Finding An Entrepreneur’s Success in Video Games

In 2017, video games again dominated sales in the lucrative entertainment industry where music and movies once held sway, according to an Entertainment Software Association report. The report reveals that Americans spent a record $36 billion on the games, accounting for 33% of global gaming revenues. As mentioned by Statista, they only spent 11.3 billion on movies and 17.2 billion on music the year before, despite video games being more expensive. This has been the trend since 2008 when gaming revenues first exceeded those of movies, DVDs, and music.

The Rise of the Gaming Industry

Before that, the gaming industry was in its infancy and could never hope to match the giant movie or film industries in quality, funding, marketing, or distribution. However, by the year 2000, gaming had taken off largely due to a growing fan base and advances in technologyEight years later, Assassin’s Creed, Terminator, Prince of Persia and other gaming franchises were household names with a cult following or even a movie to their name. Nevertheless, their success was short-lived, for 2008 was also the year when the global economy collapsed. It would be two years before gaming matched movies and music in revenue, grossing $10.5 billion while movies grossed $10.6 billion, and music, $11.6 billion.

Investing in Game Development

But this success has not come by chance. To make up for the added cost of video games, game developers like Dooma Wendschuh – one of the brains behind Assassin’s Creed, Terminator, and Prince of Persia – create high-quality, highly addictive, and culturally relevant games. They are also using technology to create a more immersive gaming experience. For instance, eight years ago, the gaming giant Nintendo launched the 3DS, a handheld console that could project 3D images without the need for 3D glasses. In addition, they are diversifying into genres like music, even releasing games like Rock Band. In addition to such efforts, the industry is now more flexible and thus more profitable than it has ever been.

Finding The Right Investors

Despite its success, the industry is not without its challenges of which the first is money. As any developer will quickly reveal, developing a successful game requires many resources, both technological and financial. However, while large industry players like Nintendo and Sony have no problem sourcing capital, small players and developers struggle to fund their projects. Fortunately, venture capitalists have always supported them, right from the inception of the gaming industry. One of these entrepreneurs, Don Valentine, financed Atari, a pioneer in video and arcade games. Even today, gaming companies like Pop Cap, the creators of Bejeweled, still turn to angel investors for capital.

The second challenge comes from an unlikely source – mobile games. Unlike console games that cost about $60, mobile games often cost as little as $0.99. Some even cost nothing, thus allowing players to try out the game and to buy upgrades later. In response to this new competition, some video gaming companies, including Nintendo, are investing in mobile games. Others are lowering the quality and then the price of their games, a move that the head of Nintendo has criticized. Experts agree with him, for they regard mobile games a separate niche, not a significant threat or even the future of the industry. To them, the future belongs to 3D televisions and holographic gaming.

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