Essay: Video game industry – USA

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November 29th, 1972, a day that, while unrecognized by many, hosts a certain event that revolutionized an industry that had hardly come out of the shadows at the time. Not only was that fateful Wednesday the introduction of the arcade cabinet PONG to the United States, it represented something much more than that, it represented the birth of an industry; the video game industry. Over decades, this industry has worked up the ranks, both economically and socially, valuing in at about $22 billion in the U.S.A. alone and generating many communities and social interactions between gamers both nation and world wide. While there is no doubt that this industry has stabilized itself as a staple in American culture and is continuing to do so, a fundamental question remains: How and why have video games been able to develop into a key part of American society? While the answer may seem rather simple at first, the question is much more complex and is more deserving of an “It’s because they’re fun.” The true answer to this perplexing predicament lies within the deep and intricate history of video games and how they were made to resonate with the players to keep them playing another level of Super Mario and have them eagerly await the next one. However, before being able to explain why these games were able to connect with the players even after adulthood, the history of the industry must first be explored to discover how it sparked in America and continued to grow and endure hardships ever since.
While the aforementioned PONG was the first videogame to achieve extreme success with the public, the first videogame ever made in the United States was William Higinbotham’s Tennis For Two, which was finished on October 18th, 1958. This predates PONG by about 50 years, and, while Tennis For Two certainly didn’t reach the level of critical acclaim that PONG did, it was by no means a failure. “Visitors waited in line at Brookhaven National Laboratory to
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play ‘Tennis For Two’, an electronic tennis game that is unquestionably a forerunner of the modern videogame”
( 1) Higinbothom had built his machine in a similar fashion to an oscilloscope, a machine that was able to display 2-D images on a screen using varying voltages, where changes in the electrical signal equated to a change in displayed images. This was the perfect model for Higinbotham to use, as he had countless experiences with the device, whether it be from working on radar systems or simply displaying information for his constructions. The time he had spent with oscilloscopes in the years prior helped made sure that his Tennis For Two would be able to function properly. As one of his partners, David Potter, noted, “Higinbotham’s circuits were rock solid. I found his work to be so beautiful, so simple. For someone involved in electronics, these really were something to behold”
( 2). Higinbotham’s ability to create such a device that was never really seen before sparked interest in the mind of many other innovators at the time. While Tennis For Two wasn’t the start of the video game industry, it laid the foundation that other people would be able to build upon, and one of those people was Ralph Baer.
After leaving Germany before the outbreak of World War I with his parents and sister, Baer graduated from the National Radio Institute and the American Television Institute of Technology, with degrees Television Engineering and Radio Service. After some time working at radio service stores in Manhattan, he eventually joins Sanders Associates and becomes the Division Manager and Chief Engineer for Equipment Design. It’s at this point when Higinbotham’s Tennis
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for Two is released, and Baer, who has profound knowledge on TV’s and electronic devices, envisions ways that videogames could be brought home and be played on the
television. Eight years after the release of Tennis for Two, Baer scribbles “a detailed four-page outline for a “game box” that would allow people to play board, action, sports and other games on almost any American television set.”
( 2) The “game box” (also known as the “brown box”) that Baer had illustrated, however, took 5 years to develop and only $2,500 of spendings on research and materials. Despite the time and low budget, the end result was revolutionary. Sanders Associates had agreed to license Baer’s system to Magnavox, which began selling the system as the Odyssey, and it was able to sell 130,000 units in the summer of 1972. Unlike Tennis for Two, the Odyssey was more accessible to everyone in America and offered a sense of immersion, having been said to make the TV “an extension of you, the player.” Being the first home console in history, the Odyssey did have its flaws, such as a lack of games to play, which eventually led
to slower sales, only selling 200,000 more units combined over the next three years. However, it was able to continue the domino effect that Tennis for Two had started. By proving that there was indeed a market in videogames, more and more people wanted a chance to strike gold, as Baer and his team had come close to. Evidently, two men by the names of Nolan Bushnell and Ted Dabney started work on their company named “Atari”, which was Japanese for “check” as used in a game of Chess. After the release of their first, and America’s first, arcade cabinet, Computer
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Space, which only sold 1500 units nationwide as it was hailed as too difficult and boring, the duo stayed determined and hired Al Alcorn to program games. As a test of his skill, Bushnell informed Alcorn that he was under a contract with General Electric to create a table-tennis game, similar to the one seen on the Odyssey. While there was no actual contract, Alcorn was dedicated to programming a great game, and in only 4 months time he finished what he titled PONG, only because the name Ping-Pong was copyrighted. Both Bushnell and Dabney were impressed with the final product and decided to place the cabinet in a local shop in Sunnyvale, California. What had started as an initiation test was looking to be a big hit, as the quarter box was constantly being filled by the nearby children. Atari saw the opportunity, and when they decided to sell the arcade cabinet to retailers worldwide, the impact on the industry would be profound.
