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Video game industry - Wikipedia, the free encyclopedia"Games industry" redirects here. For the subsidiary of Eurogamer, see Games. Industry. The video game industry (sometimes referred to as the interactive entertainment industry) is the economic sector involved with the development, marketing and sales of video games. It encompasses dozens of job disciplines and employs thousands of people worldwide.OverviewConsidered by some as a curiosity in the mid- 1. They took in about US$9.
US in 2. 00. 7, 1. ESA annual report).
Get Business Strategy Game Help from Former Business Strategy Game Grand Champion. Reveals How You Can Win Business Strategy Game Guaranteed. Interblock develops and supplies automated electronic table games to casino operators worldwide; including Electronic Blackjack, Baccarat, Roulette, & more. The video game crash of 1983, known as Atari shock in Japan,  was a massive recession of the video game industry that occurred from 1983 to 1985.
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- 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.
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Modern personal computers owe many advancements and innovations to the game industry: sound cards, graphics cards and 3. D graphic accelerators, faster CPUs, and dedicated co- processors like Phys. X are a few of the more notable improvements. Sound cards were developed for addition of digital- quality sound to games and only later improved for music and audiophiles. Early on, graphics cards were developed for more colors. Later, graphics cards were developed for graphical user interfaces (GUIs) and games; GUIs drove the need for high resolution, and games began using 3.
D acceleration. They also are one of the only pieces of hardware to allow multiple hookups (such as with SLI or Cross. Fire graphics cards). CD- and DVD- ROMs were developed for mass distribution of media in general; however the ability to store more information on cheap easily distributable media was instrumental in driving their ever higher speeds.Game industry value chainBen Sawyer of Digitalmill observes that the game industry value chain is made up of six connected and distinctive layers: Capital and publishing layer: involved in paying for development of new titles and seeking returns through licensing of the titles. Product and talent layer: includes developers, designers and artists, who may be working under individual contracts or as part of in- house development teams.
Production and tools layer: generates content production tools, game development 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 now includes network infrastructure and non- hardware platforms such as virtual machines (e. Java or Flash), or software platforms such as browsers or even further Facebook, etc.
End- users layer: or the users/players of the games.DisciplinesThe 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. Recently,[when?] game developers have begun to employ those with extensive or long- term experience within the modding communities. HistoryIn 1. Computer Space was released. The following year, Atari, Inc. Pong, the original arcade version of which sold over 1. 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 1. The crash eventually came to an end with the success of Taito's Space Invaders, released in 1. 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.Space Invaders would go on to sell over 3.
Soon after, Space Invaders was licensed for the Atari VCS (later known as Atari 2. The success of the Atari 2. North American video game crash of 1.
By the end of the 1. The early 1. 98. 0s 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 $5. North America tripling to $2. By 1. 98. 1, the arcade video game industry was generating an annual revenue of $5 billion in North America,[1. In 1. 98. 2, the arcade video game industry reached its peak, generating $8 billion in quarters,[1.
Hollywood films ($3 billion) combined at that time.[1. This was also nearly twice as much revenue as the $3. The arcade video game industry would continue to generate an annual revenue of $5 billion in quarters through to 1.
The most successful game of this era was Namco's Pac- Man, released in 1. Pac- Man is estimated to have grossed over 1. The early part of the decade saw the rise of home computing, and home- made games, especially in Europe (with the ZX Spectrum) and Asia (with the NEC PC- 8. MSX). This time also saw the rise of video game journalism, which was later expanded to include covermounted cassettes and CDs.
In 1. 98. 3, 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.[2. The latter part of the decade saw the rise of the Game Boy handheld system. In 1. 98. 7, Nintendo lost a legal challenge against Blockbuster Entertainment, which enabled games rentals in the same way as movies. The Play. Station was the most popular gaming console of the fifth generation, which saw the common adoption of CD media. The 1. 99. 0s 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,[2.
The video game industry generated worldwide sales of $1. In the United States alone, in 1.
Combined, this was nearly two and a half times the $5 billion revenue generated by movies in the United States at the time.[2. 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. 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 i. OS and Android devices) and social networking sites emerged.
For example, a Facebook game developer, Zynga, has raised in excess of $3. Today, the video game industry is a juggernaut of development; profit still drives technological advancement which is then used by other industry sectors. Though not the main driving force, casual and 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. While development for consoles and PCs is not dormant, it is estimated that mobile games will bring in more revenue in the year 2. As of 2. 01. 4, 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.[3.
EconomicsEarly 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 $5. 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.[3. The game development team has to select a profitable and suitable method to sell or earn money form 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.[3. 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 $6.
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.[3. 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.[3. 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.[3. Today the global video game market is valued at over $9. 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 2. 01. 3 Richard Hilleman of Electronic Arts estimated that only 2.
PracticesVideo game industry practices are similar to those of other entertainment industries (e. 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 Activision, founded by former Atari developers. Activision grew to become the world's second largest game publisher.[4. In the mean time, 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- 1. The industry claims software piracy to be a big problem, and take measures to counter this.[4. However, digital rights management and other measures have proved noticeably unpopular with gamers.[4.
