Gaming Software

Gaming Software

If I were to say that online gaming and gaming software are popular, it would be the understatement of this new century. When you go to Google and search on “gaming software” you get 13,200,000 hits. Search on “computer gaming” and you get 12,000,000 English language sites.

Obviously a lot of people take computer gaming pretty seriously. It doesn't matter what your interests are, there is probably a computer game that you can play. Adventure games, strategy games, role playing games, and even real life simulation games are all part of the mix. But in spite of the fact that they are called games, this is serious business.

The Business of Gaming Software

The world and business of gaming has evolved a long way from its early days when PONG was originally played on a mainframe computer and then morphed into a coin operated video game. In the 1980's the development of video game consoles that could connect to a television set spurred the market growth as PacMan brought video games to the home. It is now estimated that the worldwide market for consoles and gaming software is in the range of $10B annually.

Console Games

The initial growth of the gaming market was based on console games. Console manufacturers battled for control of a relatively closed market. They utilized proprietary software for their games, and controlled distribution and pricing. For a manufacturer, a hit game could provide tremendous returns. It is reported that in the 1990's games such as Nintendo's GoldenEye or Legend of Zelda generated lifetime worldwide revenues in the billions, while the cost of development and production was substantially less than $10 million.

Although most games will not be nearly as profitable as these, it only takes a few big winners to handsomely offset the more modest returns or losses on the majority of titles released.

Computer Games

As computers became common household appliances, new opportunities arose, as gaming software specifically for the computer was developed. As the technological power of home computers grew during the 1990's gaming software that utilized the more powerful computer platforms came into being. Playing of massive multi player role-playing games (MMRPGs, e.g., Ever Quest) was possible. Computer games became more realistic using the increased computing power to incorporate full-motion video (FMV), which, in effect, turns the games into interactive movies. The fact that the software could be distributed via wireless, cable, or telephone lines, or on inexpensive discs (CD-ROMs and DVDs), meant that the business was not capital intensive. The market for gaming software grew exponentially, and developers could now produce a game that had a potential market of literally millions of people.

Struggle Continues

The struggle for a share of the gaming software industry continues today. The two revenue streams grow and feed from each other.

The manufacturers of game consoles (Sony, Microsoft and Nintendo) still control a large segment of the gaming market. If they can maintain a large installed base of compatible consoles, significant revenues are available through license fees that they might impose on outside game developers.

Concurrently, the demand for gaming software for computers also grows. The growth of the installed base of computers means that the market for games grows along with the installed base. Since the revenues from a successful game so far outweigh the cost of development, consumer electronics companies and software development companies will continue to build games and drive technological improvements to meet this market demand.

By Murray Anderson           


Related Links:

  • SlashDot
    This site points out the conceptual and physical capabilities of consoles versus computer games.


 

 

 

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