A video game can be referred to as electronic games that involve the interaction of humans with user interfaces which then generates a visual feedback on a video gadget. The electronic systems that are used to play video games are called platforms with examples of video game consoles and personal computers. Even though some specialized video games like the arcade games which were more common previously have continued to decline in their use. Video games have grown to become an industry and an art form. Like many other forms of media, video games may be can be categorized into different genres which are based in many factors which include methods of playing, art style, art style, types of goals, interactivity and others.
For the reasons that genres depend on the content for definitions, the video game genres have continued to evolve and change as other new styles of video games are coming into existence. Due to the ever advancing production and technology values in the development of video games, complex and lifelike games have been produced resulting to introduction of enhanced genres and pushing of the existing video games boundaries. In the current times, it very common to find high level genres games that are collective across all the other genres like a combination of action, rhythm/music and horror in a single video game.
Global economic situation
It would be a temptation for the people in the video game businesses to take some current news -that the video game sales were over the roof in October and that World of Warcraft PC game broke the all time record of sales in single day-as a proof that the industry of video game may be immune to the deep despair that the global economy is facing. This seems to be what most people in the video game industry believe, that in the rough times, many people spend their money on entertainment and that video game hardware and software can give much more value than the other options. They believe that the industry of video games is immune to recession. The rationale behind the projected growth despite the face of an impending and deep recession has been explained by several people .
Ron Meiners, the director of community Hollywood Interactive suggests that, for comparable cost, the amount of time of solid entertainment gotten from the purchase of video games is much greater than other forms of entertainment. It has also been said, at the current times, video games give the consumers a much higher level of engagement and interactivity and hence their doing well despite the global economic problems.
The business life cycles
In the near past, video games were only found on bulky arcade machines. From the Pac-Man, to Nintendo consoles and to the more advanced video games and systems that are in existence today, the industry of video games has grown up into a globally recognized powerhouse that went on to earn revenues estimated to be $40 billion in the year 2007. In the United States, the sales on video game hardware went to $6.6 billion in the year while those on software were $15.8 billion in the year 2007. In earlier days, the costs of development were minimal and as so, the video games were very much profitable.
Games that were developed by single programmers or by few individual and artists were able to sell many copies up to hundreds of thousands. Most of these video games took only a few months to be created and hence developers were in a position to release several titles every year. Publishers of the video games were often generous with their benefits and in return offered royalties on video games sold. As graphics and computing on video game continue to increase, so have the sizes of development teams because of the larger staffs needed to cater for the programming and graphical complexities. Currently, the video game budgets can go up to millions of dollars while some other profession games need one to three years for their development thus increasing the strain on video game budgets.
Places like Japan and the United States which are highly dominated by the business of video games and hence contributing a lot towards the gross domestic profit of their countries. Interest rates do not have a lot of impact in the industry of video games as they mostly manufacture their units. The income that is disposable for the consumers in the industry of video game has some effect in their behavior of buying. The people who fall under low income ranges may not afford the costs of buying a video game of high price.
The low manufacturing costs by Nintendo was one of the reasons for them selling their games at nominal prices and hence increasing its sales. The video game companies use the traditional debt financing systems to source their capital. Due to high interest rates, mostly the typical loan transactions are not able to meet the funding requirement for most of the video game companies and also that lenders are not able to properly value the IP assets.
Consumer disposable income
Even with a drop in the disposable income and some other changes in the economy, publishers of video game software have continued to experience very high sales in the past 5 years. Through increment of investment in building hype and marketing about new releases, the demand of video games has been seen to rise. In the next 5 years, the revenues will probably continue to rise with the publishers trying to new consoles and technologies. With the emphasis on wireless and the new emerging technologies, the way video games are played is improving everyday and as a result attracting new audience at it holds on tight to those already using video games. In order to ease the process of buying video games, companies are encouraging its consumers to buy the games through the internet and this has also helped the companies to maximize profits.
Consumer demands and spending patterns
The demand for video games has continued to rise over the years and as such, more people are willing to spend on them. The number of programs for video game development, design and programming has continued to go upwards in the American universities, colleges, art and trade schools all the country. The high growth of video games coincides with the growth of the entertainment industry and also with the increased role of video games in people’s daily life.
Video and computer game sales in the year 2010 went up to $25.1 billion and now the game companies indirectly and directly employ over 120,000 persons in 34 states. Following a report by ESA, 72% of the American households do play video and computer games. The report continued to indicate that American universities and colleges are going to offer 344 programs in game development, design and programming in 2011-2012 academic year. This is a clear indication the demand for video games is expected to grow even bigger than it is currently .
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