Video game industry

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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.[1] As of 2018, video games generated sales of US$134.9 billion annually worldwide.[2]

Overview

The video game industry has grown from focused markets to mainstream. 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 ) 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?] for an addition of digital-quality sound to games and only later were they improved for music and audiophiles.[3] Early on, graphics cards were developed for more colors.[3] Later, graphics cards were developed[by whom?] for graphical user interfaces (GUIs) and games; GUIs drove the need for high resolution, and games began using 3D acceleration.[3] They also are one of the only pieces of hardware to allow multiple hookups (such as with SLI or CrossFire graphics-cards).[3] 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 became instrumental in driving their ever-higher speeds.[3]

Scope of the video game industry

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.[4]

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 those involved in hardware and software manufacturing, service providers, and distributors). These companies in total have nearly 66,000 direct employed workers. 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 to over 220,000.[5]

Disciplines

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. Game developers and publishers sometimes employ those with extensive or long-term experience within the modding communities.[6]

History

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 Nim-playing device designed by Edward Condon and built by Westinghouse Electric for the New York World's Fair,[7] Bertie the Brain, an arcade game of tic-tac-toe, built by Josef Kates for the 1950 Canadian National Exhibition,[8] and Nimrod created by engineering firm Ferranti for the 1951 Festival of Britain,[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.[10]

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.[11] The introduction of easy-to-program languages like BASIC for mainframes allowed for more simplistic games to be developed.

1970s

The Magnavox Odyssey, released in 1972, was the first home video game console.

In 1971, the arcade game, Computer Space was released.[12] The following year, Atari, Inc. released the first commercially successful video game, Software:Pong: The Next Level, the original arcade version of which sold over 19,000 arcade cabinets.[13] 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.[14] 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.[15] Space Invaders would go on to sell over 360,000 arcade cabinets worldwide,[16] and by 1982, generate a revenue of $2 billion in quarters,[17][18] equivalent to $4.6 billion in 2011.[19]

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.[20] 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.[21] By the end of the 1970s, the personal computer game industry began forming from a hobby culture.

1980s

The Nintendo Entertainment System, released in 1985, helped to revive the American video games industry after the video game crash of 1983.

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,[22] with the arcade video game industry's revenue in North America tripling to $2.8 billion in 1980.[23] By 1981, the arcade video game industry was generating an annual revenue of $5 billion in North America,[14][24] equivalent to $12.3 billion in 2011.[19] In 1982, the arcade video game industry reached its peak, generating $8 billion in quarters,[25] equivalent to over $18.5 billion in 2011,[19] surpassing the annual gross revenue of both pop music ($4 billion) and Hollywood films ($3 billion) combined at that time.[25] 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,[25] equivalent to over $27.3 billion in 2011.[19] The arcade video game industry would continue to generate an annual revenue of $5 billion in quarters through to 1985.[26] The most successful game of this era was Namco's Software:Pac-Man: Adventures in Time, released in 1980, which would go on to sell over 350,000 cabinets,[27] and within a year, generate a revenue of more than $1 billion in quarters;[28] in total, Pac-Man is estimated to have grossed over 10 billion quarters ($2.5 billion) during the 20th century,[28][29] equivalent to over $3.4 billion in 2011.[19]

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,[4] while a professional European video game industry also began taking shape with companies such as Ocean Software and Gremlin Interactive.[30] 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.

1990s

The PlayStation was the most popular video game console of the fifth generation, which saw the common adoption of CD media.

The 1990s saw advancements in game related technology. Among the significant advancements were:

  • The widespread adoption of CD-based storage and software distribution
  • Widespread adoption of GUI-based operating systems, such as the series of Amiga OS, Microsoft Windows and Mac OS
  • Advancement in 3D graphics technology, as 3D graphics cards became widely adopted, with 3D graphics now the de facto standard for video game visual presentation
  • Continuing advancement of CPU speed and sophistication
  • Miniaturisation of hardware, and mobile phones, which enabled mobile gaming
  • The emergence of the internet, which in the latter part of the decade enabled online co-operative play and competitive gaming

Aside from technology, in the early part of the decade, licensed games became more popular,[31][32] as did video game sequels.[33]

The video game industry generated worldwide sales of $19.8 billion in 1993[34] (equivalent to $31 billion in 2011),[19] $20.8 billion in 1994[34] (equivalent to $32 billion in 2011),[19] and an estimated $30 billion in 1998[35] (equivalent to $41.5 billion in 2011).[19] In the United States alone, in 1994, arcades were generating $7 billion[36] in quarters (equivalent to $11 billion in 2011)[19] while home console game sales were generating revenues of $6 billion[36] (equivalent to $9 billion in 2011).[19] Combined, this was nearly two and a half times the $5 billion revenue generated by movies in the United States at the time.[36]

2000s

The sixth-generation PlayStation 2 is the best selling console of all time.

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. 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.[clarification needed][37]

2010s

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.[38][unreliable source?] The 2010s have seen a larger shift to casual and mobile gaming; in 2016, the mobile video game 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.[39] 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.[40] 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.[41]

Economics

Template:Video game industry/Market
Global revenues of the video game industry from 1971 to 2018, not adjusted for inflation.[42]

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 video games[43] 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.[44]

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.[45]

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 video game.[46] The game's income was more than the opening weekend of Spider-Man 3 and the previous title holder for a video game Software:Halo 3: ODST.[47] 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.[48] Today the global video game market is valued at over $93 billion.[49]

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.[50]

By 2018, the United States video game industry had matched that of the United States film industry on basis of revenue, with both industries having made around US$43 billion that year.[51][52]

Retail

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.[53] 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.[54] The shift to digital marketplaces, especially for smartphones, led to an influx of inexpensive and disposable titles,[55] as well as lower engagement among gamers who otherwise purchased new games from retail.[56] Customers also shifted away from the tradition of buying games on their first day of release.[57]

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.[58] They figured that sites such as eBay, which convert used games into cash, compose about a quarter of the UK's trade-in market,[59] 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.[58]

Practices

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.