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 recording artists and record labels in many ways. But unlike the music industry, which has seen flat or declining sales in the early 2. 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: A license to develop games for the console.
The publisher must have a license to publish games for the console. 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. AlternativesAn alternative method for publishing video games is to self- publish using the shareware or open source model over the Internet. Gaming ConventionsGaming conventions are an important showcase of the industry. The major annual gaming conventions include gamescom in Cologne (Germany), the E3 in Los Angeles, (USA)[4. Penny Arcade Expo, and others.
International practicesWorld trendsInternational video game revenue is estimated to be $8. B in 2. 01. 4.[4. This is more than double the revenue of the international film industry in 2.
The largest nations by video game revenues are the United States ($2. B), China ($1. 7. B), and Japan ($1. B).[4. 8] The largest regions are Asia ($3. B), North America ($2. B), and Western Europe ($1.
B).[4. 8]ConventionsGaming 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.[4.
Other notable conventions and trade fairs include Tokyo Game Show (Japan), Brasil Game Show, EB Games Expo (Australia), KRI (Russia), China. Joy and the annual Game Developers Conference.
Some publishers, developers and technology producers also have their own regular conventions, with Blizz. Con, Quake. Con, 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 South Africa, Nigeria and Kenya have been making rapid advances in mobile game development, both within their country and internationally,[5. Canada has the third largest video game industry in terms of employment numbers.[5. The video game industry has also been booming in Montreal since 1.
Ubisoft Montreal.[5. 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.[5. 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.
Tencent is the largest company in the world by video game revenue.[5. China is the second- largest country by game revenue,[4. United States.[5. It is home to Asia Game Show, the largest game convention in the world by attendance.[5. In 2. 01. 4, the Xbox One became the first new game console sold since China's ban on consoles in 2.
GermanyGermany has the largest video games market in Europe, with revenues of 2. Euro generated.[5. The annual gamescom in Cologne is the Europe's largest gaming expo.
One of the earliest internationally successful video game companies was Gütersloh- based Rainbow Arts (founded in 1. Turrican series of games. The Anno series and The Settlers series are globally popular strategy game franchises since the 1. The Gothic series, Spell. Force 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 (2. One of the most famed titles to come out of Germany is Far Cry (2. 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, Deck. 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.
The Japanese video game industry is markedly different from the industry in North America, Europe and Australia. Japan has created some of the largest and most lucrative titles ever made, such as the Mario, Final Fantasy, Metal Gear 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.[5.
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.[5. In recent years some of the studios have become defunct or been purchased by larger companies such as Little. Big. Planet developer, Media Molecule[6. Codemasters.[6. 2] The country is home to some of the world's most successful video game franchises, such as Tomb Raider, Grand Theft Auto, Fable, Colin Mc. Rae Dirt and Total War.
The country also went without tax relief until 2. March 2. 01. 2[6.
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 £2.
HM Treasury, and could cost just £9. 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 2. United StatesThe United States has the largest video games market in the world in terms of revenue and total industry employees.[5. In 2. 00. 4, the U.
S. game industry as a whole was worth USD$1. U. S. gaming revenue was estimated to be $2. B in 2. 01. 4.[4. HistoryMagnavox 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 1. This resulted in the domination of the Japanese video game industry worldwide throughout the 1. CompaniesToday 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 (Borderlands, Grand Theft Auto). Zeni. Max Media (Doom, Quake) is the world's largest privately held video game company.[6. Microsoft operates one of the largest game console hardware franchises, the largest mobile gaming platforms are operated by Google, and Apple Inc.,[6.
Valve Corporation operates the largest PC gaming platform. 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.[7. Notable game engine developers include Epic Games (Unreal Engine) and Unity Technologies (Unity). RegionsThe 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 Prime), 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 centers outside of the West Coast include the Northeast and Texas.
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.[7. The United States recognizes e. Sports players as professional athletes.[7. Major League Gaming has e. Sports arenas and studios across the nation.[7.
Robert Morris University has a League of Legends varsity team, whose members are eligible for scholarships.[7. 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 6. 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, 1. 2% 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 2. 01. 2, 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 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.[7. 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 1. E3 expo, "Looking ahead, a child born in 1. E3's inaugural year, will be 1. And according to Census Bureau data, by the year 2.
Americans between the ages of 5 and 4. That's 1. 74 million Americans who will have grown up with Play. Stations, Xboxes, and Game.
Cubes 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."[7. 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 9. Apple's App Store alone has more than 9.
In addition, game revenues for i. OS and Android mobile devices now exceed those of both Nintendo and Sony handheld gaming systems combined.[7. See alsoFurther readingReferences^Bob Johnstone.
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Baran, Bryant (2. Introduction to Mass Communication : Media Literacy and Culture (Eighth Edition. New York: Mc. Graw- Hill. ISBN 9. 78- 0- 0. External links.