Intro to Macroeconomic Presentation of the US Video Game Industry (Pt 1)

Originally written August 3

Since their commercialized conception in the early 1970s, video games have undergone several evolutions, had many different perceptions, and left a myriad of impacts on society. From the Atari 2600 to the PlayStation 4, electronic gaming has transformed into arguably one of the most profitable and fastest growing entertainment industries of all time in just 60 years. This notion that video gaming truly can serve as an economic leader in the entertainment industry was really emphasized after the 2013 release of Grand Theft Auto V (GTA V) by Rockstar Games. Just in its first day of sales, GTA V managed to rake in $800 USD in worldwide sales. This massive sales record made it the highest-grossing launch day piece of entertainment, which includes movies and music, of all time[1]. This means that a mere video game managed to outsell and outperform every single song, film, or record ever produced on its first day.

Additionally, in a recent report from the Entertainment Software Association, this US video game industry generates $30.4 billion in revenue for 2016[2]. This number has been steadily increasing over the years due partially to advancement of new technology, sponsorships, and advertising.

Now given this information, the idea that there is a sort of stigma placed on gaming as simply a childish pastime seems like it has no merit. But, alas, it is apparent that some media sources, firms, and even consumers view gaming as a sort of sidecar in the entertainment world. Many even still try to pitch the arguments that gaming is a “corrupting force” for early onset violence and continuing psychological issues, even though these claims have been debunked and refuted by psychologists and even the APA[3]. And on top of all that, the majority of government statistical references in the United States do not report video game publishing as an distinct U.S. industry.

As an avid gamer myself, I always find myself a bit annoyed when I hear someone dismiss gaming as a medium of entertainment or think that there is no future for the industry past games like Mario Kart or Wii Sports. Not only does gaming have its own dynamic and unique benefits in the economy, the surrounding culture, innovation, and passion can all contribute positive externalities that do not necessarily exist in other forms of entertainment.

In order to further explore my gaming passion and learn more about the industry from a developer’s point of view, I took the opportunity to visit Microsoft’s headquarters based in Seattle, Washington. During my visit, I was able to speak with Principal Engineering Manager Chetan Parmar about the state of gaming software and get an overall outlook on the influences of gaming on big firms like Microsoft. Parmar’s position requires him to focus on producing and overseeing the formation of games and applications that will eventually be sold to other developers to produce final products. He declared that “even just looking at video game software, we are noticing significant upward trends in products and services like mobile games, downloadable content, subscriptions, and other partnerships with publishers.”

When asking him about the state of the video game economy, Parmar notes that it is “foolish to believe that the gaming industry only reaches to a disk inside of an Xbox.” He goes on to say that huge tech corporations that realize the increasing popularity and ubiquity of “gaming-inspired products are some of the only companies that will be able to keep up with the times.” That statement makes a lot of sense when looking at how large Microsoft is with its gaming sector, as well as Sony and even now Apple and Facebook with the increasing platform of the App Store and technology acquisitions like the Oculus Rift, respectively. Itis clear that regardless of the stigmas surrounding gaming, it is practically indisputable that video gaming as an industry is truly a powerhouse of economic impacts and outputs.IMG-1753

From this research endeavor, I will be able to effectively and precisely present why we should be more paying more attention to the video gaming industry in a macroeconomic lens. This is to be accomplished by describing the massive scope that the industry has, refining that scope into several key facets of the industry and how each aspect contributes to the larger industry as a whole. After this preliminary research is compiled and organized, I will discuss the implications that further investment in the gaming industry can have on the economy with an emphasis on newer technology integration and globalization.

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Chetan Parmar (Left) with Sameer Shukla (my dad!)

Sources:

[1] Kamenetz, Anya. “Why Video Games Succeed Where The Movie And Music Industries Fail.” Fast Company, Fast Company, 26 Nov. 2013, www.fastcompany.com/3021008/why-video-games-succeed-where-the-movie-and-music-industries-fail.

[2] “U.S. Video Game Industry Generates $30.4 Billion in Revenue for 2016.” The Entertainment Software Association, www.theesa.com/article/u-s-video-game-industry-generates-30-4-billion-revenue-2016/.

[3] Yee, Nick. “How The Media Consistently Gets Games Wrong.” The Huffington Post, TheHuffingtonPost.com, 9 Jan. 2014, www.huffingtonpost.com/nick-yee/video-games-media_b_4572231.html.

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