Video game industry

The video game industry is a big part of the world's fun and technology. It includes making, selling, and supporting video games that millions of people play everywhere.

Video games are very popular and affect many parts of daily life. They influence the economy, education, entertainment, and even how cities are built. Video games have grown a lot over the years and now earn more money than movies and music in some places.

The video game industry has also helped improve computer technology. Many parts of modern computers, like special graphics and sound cards, were first made to make video games better. These improvements later helped the music industry and many other areas of technology.

Industry overview

In 2017, the United States had over 2,300 companies making video games and more than 525 companies publishing them. These companies employed nearly 66,000 people. When you count jobs like graphic design that support the industry, the number goes up to more than 220,000.

The video game industry has several important parts that work together. First, there are the people who create the games, including programmers, designers, and artists. Then there are the companies that pay for and market the games. Next, games are sold in stores or online. Stores sell the games to players, and finally, there are the companies that make the gaming machines or platforms. As games move more to online sales, some of these steps are changing, especially for smaller independent games made by just a few people.

History

Further information: History of video games, History of arcade video games, and History of video game consoles

1940s–1960s

Further information: Early history of video games and Early mainframe games

Before the 1970s, video games were not a big business, but better computers helped start the industry. Early games used simple ways to show pictures, and some let players interact. Examples include "Nimatron" from 1940, "Bertie the Brain" from 1950, and "Nimrod" from 1951.

The invention of the cathode-ray tube, which is used in televisions, led to the first true video games. In 1947, Thomas T. Goldsmith Jr. and Estle Ray Mann created a game that let players shoot targets using a cathode-ray tube.

In the 1950s and 1960s, students and others began making games on mainframe computers. One of the first known games was "Spacewar!", made by people at Harvard and MIT. The arrival of easy-to-use programming languages like BASIC helped create more simple games.

The arcade game industry grew from earlier games. After Sega’s game "Periscope" in 1966, arcades became places where new commercial video games could be introduced in the early 1970s. Nolan Bushnell, a college student who worked at an arcade, learned a lot about how games worked and how the game business operated.

1970s

See also: First generation of video game consoles, Video game crash of 1977, Golden age of video arcade games, and Second generation of video game consoles

In 1971, the first commercial arcade video game, "Computer Space", was released. The next year, Atari released "Pong", the first big hit, and sold 19,000 arcade machines. That same year, the first home video game console, the Magnavox Odyssey, came out. But many clones of "Pong" flooded the market, causing the video game crash of 1977. This crash ended with the success of Taito’s "Space Invaders" in 1978, which led to the golden age of arcade games. More than 360,000 "Space Invaders" machines were sold worldwide.

"Space Invaders" was later made for the Atari VCS (Atari 2600), helping to boost sales of the console. The success of the Atari 2600 revived the home video game market until the video game crash of 1983. By the end of the 1970s, the personal computer game industry was beginning to form.

1980s

See also: Golden age of video arcade games, Second generation of video game consoles, Video game crash of 1983, Third generation of video game consoles, and Fourth generation of video game consoles

In the early 1980s, the golden age of arcade games reached its peak. Arcade game sales in North America grew very large. The most successful game was Namco’s "Pac-Man", which sold over 350,000 machines.

In the early 1980s, home computing and home-made games became popular, especially in Europe and Asia. Video game journalism also started at this time. In 1983, the North American industry crashed because too many low-quality games were made. The industry was revived by the Nintendo Entertainment System, which led to Japanese companies like Nintendo dominating the home console market. In 1987, Nintendo lost a legal case against Blockbuster Entertainment, which allowed game rentals to continue. In 1989, the Game Boy handheld system was released.

Video games moved from general trade shows to special events like Nintendo Space World and the Electronic Entertainment Expo.

1990s

See also: Fourth generation of video game consoles, Fifth generation of video game consoles, and Sixth generation of video game consoles

The 1990s brought big changes in game technology:

• The “3D Revolution” where games started using 3D graphics.
• The use of CDs for storing and distributing games.
• Faster and more advanced computer processors.
• The use of graphical user interfaces on operating systems like Amiga OS, Microsoft Windows, and Mac OS.
• Smaller hardware, like handheld consoles and mobile phones, which allowed mobile gaming.
• The rise of the Internet, which enabled online play and competitive gaming.

