one of the most fundamental social and economic dynamics of the present century – and the internet as its natural home – is mounting.
In terms of human hours, the internet is already the world’s most important gaming arena, and it is also here that gaming’s potential and its underlying nature can be seen with the greatest clarity. It is a phenomenon that brings people together while simultaneously allowing them to escape the world, either for a few minutes of casual fun, or for an entire other realm of adventures, achievements and shared experiences. There is remarkable potential and peril in this, on a scale that can begin to seem almost anti-human in its superlatives: the size, the scope, the sheer hours of effort consumed by electronic play in return for what can seem, to outsiders’ eyes, scant rewards. But just as games have a particular history that has brought them to this point, they also remain not an implacable natural phenomenon, but the products of a human industry with its particular traits and foibles. This is an industry that has grown astonishingly fast – but that has not yet, in some ways, quite grown up. And in this the games industry echoes the attitude of many of its consumers, who are aware they are standing on the edge of something transforming; but not yet aware of just how much it may change them.
C HAPTER 3
A license to print money
At a time when most global media are either shrinking or static, perhaps the most noteworthy fact about the video games industry is its growth. At the end of the 1970s, global gaming was worth a few billion dollars a year. By the 1990s, software sales – that is, sales of the games themselves, rather than the machines they were played on – had moved past the $10 billion mark. Soon after the turn of the millennium, this had escalated to over $20 billion, with the industry showing no signs of slowing down. Factoring in online subscriptions, the $40 billion mark was passed by the end of 2008, with projections putting profits from gaming at over $60 billion within another five years.
Where it will end is hard to predict, but it’s already fair to call video games the world’s most valuable purchased entertainment medium, ahead of Blu-ray and DVD sales, recorded music and cinema box office receipts. In 2008, Nintendo even overtook Google to become the world’s most profitable company per employee. Such statistics are a tribute to games’ phenomenal appeal, but also to the steady expansion of their demographic: it will be half a century before video games will be truly ‘native’ to every age group, by which stage the very definition of a video game will have shifted to cover a far broader spectrum of products than it applies to today. Already, analysts and audiences are struggling to keep up with the shifting boundaries of the gaming world, with games increasingly available on every electronic device it is possible to buy: calculators, watches, mobile phones, MP3 players. Yet perhaps the most significant attribute that games possess is their supreme suitability for the digital age.
As the book, newspaper, magazine, music, film and television industries have discovered to their cost, the accelerating migration of consumers towards digital formats is deeply damaging to the profitability of companies that traditionally make the bulk of their money by supplying physical products to retail outlets – and by charging advertisers for the privilege of featuring inside them. A mantra that’s often repeated in business is that the price of a product tends towards the cost of distribution, and when the distribution method is the internet, this cost starts to look very close to zero. Games are almost uniquely well placed among media to buck this trend. For a start, they tend to be much more difficult to pirate than other media, given both the degree of copyright protection console manufacturers build into their machines and the sheer size and complexity of most
In terms of human hours, the internet is already the world’s most important gaming arena, and it is also here that gaming’s potential and its underlying nature can be seen with the greatest clarity. It is a phenomenon that brings people together while simultaneously allowing them to escape the world, either for a few minutes of casual fun, or for an entire other realm of adventures, achievements and shared experiences. There is remarkable potential and peril in this, on a scale that can begin to seem almost anti-human in its superlatives: the size, the scope, the sheer hours of effort consumed by electronic play in return for what can seem, to outsiders’ eyes, scant rewards. But just as games have a particular history that has brought them to this point, they also remain not an implacable natural phenomenon, but the products of a human industry with its particular traits and foibles. This is an industry that has grown astonishingly fast – but that has not yet, in some ways, quite grown up. And in this the games industry echoes the attitude of many of its consumers, who are aware they are standing on the edge of something transforming; but not yet aware of just how much it may change them.
C HAPTER 3
A license to print money
At a time when most global media are either shrinking or static, perhaps the most noteworthy fact about the video games industry is its growth. At the end of the 1970s, global gaming was worth a few billion dollars a year. By the 1990s, software sales – that is, sales of the games themselves, rather than the machines they were played on – had moved past the $10 billion mark. Soon after the turn of the millennium, this had escalated to over $20 billion, with the industry showing no signs of slowing down. Factoring in online subscriptions, the $40 billion mark was passed by the end of 2008, with projections putting profits from gaming at over $60 billion within another five years.
Where it will end is hard to predict, but it’s already fair to call video games the world’s most valuable purchased entertainment medium, ahead of Blu-ray and DVD sales, recorded music and cinema box office receipts. In 2008, Nintendo even overtook Google to become the world’s most profitable company per employee. Such statistics are a tribute to games’ phenomenal appeal, but also to the steady expansion of their demographic: it will be half a century before video games will be truly ‘native’ to every age group, by which stage the very definition of a video game will have shifted to cover a far broader spectrum of products than it applies to today. Already, analysts and audiences are struggling to keep up with the shifting boundaries of the gaming world, with games increasingly available on every electronic device it is possible to buy: calculators, watches, mobile phones, MP3 players. Yet perhaps the most significant attribute that games possess is their supreme suitability for the digital age.
As the book, newspaper, magazine, music, film and television industries have discovered to their cost, the accelerating migration of consumers towards digital formats is deeply damaging to the profitability of companies that traditionally make the bulk of their money by supplying physical products to retail outlets – and by charging advertisers for the privilege of featuring inside them. A mantra that’s often repeated in business is that the price of a product tends towards the cost of distribution, and when the distribution method is the internet, this cost starts to look very close to zero. Games are almost uniquely well placed among media to buck this trend. For a start, they tend to be much more difficult to pirate than other media, given both the degree of copyright protection console manufacturers build into their machines and the sheer size and complexity of most
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