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The Games They Are A’changin’ Part One: Evolution and the Rise of the Digital Marketplace

The video game industry has evolved dramatically in the last ten years, and those changes were driven, as they always are, by technology.

The first generation video games were centered around specific consoles developed by companies like Atari, Nintendo and Sony. Then personal computers began to increase in processing and graphical power and joined consoles as suitable gaming platforms. In the late nineties, dedicated graphical processing units (GPU’s) were introduced, along with new application programming interface software, a cross-language, cross-platform interface that interacts with GPU’s to render 2D and 3D vector graphics. By handling all the graphics instead of relying only on the central processor that’s running the operating system, these new technologies dramatically increased a machine’s capabilities as a gaming platform, and gave developers the opportunity to create richer and more complex games.

The first years of the 21st century were a notable growth period for the video game industry, both creatively and financially. At the time, I was at global publisher Atari’s studio in Beverly, MA, working on highly successful franchises that included Bioware’s Neverwinter Nights series, Firaxis’ Civilization series, and Epic’s Unreal Tournament series. We had games from a dozen different development studios. It was the first golden age of computer games. It was also a golden goose for game publishers.

Back then, game developers relied heavily on publishers. There was simply no other way to get your game on the end cap at Best Buy or Gamestop. Remember when electronics stores had several huge aisles just for computer games as well as a few more for utility software? Physical product, including the “CD-in-a-box,” and handheld devices using game cartridges, dominated the market. Publishers acted as gatekeepers. The only way developers could achieve success was to partner with an entity possessing the marketing reach, the supply chain, and the money required to produce and distribute a successful video game. The stakes were high and the money invested in each game huge. The introduction of multiplayer online games introduced new programming complexities and new revenue opportunities. But publishers were still holding the keys to the retail castle. Even when you played a game online you still bought it in a store at the mall.

Those days are over. The emerging technologies altering the landscape of the industry are rapid and non-stop. The rise of broadband internet speeds and digital download services have rendered the brick and mortar store obsolete. Mobile devices - which didn’t exist ten years ago - dominate the marketplace. The recent iterations of game consoles are internet-connected, so now everyone can download games and other content directly to their devices. This provides a better experience for users, who can see,buy, and download a new game immediately to their choice of platform. It’s a tremendous opportunity for smaller developers, who no longer need a massive budget to get their game into the marketplace and take home far more . While they are no longer the sole arbiters who decide which games make it into the marketplace, publishers still play a major role. The publishers who remained agile enough to stay ahead of the changes are doing quite well. They have a huge incentive to do so, because there is a massive amount to money to be made.

Part 2 will look at the economics of the video game industry and what’s next