito's Space Invaders, released in 1978, sparking a renaissance for the video game industry and paving the way for the golden age of video arcade games.BOOK, The cyberspace handbook, Jason Whittaker, Routledge, 2004, 0-415-16835-X, 122, {{inconsistent citations, }} The game's success inspired arcade machines to become prevalent in mainstream locations such as shopping malls, traditional storefronts, restaurants and convenience stores during the golden age.WEB,weblink The 30 Defining Moments in Gaming, Future plc, Edge (magazine), Edge, Edge Staff, August 13, 2007, September 18, 2008, yes,weblink" title="">weblink October 29, 2011, Space Invaders would go on to sell over 360,000 arcade cabinets worldwide,JOURNAL, Asia Pacific perspectives, Japan, 1, Jiji Gaho Sha, inc., 2003, University of Virginia,weblink April 9, 2011, 57, At that time, a game for use in entertainment arcades was considered a hit if it sold 1000 units; sales of Space Invaders topped 300,000 units in Japan and 60,000 units overseas., {{inconsistent citations, }} and by 1982, generate a revenue of $2 billion in quarters,NEWS, Making millions, 25 cents at a time, The Fifth Estate (TV), The Fifth Estate, Canadian Broadcasting Corporation, November 23, 1982,weblink June 6, 2012, JOURNAL, Space Invaders vs. Star Wars, Executive, 24, Southam Business Publications, 1982,weblink April 30, 2011, 9, According to TEC, Atari's arcade game Space Invaders has taken in $2 billion, with net recipts of $450 million., {{inconsistent citations, }} equivalent to $4.6 billion in 2011.WEB, CPI Inflation Calculator, Bureau of Labor Statistics,weblink March 22, 2011, Soon after, Space Invaders was licensed for the Atari VCS (later known as Atari 2600), becoming the first "killer app" and quadrupling the console's sales.JOURNAL, September 2007, The Definitive Space Invaders, Retro Gamer, Imagine Publishing, 41, 24–33,weblink April 20, 2011, mdy-all, The success of the Atari 2600 in turn revived the home video game market during the second generation of consoles, up until the North American video game crash of 1983.BOOK, The cyberspace handbook, Jason Whittaker, Routledge, 2004, 0-415-16835-X, 122–3, {{inconsistent citations, }} By the end of the 1970s, the personal computer game industry began forming from a hobby culture.