After being released in 1972, Atari’s PONG quickly reached success all across the nation, an achievement that was more rewarding when taken account that it was the first videogame to do so. However, as mentioned before, while “Pong consistently earned four times more revenue than other coin-operated machines [it was] estimated that the game earned US$35–40 per day, which was nothing ever seen before in the coin-operated entertainment industry at the time” ( 2), it was it’s impact, rather it’s spark, on the industry that truly gave the game it’s relevance. With PONG’s unprecedented success, many things happened in response. For one, it meant only more great news for Atari, as their newfound success with PONG in the arcade market prompted them to introduce their home console, the Atari 2600, in 1974. While the only worthwhile game available on the 2600 was
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PONG, it became the most popular console of the year in 1975, amassing $40,000,000 in sales. Just like PONG did for the arcade market, the Atari 2600 made home consoles a staple in many homes across America, making Atari the king of the videogame industry at the time. With the fame and wealth that came with Atari’s success, many companies turned their eye to this new
industry that seemed to have cropped up out of nowhere. Companies like Mattel and, even Purina, were making quick and cheap video games to advertise their products, as everyone was playing them now. While they weren’t as popular as PONG or some other of the other Atari titles, the amount of games and consoles being created was increasing exponentially. For another seven years until 1982, Atari’s reign over the kingdom that was the videogame industry was incredibly prosperous, and it all started with a simple test game.
However, like all kingdoms, Atari wasn’t able to last forever. With everyone dipping a hand into the videogame pool, there came an oversaturation of both video games and consoles, and Atari, whom consumers looked up to in this time of need, failed to deliver as well. With such a heightened position, Atari got caught up in it all and adopted many new policies that led to it’s downfall. One of those policies was rushing all of their games in time for the Christmas season,
hoping that their name alone would sell. While many of their games were sold like that, it led to major disappointments, with E.T. the Extraterrestrial being the most notable. With a business strategy that switched to selling popular names rather than quality games, Atari lost the hope of many fans and the company’s end was spiraling ever closer. To worsen the matter, “Atari refused to give game designers authorial credit or royalty for their work”
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( 2), leading to some of Atari’s old developers starting companies of their own, which only oversaturated the industry even more. By 1982, at least 12 consoles had been released by multitudes of competing companies, amongst others. The consumers couldn’t keep up, and by early 1983, the video game home console industry crashed, and no one wanted anything to do with them anymore. Any company who had invested a hefty sum into this business had virtually lost it all, and countless of them went bankrupt entirely. Video games were looking to be a “one-hit-wonder” situation, and it was Atari, those whom had started it all, that put everybody in check, just as their name had implied.
However, there was still a hope for one of America’s strongest industries. Sneaking in just before the crash happened, the CEO of Japanese card company Nintendo, Hiroshi Yamauchi, was among the many interested parties who seeked success with video games. In 1980, he sent his son-in-law, Minoru Arakawa, to Vancouver, Washington, to set up Nintendo of America
(NOA), distributing arcade cabinets sent by Yamauchi’s development team. With a lack of popular games being made, both Arakawa and Yamauchi knew that they needed something to
keep their company alive in American markets, and this game seemed to come with Popeye the Sailorman, developed by Shigeru Miyamoto. Despite “shipments containing the code for Miyamoto’s new game beginning to arrive”
(Harris 42), tragedy struck when licensing deals with King Features, the owners of Popeye, rejected the deal last second. With thousands of unusable cabinets left at NOA’s storage facility,
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Miyamoto had to come up with a new cast of characters and needed to give Popeye the Sailorman a new coat of paint. With the selection of games growing bland overall, Miyamoto finished practically just in the knick of time, as his new game, Donkey Kong, was shipped across the country on July 9th, 1981. “Seemingly overnight, it turned into the hottest game of the year, and eventually it became the most popular arcade game of all time. Never before had there been a quarter magnet quite like Donkey Kong”
(Harris 43). By the time the crash rolled around a little under two years later, Donkey Kong had provided Nintendo and the arcade portion of the industry a small, yet sustaining, umbrella as everyone else was washed out. However, Yamauchi wasn’t just satisfied with a foothold in the arcade business, he wanted Nintendo to revitalize and bring back the entire industry, even though everyone turned their heads at anything resembling a console. Knowing this, Nintendo knew that releasing a console alone would not dent the mindset that was established by the Great Crash. They knew that, to succeed and bring back the industry that once was, to start a Golden Age, they would need a few tricks up their sleeves.
