Getting in the Game

www.nycfuture.org MAY 2008 Getting in the Game The number of companies creating video games in the five boroughs has spiked in recent years, but New York is well behind several other cities in the race to cultivate this fast-growing part of the entertainment industry CONTENTS IntroductIon 3 the number of companies creating video games in the five boroughs has spiked in recent years, but new York this report was written by tara colton and edited by is well behind several other cities in the race to cultivate Jonathan Bowles and david Jason Fischer. roy Abir pro- this fast-growing part of the entertainment industry vided additional research. General support for city Futures is provided by Bernard tHE BIG PIcturE 7 F. and Alva B. Gimbel Foundation, Booth Ferris Founda- once a niche industry marketing to kids and teenagers, tion, deutsche Bank, the F.B. Heron Foundation, Fund for video games are beginning to rival music and movies in popularity and revenues the city of new York, Salesforce Foundation, the Scher- man Foundation, Inc., and unitarian universalist Veatch Program at Shelter rock. noVIcE PLAYEr 8 new York city’s video game sector has enjoyed robust the center for an urban Future is a new York city-based growth in recent years, but remains modest overall think tank dedicated to independent, fact-based research about critical issues affecting new York’s future, including economic development, workforce development, higher orGAnIZEd KAoS 11 education and the arts. For more information or to sign up for our monthly e-mail bulletin, visit www.nycfuture.org. cASuAL GAMES 11 the center for an urban Future is a project of city Fu- tures, Inc. city Futures Board of directors: Andrew reicher tHE nEXt LEVEL 12 (chair), Margaret Anadu, Michael connor, russell dubner, challenges to growing new York’s video game industry Ken Emerson, Mark winston Griffith, david Lebenstein, include too few technical workers, limited academic Gail Mellow, Gifford Miller, Lisette nieves, Ira rubenstein, infrastructure and the lack of one signature company John Siegal, Karen trella and Peter williams. cover images: Ayiti: the cost of Life image courtesy HEroES wAntEd 15 of GlobalKids.org; diner dash® image courtesy of while new York’s video game sector has clear potential Gamelab,LLc and PlayFirst, Inc.™; Burning Monkey Soli- to grow, the Bloomberg administration has yet to taire image courtesy of Freeverse; Frontlines: Fuel of war incorporate it into its economic development strategy image courtesy of Kaos Studios, a division of tHQ, Inc.; rocketBowl Plus image courtesy of Large Animal Games; rEcoMMEndAtIonS 16 the Shivah image courtesy of wadjet Eye Games; the nightshift code™ image courtesy of Black Hammer Prouctions, Inc. and PlayFirst, Inc.™; Petz catz 2 image GAME dEVELoPMEnt companIES In 18 courtesy of Powerhead Games. nEw YorK cItY 3 3 GETTING IN THE GAME A CULTURAL PHENOMENON IN THE DAYS OF PONG AND PAC-MAN, the video game industry has evolved into an economic powerhouse with the staggering success of home gaming systems like Nintendo’s Wii, PlayStation 3 and Xbox 360. The field has achieved more robust growth in recent years than almost any other part of the entertainment industry. And with video games now breaking into previously untapped mar- kets—including women and adults—the industry’s future is exception- ally bright. New York City has many of the ingredients necessary to capture a sig- nificant share of the video game industry’s growth.I t boasts a deep pool of creative workers and it is home to some of the world’s most success- ful film, media and publishing companies—sectors that have similar characteristics as gaming. New York has already emerged as one of just a handful of cities in North America to establish a modest-sized cluster of video game companies, thanks to impressive growth in the number of gaming firms over the past few years. As recently as five years ago, the city had only a few companies in the industry; today there are about 30 game development companies and another 55 firms involved in some aspect of games. Many of these firms have been adding employees at a rapid clip. However, New York is well behind other gaming hubs like Seattle, Los Angeles, San Francisco, Montreal, Vancouver, Boston and Austin in the total number of video game development companies. The city’s gaming workforce is also much smaller than other hubs, largely because none of the industry’s giants—such as Electronic Arts (EA), Ubisoft or Sony—are located here. And since industry leaders still don’t perceive New York as a major center for gaming, the city routinely loses talented workers—including many of those who graduate from gaming programs at the city’s universities—to firms in these and other cities. New York undoubtedly has the potential to build on its recent gains and establish a larger video game industry. Doing so would help the city diversify its economy and create well-paying jobs in one of the nation’s most promising sectors. But as this study demonstrates, the growth of the city’s video game sector is far from assured. 