The Video Game Industry : Explaining the Emergence of New Markets

Introduction Since the first appearance of video games for the North American audience in the early 70’s (Kent, 2003) the industry has experienced a remarkable growth, both economically and culturally. Indeed, from a US $200 million industry in 1978 (Aoyama & Izushi, 2003) the sector grew to an estimated US $52.7 billion in 2010 (IDATE, 2010). In addition, although the video game production and consumption were exclusively American at the beginning (King, 2002), it expanded worldwide since then. Although some authors compare the video game industry with the movie or the music industry (Zimmerman, 2003) because of their similar supply chain, we must consider its uniqueness. Indeed, electronic games have been flourishing rapidly in comparison with the other media (Zimmerman, 2003). In 1999, it represented a US $15.4 billion industry worldwide whereas music and movie, respectively US $38.6 and US $17.6 billion, overshadowed it. In 2010, video games were clearly dominating the content industry, with a US $52.7 billion worth industry against US $35.1 and US $31.8 billion for the music and movie industries respectively. In addition, the persons working within the video game industry are more often drawn from gamer subcultures, creating a unique cohesion amongst the different actors of the sector (Hendricks & Winkler, 2006). Finally, video games have a very limited lifetime, closely correlated to the technology that supports it. For instance, game consoles lifetime is generally around six years and researches show that video games published on those platforms last between six month and a year. Given its rapid growth and tremendous potential in terms of revenue and innovation, the video game industry represents a major asset for those who lead it. Aside from its mere direct impact on the local economy, through sales or royalties, video games also carry a “cultural odor” (Selfe & Hawisher, 2007). This concept is defined by Koichi Iwabuchi (2002) as “the detectable imprint of a particular culture that is left behind on a product or export”. For example, the Japanese content industry is largely influenced by its history and traditions, which increase its “cultural odor”, and is greatly appreciated worldwide. This contributes to promote the Japanese culture across the globe and significantly impacts on tourism (AFJV, 2010).