How Much Money Does the Video Game Industry
Make
From LoveToKnow VideoGames
Seeing how there appears to be video games at almost every turn, you may be asking, "How much money does the video game industry make?" Years ago, video games were considered a niche product for a rather small demographic. These days, however, the concept of a traditional gamer is thrown out the window. It doesn't matter if you are young or old, male or female; everyone is playing video games.
How Much Money Does the Video Game Industry Make?
With such monumental growth, as well as all the related industries that have risen alongside of it, it's not at all surprising that you may be asking, "How much money does the video game industry make?" The figures for the movie industry are much more widely publicized than that of video games, after all.
We already discussed the salaries of video game designers in another article, showing that even entry-level designers can make a very comfortable income right out of school. There is a reason why game studios can afford to pay these kinds of salaries.
The Entertainment Software Association (ESA), which acts as the governing body for the interactive entertainment (video game) industry, U.S. computer and video game software sales grew to $11.7 billion in 2008. This is only for software sales and only in the United States! Imagine how much this expands when you include international markets like Japan, Australia, Canada, and Europe.
Continuing Growth and Profitability
Since you now know how much money the video game industry makes, you may be wondering about how it got to where it is today. Of course, video games haven't been making this much money from the beginning. The $11.7 billion figure mentioned above represents a 22.9% growth year-over-year. In fact, this is more than quadruple the figure for industry software sales in 1996.
This growth and expansion has been even more pronounced in recent years. According to the School of Engineering and Computer Science at Baylor University, software sales were only over $7 billion in 2004. That means that in just four short years, we have seen a 50% growth in the video game industry. For comparison, the Motion Picture Association of America (MPAA) states that the US box office for 2005 was $8.99 billion.
These astounding figures are not only representative of the video game industry's profitability as an aggregate, but also on an individual basis. When Grand Theft Auto: Vice City was released in 2002, it generated 1.4 million sales in its first three days. This represents $70 million in revenue, easily competing with many Hollywood blockbusters.
How much money does the video game industry make? A lot. When you look at companies like Nintendo that have been a part of the revolution since nearly the beginning, the figures truly are astounding. It is very interesting to note, however, that the profits come not from the sale of hardware (consoles), but rather from the software (games).
When the Sony PlayStation 3 was launched in 2006, Sony was actually losing money with each console sold. This is because the cost of the parts, research and development, manufacturing, shipping, and other logistics totaled more per unit than the retail price for the PS3. The profits came from selling PlayStation 3 games, where the margin could be much higher.
A Recession-Proof Industry?
Everything that goes up must come down, right? This does not appear to be the case with the video game industry. It makes more money each and every year because of its continued growth and its expanding reach in the marketplace. Video games are more than "just" gamers.
In this way, when you think about how much money the video game industry makes, it seems that the industry may even be recession-proof. Video games can be an inexpensive source of entertainment, particularly when it comes to free online games. Compare this to the price you'd normally pay to watch a sports game, go on vacation, or participate in other forms of entertainment.
Video games are here to stay. Properly managed, we can expect the profitability of the industry will continue to grow.
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