File:NES-Console-Set.jpg|thumb|right|The Nintendo Entertainment SystemNintendo Entertainment System{{see also|Golden age of video arcade games|Second generation of video game consoles|North American video game crash of 1983|Third generation of video game consoles|Fourth generation of video game consoles}}The early 1980s saw the golden age of video arcade games reach its zenith. The total sales of arcade video game machines in North America increased significantly during this period, from $50 million in 1978 to $900 million by 1981,BOOK, The video game explosion: a history from PONG to Playstation and beyond, Mark J. P. Wolf, ABC-CLIO, 0-313-33868-X, 105,weblink April 19, 2011, 2008, {{inconsistent citations, }} with the arcade video game industry's revenue in North America tripling to $2.8 billion in 1980.JOURNAL, Electronic Education, Electronic Education, 2, 5–8, Electronic Communications, 1983,weblink April 23, 2011, 41, In 1980 alone, according to Time, $2.8 billion in quarters, triple the amount of the previous years, were fed into video games., {{inconsistent citations, }} By 1981, the arcade video game industry was generating an annual revenue of $5 billion in North America,BOOK, The video game explosion: a history from PONG to Playstation and beyond, Mark J. P. Wolf, ABC-CLIO, 0-313-33868-X, 103,weblink April 19, 2011, 2008, {{inconsistent citations, }} equivalent to $12.3 billion in 2011. In 1982, the arcade video game industry reached its peak, generating $8 billion in quarters,BOOK, Silicon Valley fever: growth of high-technology culture, Everett M. Rogers & Judith K. Larsen, Basic Books, 1984, 0-465-07821-4,weblink April 23, 2011, 263, Video game machines have an average weekly take of $109 per machine. The video arcade industry took in $8 billion in quarters in 1982, surpassing pop music (at $4 billion in sales per year) and Hollywood films ($3 billion, $10 billion if cassette sales and rentals are included). Those 32 billion arcade games played translate to 143 games for every man, woman, and child in America. A recent Atari survey showed that 86 percent of the US population from 13 to 20 has played some kind of video game and an estimated 8 million US homes have video games hooked up to the television set. Sales of home video games were $3.8 billion in 1982, approximately half that of video game arcades., {{inconsistent citations, }} equivalent to over $18.5 billion in 2011, surpassing the annual gross revenue of both pop music ($4 billion) and Hollywood films ($3 billion) combined at that time. This was also nearly twice as much revenue as the $3.8 billion generated by the home video game industry that same year; both the arcade and home markets combined add up to a total revenue of $11.8 billion for the video game industry in 1982, equivalent to over $27.3 billion in 2011. The arcade video game industry would continue to generate an annual revenue of $5 billion in quarters through to 1985.BOOK, Keeping in touch, Ellen Goodman, Summit Books, 1985, 0-671-55376-3,weblink April 23, 2011, 38, There are 95,000 others like him spread across the country, getting fed a fat share of the $5 billion in videogame quarters every year., {{inconsistent citations, }} The most successful game of this era was Namco's Pac-Man, released in 1980, which would go on to sell over 350,000 cabinets,WEB,weblink Game of the Week: Pac-Man, Kevin "Fragmaster" Bowen, GameSpy, 2001, April 9, 2011, Released in 1980, Pac-Man was an immediate success. It sold over 350,000 units, and probably {{sic, y, woul, d of, would have, sold more if not for the numerous illegal pirate and bootleg machines that were also sold.}} and within a year, generate a revenue of more than $1 billion in quarters;BOOK, The video game explosion: a history from PONG to Playstation and beyond, Mark J. P. Wolf, ABC-CLIO, 2008, 0-313-33868-X, Video Game Stars: Pac-Man, 73,weblink April 10, 2011, It would go on to become arguably the most famous video game of all time, with the arcade game alone taking in more than a billion dollars, and one study estimated that it had been played more than 10 billion times during the twentieth century., {{inconsistent citations, }} in total, Pac-Man is estimated to have grossed over 10 billion quarters ($2.5 billion) during the 20th century,NEWS, Pac Man turns 25: A pizza dinner yields a cultural phenomenon - and millions of dollars in quarters, May 10, 2005, Chris Morris, CNN,weblink April 23, 2011, In the late 1990s, Twin Galaxies, which tracks video game world record scores, visited used game auctions and counted how many times the average Pac Man machine had been played. Based on those findings and the total number of machines that were manufactured, the organization said it believed the game had been played more than 10 billion times in the 20th century., equivalent to over $3.4 billion in 2011.The early part of the decade saw the rise of 8-bit home computing, and home-made games, especially in Europe (with the ZX Spectrum and Commodore 64) and Asia (with the NEC PC-88 and MSX). This time also saw the rise of video game journalism, which was later expanded to include covermounted cassettes and CDs.In 1983, the North American industry crashed due to the production of too many badly developed games (quantity over quality), resulting in the fall of the North American industry. The industry would eventually be revitalized by the release of the Nintendo Entertainment System, which resulted in the home console market being dominated by Japanese companies such as Nintendo, while a professional European computer game industry also began taking shape with companies such as Ocean Software and Gremlin Interactive.WEB,weblink World of Spectrum - Archive - YS Top 100,, The latter part of the decade saw the rise of the Game Boy handheld system. In 1987, Nintendo lost a legal challenge against Blockbuster Entertainment, which enabled games rentals in the same way as movies.


