Video Games: Structure of the industry

Video Game Industry Overview

The video game industry is a multi-billion-pound sector, incorporating various components such as game design and programming, animation, voice-over work, and marketing.
The industry is facilitated by a number of sectors including the hardware sector (including platforms such as Xbox, PlayStation, Nintendo Switch, and PC gaming), and the software sector, which designs and develops the games for these platforms.
There are a multitude of game publishers and developers, ranging from major corporations like Electronic Arts (EA), Activision Blizzard, and Ubisoft to independent (‘indie’) studios.

Structure and Functions

A video game company typically comprises several departments, including design, programming, art and animation, sound, testing (QA), and marketing.
The designing process involves conceptualizing ideas, defining rules, creating a storyline and character designs. This requires various professionals including game designers, scriptwriters, storyboard artists etc.
Programming is the process of coding the game, and often involves teams specialising in graphics, physics or AI depending on the complexity of the game.
The art and animation department ensures the visual components of the game are aesthetically pleasing. They create the visual elements of the game like characters, landscapes, and objects.
The quality assurance (QA) team is responsible for testing the game and identifying any bugs before the game is released.

Economic Model

The economic model of the video game industry revolves mainly around sales of games, in-game purchases, and subscriptions.
Supplementary sources of revenue can include merchandise related to popular game franchises.
The phenomenon of ‘free-to-play’ games, such as Fortnite, has become a significant part of the industry’s economic model in recent years. These games are free to download and play but offer optional in-game purchases or ‘microtransactions’ to enhance gameplay or aesthetics.

Recent Developments and Future Trends

The indie game movement has grown, facilitated by improved accessibility to game development tools like Unity and Unreal Engine. This has resulted in a broadening of game types and thematic content.
The emergence of esports (competitive video gaming as a spectator event) is a major recent development, contributing significantly to the industry’s overall revenue and popularity.
Virtual reality (VR) and augmented reality (AR) gaming are technological innovations that have begun to shape the future of the industry, offering immersive gaming experiences.

Students should understand that the video game industry is a complex system with a multitude of moving parts. Its economic models, structures, and future trends are dynamic and continue to change due to technological advancements.