Breakaways

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.[60] 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.

Piracy

The industry claims software piracy to be a big problem, and take measures to counter this.[61] Digital rights management have proved to be the most unpopular with gamers, as a measure to counter piracy.[62] 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 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,[63][64][65] the video game industry continues to grow.[66]

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.

Alternatives

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

Gaming conventions

Regional distribution

As with other forms of media, video games have often been released in different world regions at different times.[67] The practice has been used where localization is not done in parallel with the rest of development[68] or where the game must be encoded differently, as in PAL vs. NTSC.[69] It has also been used to provide price discrimination in different markets or to focus limited marketing resources.[67] Developers may also stagger digital releases so as not to overwhelm the servers hosting the game.[70]

International practices

World trends

International video game revenue is estimated to be $81.5B in 2014.[71] This is more than double the revenue of the international film industry in 2013.[72] In 2015, it was estimated at US$91.5 billion.[73]

The largest nations by estimated video game revenues in 2016 are China ($24.4B), the United States ($23.5B) and Japan ($12.4B).[74] The largest regions in 2015 were Asia-Pacific ($43.1B), North America ($23.8B), and Western Europe ($15.6B).[73]

In 2018, the global video games market was valued at around $134.9bn.[75]

North America

Canada

Ubisoft Montreal

Canada has the third largest video game industry in terms of employment numbers.[76] The video game industry has also been booming in Montreal since 1997, coinciding with the opening of Ubisoft Montreal.[77] 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.[78] 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).[79]

United States

Activision (now Activision Blizzard) is the first independent/third-party video game developer.

The United States has the largest video games presence in the world in terms of total industry employees.[76][80] In 2017, the U.S. game industry as a whole was worth US$18.4 billion and consisted of roughly 2457 companies that had a rough total of 220,000 people employed.[81][82] U.S. video game revenue is forecast to reach $230 billion by 2022,[83] making it the largest video game market in the world.[71] 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.[84] 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.[85]

Europe

Germany

The gamescom in Cologne is the world's leading game trade fair.

Germany has the largest video games market in Europe, with revenues of $4.1 billion forecast for 2017.[86] The annual gamescom in Cologne is Europe's largest video game 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 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.

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.[76] The size of the UK game industry is comparable to its film or music industries.[87]

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.[88] Coupled with quirky british humour, the "Britsoft" wave of popular titles led to a number of influential people and studios in the 1990s.[89] 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.[90]

In recent years some of the studios have become defunct or been purchased by larger companies such as LittleBigPlanet developer, Media Molecule[91] and Codemasters.[92] The country is home to some of the world's most successful video game franchises, such as Tomb Raider, Software:Grand Theft Auto: Vice City Stories, Fable, Colin McRae Dirt and Total War.

The country also went without tax relief until March 21, 2012[93] 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.[94] 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.[95]

Asia

China

Tencent is the largest company in the world by video game revenue.[96]

China had early on 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.[97][98] China is also the largest contributor towards esports in both revenue and in the number of professional players from the country.[99] The industry, like most media in China, is tightly controlled by the government, with strong restrictions on what content may be in games,[100] and incorporation of anti-addiction measures to limit playtime.[101] It is home to Asia Game Show, the largest game convention in the world by attendance.[102]

Japan

Headquarters of Nintendo in Kyoto, Japan, 2006.

The 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, Software:The Legend of Zelda: The Wind Waker, Software:Metroid: Other M 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.[103][104]

South Korea

The 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 PC bangs (Internet cafes). South Korea was one of the first major regions involved in esports in the 1990s and 2000s, and today a large number of professional esports players originate from South Korea.

Others

Africa

The 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 South Africa, Nigeria, and Kenya have been making rapid advances in mobile game development, both within their country and internationally,[105] but due to limited funding and a market overcrowded with Western games, success has thus far been minimal.[106]

Australia and New Zealand

Australia 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 conferences

The gamescom in Cologne, the major video game fair by attendance.

Gaming 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 trade shows aimed for developers and publishers to interact more directly with the video game media, and with retailers and distributors for planning future sales of products. The largest such trade show is the E3 in Los Angeles, California is held by the Entertainment Software Association. Other similar trade shows include Tokyo Game Show (Japan), Brasil Game Show (Brazil), EB Games Expo (Australia), KRI (Russia), 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 conferences for developers to share their knowledge with others. Two of the major professional conferences include the Game Developers Conference (GDC), which holds multiple events through the year but with its main annual conference held in March in San Francisco, and the 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 archiving

The coverage of the video game industry started off with several magazines covering the topic, but as the Internet became widely available to support new media, much of the dedicated coverage of the video game industry has transitioned to detected websites, including 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.[107]

Recognition within the industry

The 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 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.[4]

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.[108]

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."[109]

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. 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 video game systems combined.[110]

See also

  • List of video games
  • List of video game websites

References

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Further reading

External links




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