22 June 2016
What was once seen as a niche has now become the fourth biggest global entertainment market, shooting past the film world and behind only gambling, broadcast TV and book publishing.
Looking at the hype and interest in this year's recent Electronic Entertainment Expo (E3) - one of the biggest yearly video game conferences - it should come as no surprise that there are more than 2.6 billion gamers.
As a result, the global video game market was worth $91.5 billion in 2015, compared to $89 billion for films, according to recent research.
Video games are no longer the exclusive domain of the surly teen in his bedroom with the door closed. The market has been unstoppable, growing in both revenue and audience share.
While Star Wars: The Force Awakens made almost $529 million on opening weekend – a box office record – the latest installment of one of the most popular video games, Grand Theft Auto, raked in more than $800 million in worldwide sales in its first 24 hours.
That’s not just a video game record, it’s a Guinness World Record for “highest revenue generated by an entertainment product in 24 hours.”
Despite such figures, the stigma attached to the video game industry is unlike any other in entertainment. This “adolescent” market still struggles to be taken seriously.
Change, however, may be at hand.
With its growth potential and proven track record, it is no longer possible to ignore the gaming world. An aging demographic (the average gamer is now 37), with growing spending power, leads analysts to project a $107 billion market by 2017.
One key indicator that gaming is now a serious business is how much money is going into producing some of the bigger titles: at $266 million, the new Grand Theft Auto cost more to make than any Hollywood blockbuster except for the third movie in the Pirates of the Caribbean franchise.
However, as gaming skyrockets, Hollywood slides: from 2012-14, film industry revenues declined by almost 30%.
In fact, Hollywood is increasingly trying to piggyback on the success of the gaming world by producing films entirely based on their video game counterparts.
It makes sense that film studios would travel this road: the audience is already there and 1.2 billion people strong. Just video game spectating is a $1 billion business.
Additionally, video games could offer Hollywood the opportunity to finally crack the Chinese film market, estimated at $7 billion and growing by nearly 50% annually. Although Hollywood films constitute a little under half of China’s box office, not many Western genres travel well.
Ticket presale numbers for Warcraft (well over $20 million) – a film based on a computer game series from Activision Blizzard – made it one of China’s most anticipated films in history. It is also expected to rake in anywhere between $100-$150 million in its five-day launch.
Meanwhile, Sony’s animated film Angry Birds, based on a mobile game of the same name, topped China’s box office on its opening weekend.
Skeptics believed that Angry Birds would not succeed as a film – many balked at the $73 million production cost. But the film has already grossed $225 million worldwide.
These numbers are not so hard to believe when you consider that well over 1 billion people have downloaded the game since its release in 2009.
Keep in mind that video games are not more popular than films. Games, in fact, reach a smaller total audience.
Constant hardware and software developments in console, mobile and virtual reality gaming would suggest that these technologies will only continue developing and that sales will keep increasing. Goldman Sachs recently estimated virtual reality to be an $80 billion industry by 2025.
At the E3 conference, major gaming companies made announcements that were evidence of their aim to get involved in these emerging areas of gaming, seen as exciting opportunities to keep expanding the market.
Meanwhile, as Hollywood struggles to recapture its audiences of days gone by, the video game industry revels in the waves of new gamers beating down its doors.