Besides technology, licensed games and game sequels became more popular. Arcades had a comeback in the early 1990s with games like "Street Fighter II", which led to many popular fighting games. In the late 1990s, people moved from arcades to home systems. By 1996–1997, arcades were the biggest part of the video game industry, but by 1997–1998, the console market took over.

2000s

See also: Sixth generation of video game consoles and Seventh generation of video game consoles

The 2000s were a time of big development in the video game industry. New technologies like smartphones, virtual reality, and augmented reality drove game hardware and gameplay. The industry was still changing fast, with many small game developers starting and stopping quickly. But many casual and indie games became successful, like "Braid" and "Limbo". Games started appearing on mobile phones and social networking sites. For example, a Facebook game developer, Zynga, raised over $300 million.

2010s

See also: Eighth generation of video game consoles

Indie games had a big impact on the industry, with games like "Spelunky", "Fez", "Don’t Starve", "Castle Crashers", and "Minecraft" becoming very popular. In the 2010s, more people played casual and mobile games. By 2016, the mobile game market made $38 billion, compared to $6 billion for consoles and $33 billion for PC games. Virtual and augmented reality games also appeared. Newer game companies started using crowdfunding and direct-to-consumer methods. eSports, with professional players competing for prizes, grew a lot, drawing millions of viewers.

2020s

See also: Ninth generation of video game consoles and Impact of the COVID-19 pandemic on the video game industry

The new Xbox Series X/S and PlayStation 5 were planned for 2020, but the COVID-19 pandemic affected the industry starting in March 2020. Many events were canceled, and some games were delayed. However, the industry grew because people stayed home and played more games. In 2020, the market grew by 20% to over $179 billion. Popular games included "Animal Crossing: New Horizons", "Fall Guys", and "Among Us".

As the pandemic continued into 2021, a shortage of semiconductor chips affected console and computer hardware. This made it hard to get new consoles and computer parts. However, after cryptocurrency mining became less profitable, computer parts became more affordable by August 2022.

Economics

In the early days, making video games didn’t cost much. One programmer or a small team could make games that sold hundreds of thousands of copies. These games were made quickly, sometimes in just a few months. Because of this, companies could offer good benefits, like sharing profits from game sales.

As technology improved, making video games became more complex. Bigger teams of programmers, artists, designers, and producers were needed. These teams can cost a lot. Today, developing a game can take one to three years and cost millions of dollars, using special tools and game engines. Marketing budgets have also grown.

Video games have become a big part of the economy. For example, the game Call of Duty: Black Ops made a lot of money after it was released. By 2014, the global video game market was worth a lot. In 2018, the video game industry in the United States made about the same amount of money as the film industry. Even during tough times, like the 2008 financial crisis or the COVID-19 pandemic, video games remained popular and profitable.

Retail

The way people buy video games has changed a lot. Many stores that sold games, like GameStop, have struggled as more people now buy games online. These stores tried to adapt by offering services like fixing wireless devices and letting customers trade in used games for credit. In some places, game stores changed their layout to let customers play games longer and host events. The shift to digital games, especially on smartphones, has led to more cheap, easy-to-buy games. Some stores have offered deals to encourage people to buy new games. However, online marketplaces like eBay have also changed how people buy games.

Practices

The video game industry works like other entertainment industries, such as the music recording industry. But it has sometimes been criticized for how it treats its workers. This has led some developers to leave and start their own companies, which can grow into big businesses.

Unlike the music industry, making video games needs many people and equipment. This makes the companies that pay for game development, called publishers, very important.

Developers sometimes leave their jobs to start their own studios. A famous example is Activision, started by former Atari developers. Activision grew into a large company, and some of its founders later created other companies like Accolade, which became part of Atari.

The industry sees software piracy as a big problem and uses different ways to fight it. One method, digital rights management, is not popular with gamers. Another way is to use a business model called freemium, where players pay for extra features or services inside the game. This needs strong security to stop hacked transactions.

Some gamers feel that publishers control too much of the creative process, focusing on what sells quickly instead of supporting creative ideas. But publishers say they know what players want. The relationship between developers and publishers is similar to that between recording artists and record labels.

Creating games for computers is easier to start than for consoles. For consoles, developers need several licenses from the console manufacturer and often must buy special equipment to develop games.

There are other ways to publish games, such as using shareware or open source models over the Internet.

Cloud gaming

Cloud gaming is a new way to play games using cloud computing. It works by running the game on remote servers and sending the video to the player's device. This lets players enjoy advanced games on basic computers or phones, as long as they have a good internet connection. However, if the internet is slow or unstable, the gaming can suffer.

