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In 2009, it was calculated that the United States video game industry made $10.5 billion in revenue. This money largely comes from games in two groups: computer games earning $.5 billion and games played on consoles earning $9.9 billion. For such a young industry it’s fascinating to point out that there is already an oligopoly in the field. It was in the 70s that improvements in computers made the gaming industry possible and by 1989 Nintendo already had 90% of the market. A feat that is doubly astonishing: from 1977 – 1990 Nintendo only released two types of consoles: the Color TV Game series and the Nintendo Entertainment System/Nintendo Family Computer (U.S./Japan). But since then the video game console war has split into three groups: Xbox, PlayStation and Nintendo.
These three companies are owned by global superpowers. Xbox is owned by Microsoft, which in 2006 owned 96.97% of the market for operating systems. PlayStation is owned by Sony which has its hands in just about everything in mass media: music, film and television. Nintendo is privately owned but even without an umbrella corporation the gaming company has the ability to thrive. This oligopoly of the three companies can affect the consumer when it comes to pricing the hardware. For example if all companies feel that no price reduction is planned for the future then all companies will continue to keep their price fixed.
At the same time this competition between the three companies has lead to some crazy innovations in the industry. In 2006 when Nintendo’s Wii’s motion control came out Nintendo was able to tap new markets; putting the other companies at a disadvantage.
For so long the console industry was seen as only targeting younger males but with the Wii there were reports of nursing home patients playing Wii bowling. An article by BusinessWeek tackles the topic of Top 11 Video Games for Fitness. It’s hard to believe that there are video games that promote fitness at all let alone a top 11.
After 4 years of Nintendo exploring this new demographic PlayStation released the Move and Xbox released the Kinect. And if you think this is 4 years too late for the other companies to have any sort of innovation on this type of technology you’d be wrong. In the case of the Kinect there is research under way to use its capabilities to help the blind see. Not only can you get healthy now playing video games but it might “cure” your disability.
Developers in the gaming industry can be broken up into three categories. 1st party developers are simply developers that are more vertically integrated. Meaning they both make, publish and provide the sole hardware for the game. We can see this in Nintendo’s business model the most with franchises like Mario or Donkey Kong. This type of development makes it easy for the company to do cross promotional games like Mario Kart since they own the rights to all intellectual properties. 2nd party developers tend to also make games solely for a certain console but these developers are independently owned. 3rd party developers are a little different in the fact that they’ll make cross platform games. Meaning they’ll make a game that will usually be released simultaneously for Xbox, PlayStation and Nintendo.
Consoles aren’t the only way the video game market is growing, there is also growth in mobile device gaming. With yet another new market comes even more profit. Altogether it is estimated that by the end of this year the gaming industry will earn $74 billion and by 2015 may reach $112 billion.
Gaming culture seems to be an ever-evolving thing. What was once two paddles and a pixel has become a plethora of genres that anyone no matter the age can enjoy. This means that as consumers we are at the mercy of what these companies want to sell us. And although in the end the individual will choose what to buy our choices can be slowly shaped by the developers. For example the upcoming game Mass Effect 3 will use the Kinect “…to ‘augment’ the experience.” Although the device is not necessary to play the game fans of the series will have to purchase the Kinect if they want the full experience of the game. And in purchasing the device that a fan of 3rd person shooters may have never needed before the individual is being shaped.
Consoles aren’t the only way the video game market is growing, there is also growth in mobile device gaming. With yet another new market comes even more profit. Altogether it is estimated that by the end of this year the gaming industry will earn $74 billion and by 2015 may reach $112 billion.
Gaming culture seems to be an ever evolving thing. What was once two paddles and a pixel has become a plethora of genres that anyone no matter the age can enjoy. This means that as consumers we are at the mercy of what these companies want to sell us. And although in the end the individual will choose what to buy our choices can be slowly shaped by the developers. For example the upcoming game Mass Effect 3 will use the Kinect “…to ‘augment’ the experience.” Although the device is not necessary to play the game fans of the series will have to purchase the Kinect if they want the full experience of the game. And in purchasing the device that a fan of 3rd person shooters may have never needed before the individual is being shaped.