When one industry fell, another rose, with the latter being the toy industry. Minoru Arakawa, who was still the CEO of NOA at the time, took note of this, and knew that, in order to
sell the console being designed back in Japan, which was dubbed the Nintendo Entertainment System (NES), they would have to advertise it as a toy rather than a video game console. They already tried selling a console in 1984, the Advanced Video System (AVS), but it was immediately tossed aside by retailers and consumers alike. While it would be extremely difficult
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to convince consumers that the NES was not like anything that had come before it, the Nintendo team came up with many marketing strategies that eventually proved to be successful. The first step in Nintendo’s marketing magic was designing the console itself to look less like traditional consoles and more like a simplistic box that could fit in with toys in a child’s room. However, design alone was not enough, and both Yamauchi and Arakawa knew this, so the development team at Nintendo Of Japan (NOJ) came up with the Robotic Operating Buddy (R.O.B.) and the NES Zapper Light Gun (Nintendo Zapper), which were compatible with some NES titles. These two accessories, which were marketed with the NES, gave the system the final push to look like
it truly was a toy, and when it was finally released on October 18th, 1995, it sold 90,000 units by year’s end, proving that the consumer populace was, indeed, convinced. Along with games such as Super Mario Bros. and The Legend of Zelda that popularized genres of gameplay such as the Platformer and Adventure style, the NES continued to gain momentum, reaching 30,000,000 units sold by 1991. It was a combination of the marketing strategies and revolutionary games that
brought the video game industry back into business, accomplishing Nintendo’s goal and Yamauchi’s dream.
With video games finally making their reappearance in the American market and all of the old companies having been washed out, a new age had started for the industry, and it was certainly Nintendo-orientated. With the mistakes of the past being rather evident, many other companies decided to leave Nintendo alone and stayed far away from the business as possible, giving them all the more control over the videogame industry that they had brought back from its
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grave. However, despite Nintendo owning 90% of the videogame market, one company with an attitude that would always stick with them was willing to challenge them for dominance in the dog eat dog world that the video game industry would soon become. Sega (originally Service Games), which was founded in Japan in 1965 by David Rosen, controlled less than 1% of the industry at the time, but they had the willpower, strategy, and passion to try and overtake Nintendo. With Thomas Kalinske, the one responsible for bringing Barbie and Hot Wheels back into popularity, as the CEO, Al Nilsen, the enigmatic gamer who knew what would or wouldn’t sell, at the head of marketing, and Paul Rioux, a tenacious and resilient man, as the vice president of finance, as well as many others, Sega had the right players to take down Nintendo
and they subsequently started the first Console War. The Console Wars represented a new level for gaming as a whole, not only showing that it was to be taken as a legitimate business, but that the industry wouldn’t disappear again, they’d just evolve with the times.
While this type of war featured no bloodshed of any kind, it was an extremely tense time period for both sides. Attacks weren’t dealt with sieges and weapons, but with advertisements and campaigns. Either side wouldn’t gain support at draft offices, but at Consumer Electronic
Shows (CES). Both Nintendo and Sega had to be on guard whilst being able to come up with strategic ways to beat their opponents, and it was Sega, the underdog, who dealt that first strategic blow. Seeing as Nintendo targeted a much younger audience, “Kalinske wanted to expand the market by developing software for older audiences”
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(http://venturebeat,com/2014/08/14/sega-genesis-genius-tom-kalinske-on-its-25-year-legacy-battling-nintendo-launching-sonic-and-birthing-the-street-date/ 3). Kalinske’s ability to target what Nintendo lacked led to the creation of their new mascot who would take Mario head on: Sonic. “Sonic wouldn’t just become the face of the company but also would represent their spirit; the tiny underdog moved with manic speed, and no matter what obstacles stood in his way, he never ever stopped going. Sonic embodied not only the spirit of Sega of America’s employees but also the cultural zeitgeist of the early nineties. He had captured Kurt Cobain’s ‘whatever’ attitude, Michael Jordan’s graceful arrogance, and Bill Clinton’s ‘get-it-done’ demeanor”
(Harris 76). As described by author Blake J. Harris, Sega had the wits and courage to take on the giant that was Nintendo by taking the audience that they never had. In doing so, they were able to draw in a vast amount of people who were new to the gaming scene, not only increasing the amount of potential customers for just that time period, but for the generations to come.