File:PlayStation-SCPH-1000-with-Controller.png|thumb|right|The PlayStation was the most popular gaming console of the fifth generation, which saw the common adoption of CD media.]]{{see also|Fourth generation of video game consoles|Fifth generation of video game consoles|Sixth generation of video game consoles}}The 1990s saw advancements in game related technology. Among the significant advancements were: Aside from technology, in the early part of the decade, licensed games became more popular,WEB, Fahs, Travis,weblink IGN Presents the History of Madden - Retro Feature at IGN,, August 8, 2008, November 9, 2010, WEB, Hurby, Patrick,weblink ESPN - OTL: The Franchise - E-ticket,, November 9, 2010, as did video game sequels.WEB, McLaughlin, Rus,weblink IGN Presents the History of Street Fighter - Retro Feature at IGN,, July 7, 2010, November 9, 2010, The video game industry generated worldwide sales of $19.8 billion in 1993BOOK, Statistical yearbook: cinema, television, video, and new media in Europe, Volume 1999, 1996, Council of Europe, 123,weblink (equivalent to $31 billion in 2011), $20.8 billion in 1994 (equivalent to $32 billion in 2011), and an estimated $30 billion in 1998BOOK, Statistical yearbook: cinema, television, video, and new media in Europe, Volume 1999, 1996, Council of Europe, 123,weblink (equivalent to $41.5 billion in 2011). In the United States alone, in 1994, arcades were generating $7 billionJOURNAL, Business Week, Bloomberg Businessweek, Business Week, 1994, 3392–3405,weblink January 25, 2012, 58, Bloomberg L.P., Bloomberg, Hollywood's aim, of course, is to tap into the $7 billion that Americans pour into arcade games each year — and the $6 billion they spend on home versions for Nintendo and Sega game machines. Combined, it's a market nearly 2 ½ times the size of the $5 billion movie box office., in quarters (equivalent to $11 billion in 2011) while home console game sales were generating revenues of $6 billion (equivalent to $9 billion in 2011). Combined, this was nearly two and a half times the $5 billion revenue generated by movies in the United States at the time.


{{see also|Sixth generation of video game consoles|Seventh generation of video game consoles}}In 2000s, the video game industry is a juggernaut of development; profit still drives technological advancement which is then used by other industry sectors. Technologies such as Smartphones, virtual reality and augmented reality are major drivers for game hardware and gameplay development. Though maturing, the video game industry was still very volatile, with third-party video game developers quickly cropping up, and just as quickly, going out of business.{{Citation needed|date=March 2009}} Nevertheless, many casual games and indie games were developed and become popular and successful, such as Braid and Limbo. Game development for mobile phones (such as iOS and Android devices) and social networking sites emerged. For example, a Facebook game developer, Zynga, has raised in excess of $300 million.{{Clarify|date=March 2011}}NEWS,weblink Zynga Takes $180 Million Venture Round From DST, Others (Cue Russian Mafia Jokes), TechCrunch, December 15, 2009, February 11, 2014,


{{see also|Eighth generation of video game consoles}}Though not the main driving force, indie games continue to have a significant impact on the industry, with sales of some of these titles such as Spelunky, Fez, Don't Starve, Castle Crashers, and Minecraft, exceeding millions of dollars and over a million users.WEB,weblink The Gaming Industry – An Introduction, Entrepreneurial Insights, {{unreliable?|date=February 2017}} The 2010s have seen a larger shift to casual and mobile gaming; in 2016, the mobile gaming market is estimated to have taken $38 billion in revenues, compared to $6 billion for the console market and $33 billion for personal computing gaming.WEB,weblink Welcome to the New Era: Games as Media, Joost, van Dreunen, October 24, 2016, October 31, 2016,, Games centered on virtual reality and augmented reality equipment also arose during this decade. As of 2014, newer game companies arose that vertically integrate live operations and publishing such as crowdfunding and other direct-to-consumer efforts, rather than relying on a traditional publishers, and some of these have grown to substantial size.WEB,weblink The Future of Games and How to Stop It, Radoff, Jon, February 10, 2014,,, February 11, 2014, Spurred by some initial events in the late 2000s, eSports centered around professional players in organized competitions and leagues for prize money, grew greatly over this decade, drawing hundreds of millions of viewers and reaching nearly $500 million in revenue by 2016 and expected to break $1 billion by 2019.NEWS,weblink ESports: Global revenue expected to smash $1 billion by 2019, Don, Riddell, May 29, 2016, January 16, 2018, CNN,


