Video games have been around for decades and serve as entertainment for children and adults alike. They have evolved considerably since the early days of computer games and the first versions of Nintendo and Atari. The days of pixel screens and limited sounds are a distant past as video games have become more realistic than ever. As technology improves, so do video games.
Creating video games has become increasingly complex, and the cost of creating a game to run on one of the major consoles has grown along with that complexity. It was once unthinkable to invest millions in development, but today the cost of games can run into the tens and even hundreds of millions. This has pushed game development to Hollywood movies in terms of production and marketing costs.
The video game sector is very large. In fact, it’s bigger than the movie and music industries combined, and it’s only growing. Although it doesn’t get as much attention as the film and music industries, there are over two billion gamers in the world. That’s 26% of the world’s population.
No wonder companies want their piece of the pie. In 2020, the gaming industry generated $155 billion in revenue, and by 2025, analysts predict it will exceed $260 billion.1 So tech companies are eager to participate in this revenue stream. Tech giants such as Google (GOOGL), Facebook (FB), and Apple (AAPL) plan to enter the video game industry.
Technology that has changed games
Online gaming has come a long way, and gambling hasn’t been left far behind either. Now we have online websites that make players feel like they are in a real bonus casino. Technological advances used by these sites include, but are not limited to, the following:
- facial recognition
- Voice recognition
- Gesture control
- High definition displays
- Amazing graphics
- Virtual Reality
- Augmented Reality
- Wearable gaming consoles
- Smartphone technology and gaming apps
The advent of smartphones has brought the online gaming industry to the state it is in today. Playing with a device that fits in your pocket and is available 24/7 has made online gaming more convenient and popular.
Many games are also designed for casual gamers who only have a few minutes to spare. Most of the time we are busy with daily activities or work, but there are times when we are waiting for a cab or standing in the subway and we have nothing to do. That’s when we may well be entertained by online gaming applications on the smartphone.
The widest audience is naturally attracted to games that are easy and fun to play. Smartphones make this possible by offering games for every taste.
Streaming and the participation of tech companies
Non-traditional gaming companies like Facebook, Apple and Google are coming into the industry. The tech industry is looking for ways to make streaming video games as natural as playing a song on Spotify or a movie on Netflix.
Microsoft (MSFT) already had a presence in the gaming industry thanks to its popular Xbox console. In 2019, the company introduced Project xCloud, a video game streaming service that allows users to stream Microsoft Xbox games to a PC or other devices. The service became fully functional in September 2020, and Xbox Game Pass Ultimate subscribers can access it.2
In 2016, Facebook began developing a game platform with Unity Technologies, which creates a game development platform that allows people to create video games. Google launched its Stadia program, which is Google’s cloud-based gaming service that allows users to play streaming video games with extremely high quality. It is available through the Google browser, on phones, tablets and desktops.
The main goal of all these companies is to allow players to play streaming video games without using a computer or game console. As this trend develops, buying physical video games in the form of cartridges or discs is becoming increasingly rare.
Subscription streaming services are the future, and they will be profitable for video game companies like Ubisoft and Electronic Arts because the costs of production, shipping and storage will disappear. Subscription services also allow for revenue throughout the year, whereas traditionally games were bought during holidays and other important events.
Virtual reality is already here. Oculus VR, a subsidiary of Facebook, is working hard to improve the quality of the virtual reality headsets it has already released. Oculus VR was acquired by Facebook in 2014 for $2 billion.3 Oculus Quest 2 is Facebook’s latest offering.
Video games have already surpassed many other forms of entertainment in terms of immersion, and virtual reality will add another level. There will also be further experimentation with controls, such as adding voice, touch screens and gestures to game mechanics when consoles are equipped with peripherals to receive these signals.
Apple also plans to release a virtual reality headset in 2021 or 2022.
Like Hollywood, the video game industry needs more revenue from its intellectual property because it is expensive to produce the product. Merchandising already exists: t-shirts, figurines, hats, mugs and more. Microsoft’s Halo series of games on the Xbox console has expanded into other forms of content in the form of novels and comic books in addition to the upcoming television series and movie that have long been rumored. This could be an approach for all successful video game series.
For example, the popular video game Assassin’s Creed, developed by Ubisoft, was made into a movie in 2016 with famous actors. In 2020, Sega’s popular Sonic the Hedgehog game was the subject of a successful movie starring famous actors that set the record for the biggest premiere weekend for a video game movie.
Market demographics are expanding
Another trend in the video game industry is the expansion of the market in terms of demographics. People are playing games both earlier and later in life, and the gender ratio is approaching parity. Top-level gamers competing in cybersports leagues have gained enough recognition to qualify for a professional athlete visa when entering the United States. The gaming industry has widespread popularity, and it continues to grow.
Video games have become so popular on a massive scale that some players broadcast videos of themselves playing video games at home and make hundreds and thousands of dollars from it. This has become another revenue-generating sector of the video game market.
Vintage Video Games
As the world gets nostalgic and we see reboots and remakes of favorite movies and shows from decades ago, the same thing is happening with video games. Vintage video games from the early days of the industry are in high demand and have become extremely popular, not only among older players who are familiar with these games firsthand but also among the new generation of players.
Many companies have taken advantage of this nostalgia and released updated versions of their consoles. Nintendo (NTDOF), more than any other company, has successfully capitalized on this interest in retro video games with the Nintendo Classic Mini and Nintendo Switch, two consoles that allow you to play classic Nintendo video games. This became a reliable source of revenue for companies that were in the early stages of the industry.
Thomas Glare is a dedicated video gamer, reviewer, and content writer, always willing to analyze and provide feedback on new games in the industry. His passion is not limited to a specific genre, but he definitely appreciated a thought-through product, regardless of its main idea.