It seems that all we hear about from the media is the terrible state of the current economy and how businesses of all platforms are suffering.  However, as sales within the entertainment industry decline, one outlet continues to show consistent returns over the past few years – the video gaming industry.

What makes video games stand out from other entertainment genres?  Why aren’t music and film sales following a similar trend?  Let’s compare costs of a new video game to a ticket for a recently released movie:

$10 for a 2 hour, single showing of a movie in the theatre
(not including popcorn)

vs.

$50 for 40+ hours of entertainment in a video game that is accessible at any time.

Granted, these numbers vary depending on the individual medium, but it is interesting to compare in terms of cost per hour and lasting appeal.

Another useful benefit for gamers is in-store credit or even cash back for trade-ins. This specific market is what keeps giant retail chains like Gamestop on top.  Once you have played your game to its fullest extent and when your playtime starts to exceed the number of hours you slept that week (yikes), simply trade it in for credit towards a new game.  Even online retailers like Amazon have this policy now.  If the game is in reasonable condition, Amazon provides the shipping and you get a gift card in return.  Many movie retailers offer a similar service, but companies like Gamestop will buy used movies as well!

Much like Netflix and other online rental services, video games can now be accessed from anywhere through services like GameFly or NumbThumb. If you aren’t one for paying monthly fees for renting, game systems now incorporate game marketplaces where you can purchase a variety of individual titles. The Xbox Live Marketplace has games from generations past and current hits that are fully downloadable onto your hard drive. There are similar features in both the PS3 Store and Wii Shopping Channel.  This interactivity is what makes video game consoles so successful.  Who needs a DVD player or CD burner when you can have all in one simple package?  A video gaming platform is no longer JUST for playing video games.

Still, the question remains about why the video game industry is so successful in relation to other forms of entertainment.  Daniel Ernst, an analyst for Hudson Square Research responded to this question earlier this year by stating:

‘Consumers are increasingly in control of their media experience – narrowing in on what they consume, where they consume it, and when they consume it. We see interactive entertainment as an extension of that control, where the protagonist, settings, and outcomes are dictated not by the author or screenwriter, but by the players themselves.’

I think that Ernst answers this question completely.  This concept of interactivity is becoming increasingly critical in our rapidly developing world.

Most of the success of the video game industry over the past few years can be attributed to bundle packages and Nintendo’s excellent marketing campaign to make the Wii enticing to all age demographics. Needless to say, it worked. 2008 sales in video games alone surpassed over $21 billion (in the U.S.) – with over half of that gross figure belonging to Nintendo’s Wii alone.  In terms of game sales, Guitar Hero/Rock Band made up around 16% of total revenue during last year’s holiday season and Wii Play sold over 5 million copies.

Recently, the sales of the video game industry have started to decline, but this is somewhat expected.  This Summer has not seen many new ‘big’ titles like the 3rd and 4th quarters of 2008.  However, expect this to change drastically as Nintendo begins to populate the online store for their newly released DSi and highly anticipated titles start flooding the marketplace like Assassin’s Creed 2, Mass Effect 2, Final Fantasy XIII, WoW Cataclysm, Pokemon Heart Gold/Soul Silver (US), and Star Wars: The Old Republic.

Expect big things as we enter 2010.