{{Image frame |caption=Global revenues of the video game industry from 1971 to 2018, not adjusted for inflation.WEB,weblink Peak Video Game? Top Analyst Sees Industry Slumping in 2019, Yuki, Naramura, January 23, 2019, January 29, 2019, Bloomberg L.P., |content={{Video game industry/Market}} | align=center }}{{-}}Early on, 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 titles 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 videogamesWEB,weblink Top Gaming Studios, Schools & Salaries, Big Fish Games, which can often take between one and three years to develop. Now budgets typically reach millions of dollars despite the growing popularity of middleware and pre-built game engines. In addition to growing development costs, marketing budgets have grown dramatically, sometimes consisting of two to three times of the cost of development.WEB, Superannuation, How Much Does It Cost To Make A Big Video Game?,weblink Kotaku, Gawker Media, October 30, 2014, The game development team has to select a profitable and suitable method to sell or earn money from the finished game. Traditionally, the game monetization method is to sell hard copies in retail store. Now some developers are turning to alternative production and distribution methods, such as online distribution, to reduce costs and increase revenue.WEB, Kain, Erik, Why Digital Distribution Is The Future And GameStop Is Not: Taking The Long View On Used Games,weblink Forbes, October 30, 2014, Today, the video game industry has a major impact on the economy through the sales of major systems and games such as (Call of Duty: Black Ops), which took in over $650 USD million of sales in the game's first five days and which set a five-day global record for a movie, book or videogame."Call of Duty: Black Ops" sets record for Activision" {{webarchive |url= |date=January 25, 2011 }}. Yahoo Games Plugged In. December 21, 2010. Retrieved on May 19, 2011. 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."Variety: GTA IV Launch Bigger Than Halo 3 (And Then Some)", Kotaku, April 15, 2008. Retrieved on April 15, 2008. 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.NEWS,weblink Japan's Richest Man Is...Yes, Hiroshi Yamauchi,weblink March 30, 2009, March 30, 2009, Forbes, May 7, 2008, yes, mdy-all, Today the global video game market is valued at over $93 billion.WEB, van der Meulen, Rob, Gartner Says Worldwide Video Game Market to Total $93 Billion in 2013,weblink Gartner, October 30, 2014, 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 titles under development. In 2013 Richard Hilleman of Electronic Arts estimated that only 25 developers were working on such titles for the eighth console generation, compared to 125 at the same point in the seventh generation-console cycle seven or eight years earlier.WEB,weblink EA: AAA Development in Decline, VGChartz, July 6, 2013, July 8, 2013, D'Angelo, William, By 2018, the United States video game industry had matched that of the Unites States film industry on basis of revenue, with both industries having made around {{USD|43 billion}} that year.WEB,weblink NPD: U.S. game sales hit a record $43.4 billion in 2018, Mike, Minoitti, January 22, 2019, January 22, 2019, Venture Beat, WEB,weblink U.S. Film Industry Topped $43 Billion In Revenue Last Year, Study Finds, But It's Not All Good News, David, Robb, July 13, 2018, January 22, 2019, Deadline Hollywood,


The games industry's shift from brick and mortar retail to digital downloads led to a severe sales decline at video game retailers such as GameStop, following other media retailers superseded by Internet delivery, such as Blockbuster, 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.NEWS, Wingfield, Nick, As Downloads Take Over, a Turning Point for the Video Game Industry, The New York Times, 2015-12-20,weblink 0362-4331, mdy-all, 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.WEB, Dring, Christopher, GAME launches Belong - is this the future of video games retail?,, 2016-12-16,weblink 2017-06-30, mdy-all, The shift to digital marketplaces, especially for smartphones, led to an influx of inexpensive and disposable titles,NEWS, Suellentrop, Chris, Totilo, Stephen, Video Game Retail Sales Decline Despite New Hits, The New York Times, 2012-10-03,weblink 0362-4331, mdy-all, as well as lower engagement among gamers who otherwise purchased new games from retail.WEB, Dring, Christopher, What's going wrong at UK games retail?,, 2016-11-21,weblink 2017-06-30, mdy-all, Customers also shifted away from the tradition of buying games on their first day of release.WEB, Dring, Christopher, Is the industry's obsession with Day One coming to an end?,, 2016-11-08,weblink 2017-06-30, mdy-all, Publishers often funded trade-in deals to encourage consumers to purchase new games. Trade-in customers at the Australia 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.{{r|Eurogamer: trade-in myths}} They figured that sites such as eBay, which convert used games into cash, compose about a quarter of the UK's trade-in market,WEB, Parfitt, Ben, Pre-owned price comparison site Trade In Detectives goes live, MCV (magazine), MCV, 2013-08-07,weblink 2017-06-30, mdy-all, 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.WEB, Purchese, Robert, Myth-busting the murky world of video game trade-ins, Eurogamer, 2013-12-18,weblink 2017-06-30, mdy-all,


Video 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.


