Current Economic Health of the Video Game Industry

ESA At PlayEntertainment Software Association 2013

There has been another paradigm shift in the video game industry and what was once an industry full of game cartridges is now an industry that is saturated with free-to-play games on the game console, and free apps on smart-phones (i.e. Android, iPhone) and on Facebook. No longer is it just the boys in front of the game console playing video games. Females now make up 45% of game players (ESA, 2013).

According to the Entertainment Software Association, 36% of gamers play games on their smart-phone and 25% of gamers play games on their wireless devices. These consist of mainly casual, social games and puzzle, board game, game show, trivia, and card games (ESA, 2013).

For large game manufacturers though, they still have an upper hand in the fact that a mobile app cannot hold all the power it needs to run more complicated and intense games. For multi-player universe and action, sports, strategy, and role-playing games, people still need to turn to the game platform/console or computer/PC (i.e. MMO, MMORPG, Virtual Worlds).

The major difference now is, that the current economic health of the video game industry is moving more and more into the free-to-play arena. Game producers are better off focusing on selling subscriptions, ad space and virtual goods, rather than trying to profit off of just their cartridges at point-of-sale.

In 2011, Sony had a data breach that put about 77 million people at risk for fraud. Cyber security threats such as these, compromise the trust of customers and sometimes force people to ‘play elsewhere.’ As long as these types of security failures decrease or can be eliminated, console games should remain in full swing, even if they are selling a less number of game cartridges as a whole.

Of the games rated by ESRB in 2012, 45% received an E (Everyone) rating while only 9% received an M (Mature) rating (ESA, 2013). Today, children games are the only ones making it successful from movies. Add to that, the fact that people who start playing games young, typically keep playing. What is the lesson there? To “get ’em while they’re young!”

For an industry that makes more in U.S. revenue than music and movie industries combined, I am sure they will all figure it out.

Precursors and Early History – the 1950s – Board Games, Role Playing Games, Pen and Pencil Games, Board Games, Table Games
1952 – Tic-Tac-Toe on oscilloscope by computer (“Noughts and Crosses”)
1958 – “Tennis for Two” by William Higinbotham at Brookhaven National Laboratory (precursor to “Pong”)
1960 – Steve Russell at MIT invents “SpaceWar”
1967 – First video game on a TV set, “Chase”
1971 – First arcade game, “Computer Space”
1972 – Ralph Baer works with Magnavox to create Odyssey, first console for TV
1972 – Nolan Bushnell creates Pong
1975 – Atari founded
1982 – Microsoft Flight Simulator
1989 – Sim City
1992 – Wolfenstein 3D
1993 – DOOM
1994 – MYST
1996 – Tomb Raider
1997 – Age of Empires
1997 – Ultima Online
1997 – Grand Theft Auto
1998 – Half-Life
1998 – Lineage (very popular in Asia)
1999 – Everquest
2000 – The SIMS
2000 – Play Station 2
2001 – HALO
2002 – Second Life
2004 – HALO 2
2004 – World of Warcraft
2004 – Nintendo DS
2005 – X-Box 360
2006 – Play Station 3
2006 – Nintendo Wii
2007 – HALO 3
2008-9 video game industry recession
2009 – Call of Duty: Modern Warfare 2 passes $1 billion in worldwide sales
2010 – Microsoft releases Kinect motion-detecting controller
2010 – Rise of Social Network and Mobile games causes platform disruption
2011 – Nintendo releases 3DS handhold 3-D platform
2011 – Market for virtual goods exceeds US $5 billion

Work Cited:
Messmer, Ellen. 2011, April 27. The Sony PlayStation Network Breach: An Identity-theft Bonanza. Network World. Retrieved from: http://www.networkworld.com/news/2011/042711-playstation-identity-theft.html

Entertainment Software Association. 2013. The 2013 Essential Facts About the Computer and Video Game Industry. Retrieved from: http://www.theesa.com/facts/pdfs/esa_ef_2013.pdf

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