4 This report, the first comprehensive analysis man, co-founder of Gamelab, New York’s largest of New York City’s video game sector, is based on casual game company. “Games are not anymore extensive data analysis and more than two dozen just for geeky young males. In the generation interviews with executives of local video game growing up now, everyone is playing games. companies, academic officials involved in gaming It’s simply part of their leisure landscape.” programs, city officials and an assortment of lo- According to local industry experts, the num- cal and national industry experts. The study was ber of game development companies in New York also informed by a wide-ranging survey of dozens City could be counted on one hand as recently as of entrepreneurs and workers in the city’s video five years ago. But today, based on our analysis, game industry that was conducted in partnership the city is home to more than 30 game develop- with the New York chapter of the International ment companies and another 55 firms involved in Game Developers Association (IGDA). some aspect of games, from sound effects to dis- According to local industry experts, the number of game development companies in New York City could be counted on one hand as recently as five years ago. But today, the city is home to more than 30 game development companies and another 55 firms involved in some aspect of games, from sound effects to distribution. Only a handful of other cities in North America have as many gaming firms. Video games have been around for more than tribution. Only a handful of other cities in North 30 years now, but the industry has exploded in America have as many gaming firms. the last decade as home systems came to eclipse We estimate that the industry employs the arcade games that swallowed quarters by the roughly 1,200 people in the five boroughs—our millions in the 1980s. Computer and video game research identified that many workers, but the software sales in the United States have nearly overall job total is undoubtedly slightly higher tripled since 1996, reaching $7.4 billion in 2006, than this figure since we were not able to ob- according to a 2006 report by the Entertainment tain employment information from a number of Software Association (ESA). The number of video firms. While the employment total is still small, game units sold also skyrocketed, from 74 million the workforce in the five boroughs has swelled in 1996 to more than 250 million a decade later.1 in recent years. For example, Kaos Studios has Meanwhile, membership in the IGDA grew by grown from 15 to 90 employees. Other city-based nearly 3,000 percent between 1999 and 2007.2 firms like Arkadium Games, Powerhead Games The industry has taken off in part because and Large Animal Games have experienced con- games aren’t just for kids and teenagers any- siderable job growth. more. New systems like Nintendo DS and Xbox Unlike most other gaming centers in North Live Arcade, and the growing popularity of “ca- America, New York does not have any of the in- sual games” like Diner Dash and Bejeweled, dustry heavyweights that employ thousands of have redefined the industry. A 40-year-old wom- people locally. Take-Two Interactive Software an who likes to solve puzzles during her lunch and Atari are the two largest video game com- break is now considered as much of a ‘gamer’ as panies headquartered in the city. Both are ma- a teenager playing a first-person shooter game jor players in the industry, but most of their jobs for hours each night. here are in marketing, sales and other business “It’s clear that video games are definitely a fields rather than game development. The city is major mass medium now,” says Eric Zimmer- also home to entertainment companies like Via- 5 com—which includes MTV, VH1 and Nickelode- we should court it because it doesn’t take a lot of on, among other networks—that are increasingly space and it doesn’t take a lot of money.” incorporating video games into their portfolio. But despite the recent growth, the city’s vid- Although New York does not have an EA eo game industry is still small compared to other or Ubisoft, the city has become one of the na- regions with game development workforces that tion’s leaders in two fast-growing sub-sectors of number in the thousands.

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