In 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 Activision, founded by former Atari developers. Activision grew to become the world's second largest game publisher.NEWS,weblink Activision Aims for Sweet Spot, Wolverton, Troy, May 24, 2005,, March 30, 2009,weblink March 30, 2009, yes, mdy-all, In the meantime, many of the original developers left to work on other projects. For example, founder Alan Miller left Activision to start another video game development company, Accolade (now Atari née 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.


The industry claims software piracy to be a big problem, and take measures to counter this.WEB, Valjalo, David,weblink 3DS Will Fight Piracy With Firmware | Edge Magazine,, October 4, 2010, November 9, 2010, yes,weblink February 12, 2013, mdy-all, Digital rights management have proved to be the most unpopular with gamers, as a measure to counter piracy.NEWS,weblink Technology | EA 'dumps DRM' for next Sims game, BBC News, March 31, 2009, November 9, 2010, 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 (faked) transactions.

Creative control

On 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 recording artists and record labels in many ways. But unlike the music industry, which has seen flat or declining sales in the early 2000s,WEB,weblink Global sales of recorded music down 9.2% in the first half of 2002 from IFPI,, WEB,weblink Global sales of recorded music down 10.9% in the first half of 2003 from IFPI,, WEB,weblink Digital sales triple to 6% of industry retail revenues as global music market falls 1.9% (2005) from IFPI,, the video game industry continues to grow.WEB,weblink Video game industry growth still strong: study, Reuters, Also, personal computers have made the independent development of music almost effortless, while the gap between an independent game developer and the product of a fully financed one grows larger.In the computer games industry, it is easier to create a startup, resulting in many successful companies. The console games industry is a more closed one, and a game developer must have up to three licenses from the console manufacturer:
  1. A license to develop games for the console
  2. The publisher must have a license to publish games for the console
  3. A separate license for each game
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.


An alternative method for publishing video games is to self-publish using the shareware or open source model over the Internet.

Gaming conventions

Gaming conventions are an important showcase of the industry. The major annual gaming conventions include gamescom in Cologne (Germany), the E3 in Los Angeles (USA),MAGAZINE, E3 is Obsolete, But it Doesn't Matter,weblink Forbes, June 8, 2012, October 18, 2012, the Penny Arcade Expo, and (:Category:Video game conventions|others).

Regional distribution

{{see also|Regional lockout#Video games}}{{expand section|date=June 2018|reason=Needs discussion of regions (NA, JP, EU, & AU, plus explaining about regions not covered [e.g., South America, Africa, the rest of Asia])}}As with other forms of media, video games have often been released in different world regions at different times.WEB, Josh Butler,weblink The irritation of staggered release dates, Den of Geek, 2010-08-11, 2018-06-05, The practice has been used where localization is not done in parallel with the rest of developmentWEB, Elliman, Sarah,weblink East to West: The Major Differences in Game Releases Based on Geographic Locations,, 2017-11-08, 2018-06-05, or where the game must be encoded differently, as in PAL vs. NTSC.WEB,weblink Region Lock and Video Games,, 2018-06-05, It has also been used to provide price discrimination in different markets or to focus limited marketing resources. Developers may also stagger digital releases so as not to overwhelm the servers hosting the game.WEB, Jason Rodriguez,weblink Destiny 2 will have a staggered worldwide release, Australia and Japan get it first,, 2017-08-31, 2018-06-05,

International practices

World trends

International video game revenue is estimated to be $81.5B in 2014.WEB,weblink Top 100 Countries by Game Revenue, January 2017,, newzoo, This is more than double the revenue of the international film industry in 2013.WEB, Percentage of GBO of all films feature exhibited that are national,weblink UNESCO Institute for Statistics, November 1, 2013, In 2015, it was estimated at {{USD|91.5 billion}}.WEB,weblink Newzoo’s Top 100 Countries by 2015 Game Revenues, October 15, 2015, June 3, 2016,, The largest nations by estimated video game revenues in 2016 are China ($24.4B), the United States ($23.5B) and Japan ($12.4B).WEB,weblink Top 100 Countries by Game Revenues, June 3, 2016,, The largest regions in 2015 were Asia-Pacific ($43.1B), North America ($23.8B), and Western Europe ($15.6B).


