The Business of Video Games: The Future Calls

2018 was a record-breaking year for the video game industry. In 10 years, the industry more than tripled in size, from $10.5 billion in 2009 to $43.4 billion in 2018. More Americans are playing video games than ever before, and video games are leading entertainment and other industries into an exciting future. It’s an exploding sector of the American economy.

This is great news for the industry, of course, but also for everyone who plays games for fun, for learning, or for their health. In the months to come, I’ll be exploring the status and future of the video game industry in these pages, but let’s do some level setting first.

Video game companies grow and succeed wherever there’s a pool of talented and creative individuals, bringing high-paid jobs to towns and cities across the United States. And with eyes on those salaries and benefits for their residents, states are competing against each other to draw video game companies to their communities.

Video games have become a uniquely social experience, creating networks and communities of players who rely on each other for fun and support. Games by King Digital Entertainment, creator of the wildy-popular game Candy Crush Saga, draw more users than Snapchat or Instagram, and its user base continues to expand. Mary Meeker, the world-renowned tech expert and venture capitalist, called video games “the most engaging form of social media.” Video games are fun to play, sure—but they help foster networks of engagement and friendships.

Video games are changing people’s lives and health. Doctors are seeing impressive results among Alzheimer’s patients who play video games, and have explored the possibility that playing video games can help stave off memory loss and brain deterioration. People facing the long road back from suffering a stroke have found that playing video games eases their recovery. Healthcare professionals are just beginning to see how video games can help patients.

2019 promises to be pivotal for the industry. Mobile games, which currently account for a significant portion of global industry revenue, will fuel industry growth. Swift advances in cloud computing open up more possibilities for video games streamed directly to your device and even broader opportunities for players. It’s rewriting the rules, for the industry and for players. But while companies have long desired to follow the Netflix subscription model, video games have been hampered by bandwidth. 5G and its boundless bandwidth could be the answer.

Esports will continue their explosive growth and will start matching traditional sports in terms of profile, prestige, and crowds. In fact, in 2018 more people watched esports tournaments than Game 7 of the NBA Championship or the MLB World Series. The Overwatch League, the professional esports league for Overwatch, is modeling itself after traditional sports leagues, with city-based events, franchises, and regular season play, and plans to host road matches in Dallas, Atlanta, and Los Angeles this year. Cities are even building esports arenas to host their own events.

And then there’s Twitch, which had a big 2018 with 15 million active daily users. But nothing will compare to 2019. The live-streaming platform for video games owned by Amazon will start to weave itself into more sports: one of the world’s top video game players, Richard Tyler Blevins, also known as Ninja, live-streamed and provided commentary for a Thursday night football game through a partnership with the NFL and Amazon. And just this past fall, he was the first esports player to be featured on the cover of ESPN The Magazine. Because of services like Twitch—and powerhouse deals made by Amazon—the line between esports and traditional sports is blurring.

Video games hold great promise. For players, investors, health care professionals, and educators, the future is already here. We look forward to seeing where the industry’s creators will take us next.

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