The economics of the video-gaming leisure market

Video gaming has become a hugely popular activity within the space of the last few decades. The practice of playing video games can take a variety of forms, ranging from feeding coins into traditional amusement arcade machines to the use of dedicated video- gaming hardware or a personal computer and increasingly to mobile devices such as phones and personal organizers. Despite omission as a category in its own right in Aguiar and Hurst’s (2007) large- scale study into the use of leisure time over the course of the last fi ve decades in the United States, video gaming is a pursuit that is arguably reaching some semblance of maturity in both market development and depth of cultural content. As a result, video gaming is now being taken seriously within the mainstream as a major commercial force in the entertainment industry and as an art form in its own right. In terms of revenues, video gaming has recently grabbed a number of headlines by recording hugely impressive sales fi gures, especially in the context of the performance of other, more traditionally heralded constituents of the entertainment industry and of the general economic downturn. For example, the 2008 game ‘Grand Theft Auto IV’ set a Guinness World Record for the highest ever entertainment earner within the fi rst 24 hours of release, selling 3.6 million units and generating $310 million in revenue (Guinness World Records Games Edition, 2008). By comparison, the fastest- selling boxoffi ce release ever was Spiderman 3 (generating $60 million revenue in 24 hours) and the book Harry Potter and the Deathly Hallows generated $220 million revenue in the same time period. But how did the video games industry, once regarded as exclusively the domain of the ‘geeky’ teenage male, come to challenge other, more traditional forms of entertainment? What are the types of game available and how have these different types of game impacted upon usage patterns across demographics and global territories? This chapter will seek to answer some of these questions by detailing relevant aspects of the video- gaming industry from an economic perspective.