Extensive literature and research has been carried out of the economic factors of the video games industry in America which can be easily correlated with other factors which are considered herein. Video games along with other forms of gaming have been a part of the American entertainment since long. In 1999, it is said that retail sales were $ 6. 1 billion up from $ 5. 5 billion and $ 4. 4 billion in the previous two years respectively. (Conference, 2000).
This is said to have approached in revenues the total box office receipts of the motion picture industry in America.
(Conference, 2000). The growth of video game hardware and software is evident with the rise in sales worldwide of video games to US $ 30 billion in 2008 as predicted by the market research firm IDC. (Kosher, 2005).
The United States is leading in the video and computer games sphere with a yearly spend of $ 11 billion which includes 248 million computer and video games as per Entertainment Software Association in Washington, D. C. which implies two games for every household.
These include a variety of games such as online games, console games, software and graphics accelerators used on computers. (Kosher, 2005). It is the second most popular form of home entertainment after reading books at 30 %. While the entertainment value derived from video games was said to be maximum at 40 % by Americans even seen ahead of watching TV and movies which trailed far behind at 18 % and 16 % respectively. (Conference, 2000).
This trend is likely to progress further with new platforms being constantly introduced by console manufacturers. With DVD formats being playable on consoles, the content will enhance in quality as well as in inputs with high graphics.
It will also be possible to download content from the internet on these machines enabling gaming software providers to upgrade the games on line leading to even greater demand. This will be the benefit of convergence, which will come at a mass market price. (Conference, 2000).
Consumer demographics, income and preferences are said to structure growth and shape of the console gaming industry. (Beinisch. Paunov, 2005). The market comprises more of adults and is also relatively gender neutral. More and more adults rather than kids are said to be into video games as indicated by an IDSA survey published by OECD (Beinisch. Paunov, 2005) wherein 65 % gamers were male and 35 % were female while 54 percent of the video games consoles had been purchased by people over 18 years of age, 25 percent were over 36 years and only 46 percent were below 18 years.
These have also been indicated in the pie charts as given below. The cost of developing a console video game is also very high and often involves a long drawn out two year process at almost $ 10 million per game. The need is also to have a large number of consoles in use to enable recovery of costs. (Beinisch. Paunov, 2005). Piracy is the greatest challenge which is being faced by the gaming industry as per Doug Lowenstein. The total losses are said to be $ 3. 2 billion a year world wide due to piracy.
(Conference, 2000). There is limited diversity in gaming as most of the games cater for a male audience. Initially consoles were stand alone systems but Microsoft and Sony have launched Xbox Live and adaptor for Play station 2 which can be connected to a broad band based game network and play the games very conveniently online. Nintendo also joined the trend in 2003. It is anticipated that the next generation consoles are likely to be user friendly to enable playing online games. (Beinisch. Paunov, 2005).