{{See also|:Category:Video game trade shows}}
missing image!
- Gamescom 2009 - Koelnmesse Südeingang (5473).jpg -
The gamescom in Cologne, the major gaming fair by attendance.
Gaming conventions are an important showcase of the industry. The annual gamescom in Cologne (Germany) is a major expo for video games. The E3 in Los Angeles (USA) is also of global importance, but is an event for industry insiders only.Other notable conventions and trade fairs include Tokyo Game Show (Japan), Brasil Game Show (Brazil), EB Games Expo (Australia), KRI (Russia), ChinaJoy (China) and the annual Game Developers Conference. Some publishers, developers and technology producers also have their own regular conventions, with BlizzCon, QuakeCon, Nvision and the X shows being prominent examples.


Video gaming 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 South Africa, Nigeria and Kenya have been making rapid advances in mobile game development, both within their country and internationally,WEB,weblink Top 10 African game developers, IT News Africa, Fripp, Charlie, 15 October 2013, but due to limited funding and a market over-crowded with western games, success has thus far been minimal.WEB,weblink Africa 2030, the next 25 years: From video games, eco-buildings, robotics, and cycling, Mail & Guardian Africa, Spooner, Samantha, January 5, 2015,


File:Ubisoft Montreal.jpg|thumb|Ubisoft MontrealUbisoft MontrealCanada has the third largest video game industry in terms of employment numbers.WEB,weblink Canada boasts the third-largest video game industry,, April 6, 2010, November 9, 2010, yes,weblink" title="">weblink April 12, 2010, mdy-all, The video game industry has also been booming in Montreal since 1997, coinciding with the opening of Ubisoft Montreal.WEB,weblink Immigration Services For Canada, USA, Australia, UK, Australia & New Zealand !,, yes,weblink" title="">weblink October 7, 2015, mdy-all, Recently, the city has attracted world leading game developers and publishers studios such as Ubisoft, EA, Eidos Interactive, Artificial Mind and Movement, BioWare, Warner Bros. Interactive Entertainment and Strategy First, mainly because video games jobs have been heavily subsidized by the provincial government. Every year, this industry generates billions of dollars and thousands of jobs in the Montreal area.WEB,weblink What are the leading business sectors in Montréal? We’re glad you asked, Meetings à la Montréal, Vancouver has also developed a particularly large cluster of video game developers, the largest of which, Electronic Arts, employs over two thousand people. The Assassin's Creed series, along with the Tom Clancy series have all been produced in Canada and have achieved worldwide success. For consumers, the largest video games convention in Canada is the Enthusiast Gaming Live Expo (EGLX).WEB, Kevin Carignan,weblink Dtoid is hosting Canada's largest gaming event! EGLX returns, March 9-11, 2018,, 2018-01-30, 2018-06-05,


File:腾讯大厦.JPG|thumb|right|150px|TencentTencentChina is the largest country by game revenue,WEB,weblink The Global Games Market Reaches $99.6 Billion in 2016, Mobile Generating 37%, April 21, 2016, June 3, 2016,, and has a gaming public that exceeds the population of the entire United States.WEB,weblink Xbox One Hits China Today Following 14-Year Console Ban, GameSpot, It is home to Asia Game Show, the largest game convention in the world by attendance.WEB,weblink The World's Biggest Games Show Isn't In Germany. Not Any More., Kotaku, In 2014, the Xbox One became the first new game console sold since China's ban on consoles in 2000.


File:Gamescom 2009 - Fujitsu (5154).jpg|150px|right|thumb|The gamescom in CologneCologneGermany has the largest video games market in Europe, with revenues of $4.1 billion forecast for 2017.WEB,weblink Top 100 Countries By Game Revenues, January 2017,, October 1, 2014, The annual gamescom in Cologne is Europe's largest gaming expo.One of the earliest internationally successful video game companies was Gütersloh-based Rainbow Arts (founded in 1984) who were responsible for publishing the popular Turrican series of games. The Anno series and The Settlers series are globally popular strategy game franchises since the 1990s. The Gothic series, (SpellForce: The Order of Dawn|SpellForce) and Risen are established RPG franchises. The X series by Egosoft is the best-selling space simulation. The 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 titles to come out of 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 Ascaron, Blue Byte, Deck13, Phenomic, Piranha Bytes, Radon, Related, Spellbound and Yager Development. Publishers include Deep Silver (Koch Media), dtp entertainment, Kalypso and Nintendo Europe. Bigpoint Games, Gameforge, Goodgame Studios and Wooga are among the world's leading browser game and social network game developers/distributors.