While the Console Wars ended with Nintendo’s victory in 1995, beating Sega’s Sonic and the Sega Genesis by around $9 million in sales, that was not nearly the most important result of it all. The Console Wars represented a time of rapid change for the industry, as each company was pushed to their limit in attempts to create better consoles, better graphics, and, overall, better
games, so that they could outclass their opponent. If it weren’t for this war, the advancements that video games took would have been stunted immensely, as it was the pressure of losing that drove each side to keep on improving. More important than anything, however, was that the Console Wars were the final step in establishing the video game industry in America as something that was meant to stay. It had survived a Crash in 1983, a war in the 1990’s, and, after
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every fall, it would always bounce back and continue to grow and develop, integrating itself as a part of American culture a little more each time.
While history has certainly demonstrated how videogames have incorporated themselves into American culture, with the events leading up to the end of the first Console War finally inaugurating the industry into the American way of life, economics has also played it’s role in ensuring the industry’s success, even into the 21st Century. After the excitement that was the Console Wars had died down, what was soon becoming the deciding factor in whether or not consumers would purchase a system was how price-effective it was. This became an issue for the companies producing the games, as they had to price everything in a way that would create a good profit for themselves while staying affordable for the general public. In doing so, they would be able to keep the industry alive in the hearts of gamers and in the trevasses of their wallets. While the retail costs of games has been changing over time, they have been adapting and have become far more suitable to the market. In an account for inflation, the earliest video games consoles costed around $780 ($199.99 in 1974), with the games for those consoles at the high price range of $80-$120 ($15-$30 in 1974). As time went on and the industry become more of a staple for Americans, prices were shown to drop, allowing themselves to easily find themselves in more homes across the nation. 1996 saw game prices dip to a range of $75-$115 ($40-$70 in 1996), bringing us to the prices of many games today, which boast the range of $40-$60. Not only this, but with the introduction of Indie Game developers and digital purchases, some critically acclaimed games, such as Shovel Knight, sell for prices of only $5-$20. The industry’s ability to change prices whilst maintaining a profit signifies how it has
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been able to make gaming much more accessible for everyone, allowing its audience to grow even further. Not only have the economics of gaming been able to maintain it’s older following while attracting a new one, it also has benefited the nation financially. According to Rich Taylor of HuffPost Business, “the industry added more than $6.2 billion to the U.S. economy in 2012. Approximately 146,000 individuals are directly and indirectly employed by the video game industry.”
(Taylor 1) These numbers exhibit that, not only have games been able to stay and grow more cost effective for it’s consumers, but it has also been able to support itself ever since it’s introduction in 1972, “growing more than nine percent”
(Taylor 2) each year in overall worth. By staying alive economically, it has allowed for videogames to hold its stance in America and develop its fanbase so much that it would soon become it’s own subculture in America.
While a subculture wasn’t created by the number of sales that video games had, the eventual bonds that games formed with players and the players with one another is what did. Scott Rigby, coauthor of the book Glued to Games, explains that, over time, the gaming industry has learned to follow the Theory of Self-Motivation, which is the idea that competence, autonomy, and relatedness are what drive people to do things. In the world of video games, there are genres that fit into each mental characteristic, such as RPG’s for competence, MMORPG’s for relatedness, and Open World Adventure Games for autonomy. This theorem of understanding provides key reasoning as to why video games have been able to become a part of American culture, and especially why people have been drawn towards them for more than just to play.
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Under the theory, without these three needs being satisfied, a motivation, or engagement, in something is unable to exist. Therefore, if any one of these needs isn’t provided in a person’s life, video games have developed to provide the feeling of either competence, autonomy, and relatedness rather quickly. Looking back at the examples, competence, or a sense of mastery, is provided in almost any video game. In order to win, new skills need to be learned, and higher levels need to be reached. RPG’s tackle this sense of mastery with “Leveling-Up” and unlocking a stronger move. With relatedness, or a sense of being socially active, MMORPG’s provide this perfectly, as they require working together and formulating strategies with teammates at a live-action pace, and that method being the only way to win. This allows players to work with others in order to attain a common goal. Lastly, with autonomy, or the sense of having control, the Open World game genre puts players right in the characters shoes, and in a world where there are no direct instructions as to what to do next. These types of games demonstrate a sense of a free will, satisfying the need of having their decisions actually determine what happens nexts. In many instances, especially in the modern world, there come times where one may lose a sense of mastery, social interactions, or mattering at all, but this has allowed for video games to peak into our culture, providing an alternative to moping around. When these feelings for motivation began to diminish, there will always be an Earthbound game with characters to level up, there will always be a World of Warcraft server to log in to and play with others, and there will always be a Legend of Zelda dungeon to explore.