Cloud gaming is growing fast. It can save players money on expensive hardware and help developers update games more easily. But it still needs fast and stable internet connections.

Gaming conventions

Big video game conventions show off the latest games and news. Major annual events include Gamescom in Cologne (Germany), Penny Arcade Expo, Summer Games Fest, Tokyo Game Show(TGS), Brazil Game Show (BGS), and before it stopped, E3 in Los Angeles (US).

Regional distribution

Video games are often released at different times in different parts of the world. This can be because of differences in how the game needs to be prepared for each region, like changing the video system from PAL to NTSC, or to set different prices in various markets. Developers may also release games slowly to avoid overloading their servers.

International practices

The video game industry began in the United States with arcade games and consoles, and Japan followed soon after. Personal computers made Western Europe a major center too. Today, the industry is led by companies in North America, Europe, and Japan, but other places like Australia, New Zealand, China, and South Korea are also becoming important.

In 2022, the world made over $142B from video games, which is almost double what the film industry made in 2023. The gaming industry grew a lot in 2020, the first year of the pandemic, and this growth kept going into 2021.

Generally, people spend more on gaming as their country’s economy grows. Gaming is especially popular in East Asia and less so in places like India.

North America

Canada

Main article: Video gaming in Canada

Canada has the third largest video game industry by the number of people working in it. Montreal has been a big spot for gaming since 1997, especially after Ubisoft Montreal opened. The city now has many top game studios like Ubisoft, EA, Eidos Interactive, Artificial Mind and Movement, BioWare, Warner Bros. Interactive Entertainment, and Strategy First. This is partly because the government helps by giving money to support these jobs. Vancouver also has many game developers, with Electronic Arts being the biggest, employing over two thousand people. Popular game series like Assassin's Creed and Tom Clancy come from Canada. The biggest gaming event there is called the Enthusiast Gaming Live Expo (EGLX).

United States

Main article: Video gaming in the United States

The United States started the video game industry in the 1970s and 1980s with arcade games like Pong and the first home console, the Magnavox Odyssey. In 1983, a big problem happened called the video game crash, which hurt both arcades and home systems. Nintendo’s Nintendo Entertainment System helped bring things back, but it was Microsoft’s Xbox in the early 2000s that really changed the hardware side. Since then, the U.S. has grown a lot in game development, creating new technologies and big companies like Electronic Arts that help market and sell games.

The United States has the most people working in video games worldwide. The industry was worth about $18.4 billion and had around 220,000 workers across roughly 2457 companies. By 2022, the U.S. is expected to be the biggest video game market, with over 150 million gamers.

Europe

Main articles: Video gaming in Russia, Video gaming in France, Video gaming in Italy, and Video gaming in Spain

Germany

Main article: Video gaming in Germany

Germany has the biggest video game market in Europe. The big gaming event Gamescom happens every year in Cologne. Early successful companies like Rainbow Arts made games like the Turrican series. Popular series like Anno, The Settlers, Gothic, SpellForce, and Risen all come from Germany. The action game Spec Ops: The Line and the hit Far Cry were also made there.

United Kingdom

Main article: Video gaming in the United Kingdom

The United Kingdom is third in the world for game developer success and sales. The UK started with personal computers instead of consoles, leading to many small creators known as “bedroom coders.” As games got more complex, bigger studios formed. The UK has created famous game series like Tomb Raider, Grand Theft Auto, Fable, Colin McRae Dirt, and Total War. In 2012, the UK government started giving tax help to game developers.

Africa

The video game industry is just starting to grow in Africa, but because many people are young and getting used to technology, it’s growing fast. Countries like South Africa, Nigeria, and Kenya are getting better at making mobile games, though they still face challenges like not enough money and lots of games from other places.

Asia

Bangladesh

Main article: Video gaming in Bangladesh

Video games are new in Bangladesh. People have been making games since 2002, mostly on their own. Since 2014, some companies have started making games for money. In 2020, a first-person shooter called Zero Hour was released on Steam and got good reviews. It’s the first game from Bangladesh on that platform.

China

Main article: Video gaming in China

China wasn’t a big player early on because of money issues, government rules, and fake copies of foreign games. In 2000, China banned console games, but people still played PC games, especially ones you pay for each month or small extra things. Big companies like Tencent and NetEase grew a lot in the 2010s. By 2015, China had the biggest video game market in the world. The government controls the industry tightly. China also has the biggest esports scene.