File:Nintendo office.jpg|thumb|right|Headquarters of Nintendo in KyotoKyotoThe Japanese video game industry is markedly different from the industry in North America, Europe and Australia.Japanese companies have created some of the largest and most lucrative titles ever made, such as the Mario, Donkey Kong, The Legend of Zelda, Metroid and Pokémon series of games.In recent years, consoles and arcade games have both been overtaken by downloadable free-to-play games on the PC and mobile platforms.NEWS, Japan fights back,weblink The Economist, November 17, 2012, WEB, Market Data,weblink Capcom, October 5, 2012,

United Kingdom

The 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. The size of the UK game industry is comparable to its film or music industries.WEB,weblink The View From the Tower,, In recent years some of the studios have become defunct or been purchased by larger companies such as LittleBigPlanet developer, Media MoleculeWEB,weblink Media Molecule Officially Joins The PlayStation Family – PlayStation.Blog.Europe,, March 2, 2010, January 27, 2011, and Codemasters.WEB, Hinkle, David,weblink Reliance Big Entertainment acquires 50% stake in Codemasters, Joystiq, April 5, 2010, November 9, 2010, 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|Colin McRae Dirt) and Total War.The country also went without tax relief until March 21, 2012WEB, Henderson, Rik,weblink UK tax relief break, March 21, 2012, March 31, 2012, 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.WEB, Post comment Name Email Address Comments,weblink Game industry tax relief plans are shelved,, June 22, 2010, November 9, 2010, yes,weblink" title="">weblink June 25, 2010, mdy-all, Before the tax relief was introduced there was a fear that the UK games 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.WEB, Canada overtakes UK,weblink March 31, 2012, March 31, 2012,

United States

File:Activisionheadquarters.jpg|200px|thumb|Activision (now Activision BlizzardActivision BlizzardFile:US PlayStation HQ (30344827735).jpg|215px|thumb|Sony Interactive Entertainment runs the PlayStationPlayStationFile:Ralphbaer.jpg|170px|thumb|Ralph Baer receiving the National Medal of Technology and InnovationNational Medal of Technology and InnovationThe United States has the largest video games presence in the world in terms of total industry employees.WEB,weblink US still the gaming super power | GamesIndustry International,, December 11, 2012, February 11, 2014, In 2004, the U.S. game industry as a whole was worth US$10.3 billion.WEB,weblink An Industry Shows Its Growing Value, May 12, 2006,, Interactive Entertainment Today, November 17, 2013, U.S. gaming revenue is forecast to reach $23.5 billion in 2017, making it the second largest market behind China.


Magnavox is credited for releasing the first video game console, the Odyssey. Activision was the first developer to create independent/third-party video games. Once the fastest-growing American company, Atari crashed in spectacular fashion, resulting in the North American video game crash of 1983. This resulted in the domination of the Japanese video game industry worldwide throughout the 1980s and 1990s.


