Written by: Nikhil Vijay
The first-ever digital game was presented by Edward Uhler Codon in 1950 at the New York world’s fair. Since its introduction in the commercial world in the 1950s as a technical oddity at a science fair, gaming has flourished as one of the money-making entertainment industries in the world. The introduction of mobile games in the market has revolutionized the industry and oiled the wheels for the new generation of gamers.
Where it all started
In 1967, Ralph Baer released the “Brown Box,” which could be programmed to play checkers, ping-pong, and four other sports games.
The brown box was licensed to Magnavox, which later in 1972 was released as “Magnavox Odyssey.” Then came Atari which not only developed games in-house but created a whole new sensation around “Arcade.” Atari began to sell Pong (the first-ever real electronic video game as many of your will know), which retailed at around $1095.
Tech giants realized this could be a big thing in the market, and in the next 13 years, more than 15 companies started to develop video games for the ever-growing industry. By 1982 U.S. video game sales had already reached $2.1 billion, exemplifying the potential of this industry.
In the late 1970s, we saw technological advancements, such as Intel’s invention of the world’s first microprocessor, which led to creating the first-ever 3-D multiplayer game -Gunfight.
3D gaming made its entry in 1995 which created new instruments for building realistic textures, computing physical characteristics, and enabling in-game interactions between objects. Special effects with well-designed realistic details now allow players to immerse themselves in the online gaming world.
Fast forward to 2004, the release of World of Warcraft paved the way for the creation of a new type of video game- Massive Multiplayer Online which changed the face of the industry altogether. We will explore more of this in the next section.
Then came the touch controlled gaming technology, with the iPhone being released in 2008 along with a host of apps. Sony’s PS Vita too was a novel creation. Consoles like the ps3, Wii, Xbox 360, ps4 to become popular standard devices in the homes of many families.
How Massively Multiplayer Online(MMOs) changed the game
The rise of the internet and advancements in mobiles and computers have grown the gaming industry to unbelievable new heights. With Microsoft’s Xbox live gaming platform launch in 2001, gaming players accessed voice chat and multiplayer matching services. The World of Warcraft released on P.C.s, which saw massive success with over 14 million monthly paying subscribers.
As the PlayStation Network, Xbox Marketplace, and Wii Marketplace began to gain traction, they changed the way games are updated and purchased. In a recent ESA gaming report, around 54% of the gamers feel their hobby helps them connect with friends, while 45% use gaming to spend time with their family.
As online first-person shooter games became more popular, gaming “clans” began to emerge worldwide. These games range from a few to 4 thousand people organizations with a broad range of structures and goals. With the meteoric development in mobile gaming, it overtook the revenue of console gaming after 2015.
Present market share in the entertainment sector
Currently, the gaming industry is valued at 170B USD and is expected to register a CAGR of 9.64% over the next few years.
As of today, it holds the biggest share of the pie. The movie industry combining the box office and home entertainment revenue, is worth around 130B USD, while the recorded music industry is worth about 23B USD.
To give you a better sense of perspective, consider one of the most hyped-up blockbuster movies of all time — Avengers Endgame. During its opening weekend, it generated around 800M USD in revenue. Now take the release of GTAV, which crossed a whooping 1B USD in just three days.
Gaming extends across many platforms like mobile gaming, console gaming, P.C. gaming, etc. of which mobile gaming seems the most promising. Of the total estimated 2.7B gamers in the world, 2.4B are mobile game players. Many large companies are releasing their games on smartphones as paid or free versions. A good example would be COD mobile.
The impact of the pandemic
Despite the widespread chaos caused by the pandemic in the entertainment industry, gaming has in fact, not only survived but has thrived during this period. Being a typically in-home activity, it makes sense that the sales have only improved with people being locked up in their homes looking for entertainment options to keep them occupied. Two sectors emerged as outliers in this situation, the first being the EdTech industry. And as you can guess, the second turned out to be gaming.
Analysis from GamesIndusty.biz shows that sales across 50 key markets have increased by 63%. Even new games released during the pandemic like Doom Eternal and Animal Crossing both have broken sales after launching. Countries like the U.S. and France, in fact, saw a 38–45% increase in time spent playing video games.
However, there is a downside to this pandemic scenario. Gaming hardware components and chips are facing a lot of delay issues because of the supply chain interruption in factories around the world.
Also, many of the e-sports events that were lined up were cancelled or postponed since these mega-events require a large audience to be physically present. But considering that e-sports account for less than 1% of the gaming market, this would not pose a big threat to the industry as a whole.
The future
Tech giants are realizing the growing prominence of the gaming industry and are placing their bets on the future of this market. In 2019, Apple released Apple Arcade, a game subscription service. Soon after, Google launched Stadia, which allows users to stream major game titles directly from the Cloud. And Amazon — which in 2014 acquired Twitch is also rumoured to launch its own gaming streaming service.
A.I. algorithms are constantly being developed, especially to cater to the Non-Player Characters (NPCs) of the game. Game developers are experimenting with using A.I. to create games that evolve automatically based on player feedback. For example, an A.I. algorithm can respond to a player’s choices and automatically initiate new challenges, characters and worlds, creating levels and challenges for players to explore and enrich their experience.
V.R. offers gamers an immersive experience by making players wear headsets and interact with graphics in their own little created world.
The development of cloud gaming is driving the market. Ongoing advances in cutting-edge cloud innovation have transformed cloud gaming into the real world. Mobile 5G technologies will shape the way people use their data, and so the smartphone gaming sector is expected to boom even further.
Why E-Sports is a goldmine
E-sports is set to explode in the future, with pop culturalization enhancing the investments and revenue. Video gaming-specific streaming platforms like Twitch and YouTube Gaming give fans a direct connection to the players and teams, while more mainstream socials have allowed those connections to flourish. Top players in the e-sports market are Activision Blizzard, Nintendo, Tencent, Electronic Arts(E.A.), etc.
Valued at 694.2M USD in 2017, e-sports can be considered as an entire industry in itself, with reports estimating that it could cross the 2B USD mark by 2023. The revenue is mainly generated from media rights. Media houses are willing to shell out huge sums of money just to earn exclusive broadcasting rights. Apart from this, other sources of revenue are sales of tickets & merchandise, sponsorships, and publisher fees.
Conclusion
Gaming has a false perception in many people’s minds, and it is not respected in the same way that active sports are. The sports sector will evolve with time in this technological era of the internet and computers. Every coin has two sides. It’s generally established that an individual’s health, be it physical or mental, does not go along with video games. It’s too early to gather concrete evidence on the same as there is various ongoing research.
Will e-sports become analogous to IPL in terms of hype and viewership? Will the future Olympics and other sporting events see e-sports as an event? Only time will answer these questions. But one thing is sure — gaming is set to become an integral part of our future and shape the entertainment industry as a whole.