Japan

Main article: Video gaming in Japan

The Japanese video game industry is different from places like North America and Europe. Japan started later but soon began creating its own ideas. Japanese arcade games like Space Invaders helped make arcade games popular from 1978 to 1982. Even though the 1983 crash hurt North America, Japan wasn’t hit as hard. Nintendo brought the Nintendo Entertainment System to Western markets and made sure to avoid the problems that caused the crash. Japan led in consoles and console games until the early 2000s. Big companies like Nintendo, Sega, Sony Interactive Entertainment, and Capcom are key players. Nintendo made famous series like Mario, Donkey Kong, The Legend of Zelda, Metroid, and Pokémon.

Lately, consoles and arcade games have been overtaken by free-to-play games you can download on PCs and phones.

India

Main article: Video gaming in India

Video gaming in India is growing fast. From almost nothing in the 1990s, it’s become one of the top markets. In 2019, the online gaming market was worth about $660 million with 300 million gamers. By 2022, it’s expected to have 510 million gamers.

South Korea

Main article: Video gaming in South Korea

South Korea’s video game industry started like Japan’s, but players focused on games you can play with many people online at PC bangs (Internet cafes). South Korea was one of the first big places for esports in the 1990s and 2000s, and many pro players come from there.

Taiwan

Main article: Video gaming in Taiwan

Taiwan’s video game industry developed differently. In the 1980s, many companies copied and changed imported games because of high costs and little copyright knowledge. By the early 1990s, Taiwan began making its own games, with companies like Softstar Entertainment creating popular role-playing games like The Legend of Sword and Fairy and the Xuan-Yuan Sword series. The rise of Windows 95 changed things, but studios adapted. In the 2000s, online games became big, and Taiwan’s first big esports events started. The Taipei Game Show began in 2003, bringing in international developers. Today, Taiwan has a mix of small and big studios and a strong esports scene. In 2022, Taiwan had about 17.1 million gamers and the digital gaming market was worth over $2.2 billion, with mobile games making up most of it.

Oceania

Australia and New Zealand

Main articles: Video gaming in Australia and Video gaming in New Zealand

Australia and New Zealand have active video game industries, with several independent developers and studios from bigger companies around the world.

Conventions, trade shows, and conferences

Gaming conventions are important for the video game industry. They let game developers show new games to players and get feedback. Many new games are introduced at these events. Examples include the yearly Gamescom in Cologne and various PAX events. Some companies have their own special events, like BlizzCon, QuakeCon, Nvision, and the X shows.

Countries also have trade shows to help game developers plan for future games. One of the biggest was E3 in Los Angeles, California, organized by the Entertainment Software Association. Other trade shows include Tokyo Game Show in Japan, Brasil Game Show in Brazil, EB Games Expo in Australia, KRI in Russia, ChinaJoy in China, and the yearly Game Developers Conference.

There are also conferences where game developers can learn from each other. The Game Developers Conference (GDC) happens several times a year, with its main event in March in San Francisco. Another big conference is the D.I.C.E. Summit, run by the Academy of Interactive Arts & Sciences each February in Las Vegas, Nevada.

Media coverage and archiving

See also: Video game journalism and Video game preservation

When video games became popular, magazines were the main way people learned about them. But now, many websites share news and reviews. Popular sites include Gamasutra, IGN, Eurogamer, Polygon, and GameSpot. Today, players who make videos or stream games on platforms like Twitch also help share news and opinions about games.

Saving video game history is important but difficult. Old games often need special hardware or online services that no longer exist. Some early history was lost because companies threw away materials. Luckily, more people now understand the need to protect these games, and museums and groups work to save old games and devices.

Recognition within the industry

See also: List of video game awards

The video game industry has many yearly award ceremonies. These events often happen during big trade shows, conferences, or as special award shows. Websites that focus on video game news also give out their own awards. The biggest honor at most of these events is the "Game of the Year" prize.

Trends

Players can now help create games by making changes and additions. Sometimes, these changes become popular games. For example, Counter-Strike started as a change to Half-Life and became a big game.

More games let players compete with each other online. Games can be played on many devices, like TVs, game machines, phones, and computers. This makes it easier for everyone to enjoy games.

As more people grow up playing games, they want more choices and better games. Many people play games on phones and tablets, and these games are very popular. The App Store has thousands of game apps.