The U.S. is home to major game development companies such as Activision Blizzard (Call of Duty, World of Warcraft), Electronic Arts (FIFA, Battlefield, Mass Effect), and Take-Two Interactive (Civilization, NBA 2K series, Grand Theft Auto). ZeniMax Media (Doom, Fallout, The Elder Scrolls) is the world's largest privately held video game company.WEB,weblink Zenimax Claims Carmack Stole Oculus VR, Facebook Barks Back, Niantic (Ingress, Pokémon Go) is a notable mobile game developer.Valve Corporation operates Steam, the largest computer gaming platform, with an active user base (≈125 million) that rivals the combined user bases of the current console generation (≈150 million).WEB,weblink VGChartz, While not specifically focused on games, the largest mobile gaming platforms are operated by Google (Google Play), and Apple Inc. (App Store), with the majority of mobile revenue coming from Asia.WEB,weblink App Annie, IDC, App Annie & IDC Portable Gaming Report Q2 2013: iOS & Google Play Game Revenue 4x Higher Than Gaming-Optimized Handhelds, Microsoft operates Xbox, the only major game console hardware franchise not controlled by a Japanese company. Sony established Sony Interactive Entertainment in Silicon Valley to run PlayStation, the world's largest and longest-running video game console franchise.NEWS, Sony Interactive Entertainment Merges PlayStation Biz Units,weblink January 26, 2016, Wired, Intel and Nvidia are the largest makers of PC graphics chips. Advanced Micro Devices has become the most important console processor vendor, with all three of the eighth generation home consoles using AMD GPUs, and two of them use AMD CPUs. Microsoft, Nintendo, and Sony were not aware that they were all using AMD processors until all their consoles were announced,WEB,weblink Engadget, AMD's Saeid Moshkelani on building custom silicon for PlayStation 4, Xbox One and Wii U, June 12, 2013, Michael, Gorman, underscoring the secrecy found within the game industry. Notable game engine developers include Epic Games (Unreal Engine) and Unity Technologies (Unity).


The West Coast is home to important video game conventions, such as Electronic Entertainment Expo (E3), one of the largest video game industry-only events in the world, and Penny Arcade Expo (PAX West), the largest public video game convention in North America. The West Coast is also home to many of the major American video game industry companies, particularly the regions of Los Angeles, San Francisco Bay Area, and Seattle. Major game development regions outside of the West Coast include the Northeast and Texas.


Over 150 million Americans play video games, with an average age of 35 and a gender breakdown of 59 percent male and 41 percent female.WEB,weblink Industry Facts, Entertainment Software Association, American gamers are more likely to vote than non-gamers, feel that the economy is the most important political issue, and lean conservative, however party demographics are split evenly with 38% identifying as Democrats, 38% identifying as Republicans, and 24% identifying as Independents.WEB,weblink New Study Finds Video Game Players Are Highly Engaged Politically, Entertainment Software Association, Several important game development personalities were born in or moved to the United States. Notable developers include Ralph H. Baer (Magnavox Odyssey, the "Father of Video Games"), Jonathan Blow (Braid), John D. Carmack (Doom, Quake), and Alexey Pajitnov (Tetris). Mario is named after Mario Segale, a former landlord of Nintendo of America. Some right-wing and left-wing activists, including Jack Thompson and Anita Sarkeesian, have met extreme resistance from the gaming public in response to the perceived politicizing of their art form.NEWS,weblink #GamerGate – An Issue With Two Sides, Allum Bokhari, TechCrunch, September 27, 2014, September 25, 2014,


The United States recognizes eSports players as professional athletes.MAGAZINE,weblink The U.S. Now Recognizes eSports Players As Professional Athletes, Forbes, Major League Gaming has eSports arenas and studios across the nation.NEWS,weblink Major League Gaming announces its own arena in Columbus, Ohio, VentureBeat, Robert Morris University has a League of Legends varsity team, whose members are eligible for scholarships.WEB,weblink Illinois university makes League of Legends a varsity sport, Gamasutra,


Players become fourth-party developers, allowing for more open source models of game design, development and engineering. Players also create 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.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.BOOK, University, Stanley J. Baran, Bryant, Introduction to Mass Communication : Media Literacy and Culture, 2014, McGraw-Hill, New York, 978-0-07-352621-8, 220–221, Eighth Edition., 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."BOOK, University, Stanley J. Baran, Bryant, Introduction to Mass Communication : Media Literacy and Culture, 2014, McGraw-Hill, New York, 978-0-07-352621-8, 221, Eighth Edition., 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 gaming revenue will come from tablets alone. Apple's App Store alone has more than 90,000 game apps, a growth of 1,400% since it went online. In addition, game revenues for iOS and Android mobile devices now exceed those of both Nintendo and Sony handheld gaming systems combined.BOOK, University, Stanley J. Baran, Bryant, Introduction to Mass Communication : Media Literacy and Culture, 2014, McGraw-Hill, New York, 978-0-07-352621-8, 222, Eighth Edition.,

See also



Further reading

External links

{{Wiktionary}} {{Industries}}

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