As more and more people in America began to become emotionally immersed in videogames, the industry was finally holding more than an economic stance, it started building
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its cultural stance, cultural in the sense that it grew a massive fanbase and became more respected nationwide. One of the immediate signs of this cultural growth was the plethora of conventions that began to pop up. In fact, there are conventions that have started for specific games entirely. Conventions such as MineCon demonstrate that the subculture that gaming has evolved into has grown so large that it has branched out and formed other communities, with those communities being quite large in their own right. “Minecon 2015 attracted over 10,000 visitors this weekend, netting the event the Guinness World Record for ‘largest convention for a single video game’”. Of course, there also conventions that bring together fans of videogames as a whole to celebrate different aspects of videogames, such as MAGFest, PAX, and E3, which celebrate video game OST’s, the variety of genres, and upcoming news in the industry, respectively. With over 70 conventions dedicated to video games, each new one that is started by the fans who play demonstrates just how much gaming has evolved from the national pastime to a national hobby. In fact, as stated by Jesper Juul, a ludologist, “…note how ‘gamer’ only really became popular from 2000…”
( 1). As the 2000’s saw the start of the biggest gaming conventions in the United States, such as the aforementioned MAGFest starting in 2002 and PAX starting in 2004, it further demonstrates how the community began growing so close that the term “gamer” spiked in popularity, as it became what the fans united under. Some gamers took games beyond being just a hobby, however, as many began taking the first steps of playing games as an occupation.
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The idea of gaming as an occupation is relatively new, but, despite its young age, it has spiked in popularity immensely, and one reason for this is because of websites such as YouTube. YouTube and other video streaming platforms, such as Twitch, allow gamers and content creators to post videos about games in a wide variety of formats, whether it be List Video’s, Top Tens, Reviews, or even simple Let’s Plays. A grand example of gaming’s success on YouTube and other social platforms is Felix Arvid Ulf Kjellberg, who goes by the name of YouTube. After starting his channel in the year 2012, PewDiePie’s channel has ever since amassed 43 million subscribers, more than any other YouTuber today. Gaining 43 million subscribers in 4 years exhibits the massive following that the gaming community has developed, and now with other YouTube Gamers reaching high subscriber counts, such as Markiplier with 12 million subscribers and JackSepticEye with 9 million, the already vast community is only going up. Recently, in fact, YouTube created another branch of it’s website known as YouTube Gaming to commemorate this expansion of gaming content creators. This acknowledgement of the gaming community by a company such as YouTube has allowed for more interaction between gamers by making it easier to find others as well as easier to communicate and plan collaboration videos. Contrary to popular belief, however, gamers have also received recognition in areas besides YouTube. As the subculture grew, more competitive gamers found their place in national competitions, as well as national broadcasting networks such as ESPN.
While competitive tournaments for competitive multiplayer games such as Counter Strike:Global Offensive and League of Legends have always had annual competitions across the nation, the question of “Are eSports actually sports?” have always kept these electronic sports off
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of sport broadcasting networks such as the aforementioned ESPN for quite a while. However, the restless and ever-growing subculture of the video game community had grown so large that last year ESPN had announced that “The final round of the collegiate championship for Heroes of the Storm — Blizzard’s answer to hugely popular MOBA games League of Legends and Dota 2 — will be broadcast live on ESPN2 on Sunday at 6:30PM PT. This marks the first time that ESPN will air an eSports match on live TV”
( 1). This marks a monumental step forward for gaming’s cultural stance in America, as being aired on live television on America’s most well-known sports channel allows videogames to transcend another barrier between gamers and the rest of the American populace. For the gamers, this provides them with a higher reputation and credibility, and for the rest of Americans, it allows them to experience a new type of entertainment for them, a type of entertainment that they may actually enjoy and contribute to. These advancements in entertainment accessibility did for the video game industry culturally what the Console Wars did for it economically; it was revolutionized in a way that developed the community by introducing a new demographic and increasing the range of what is deemed socially “acceptable” to play video games.
November 29th, 1972, a day that brought the video game industry to life with every quarter of every child across the country. However, that date now represents something more profound than the birth of an industry; it represents the birth of an entire subculture. In the beginning, videogames followed the traditional practice of “business for business’s sake”, where the end goal was to make money, and when that was achieved the goal became to make more.
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However, as videogame companies began to evolve with their gamers, producing games that formed connections and motivations, the colossal industry evolved with it, becoming a community. The focus shifted from seeing a higher profit margin to seeing more people interact with each other through discussions and friendly competitions about the one thing that they all share in common; a love for video games. This change into a community solidified the fact that videogames had finally integrated themselves as a part of American culture and, judging from their history, they would be here to stay.

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