Copyright material – 9781844573172 Contents Acknowledgments vi Introduction: Video Games as a Global Phenomenon 1 1 An Industrial History of Video Games 12 Case Study: Atari 19 Case Study: Nintendo 34 Case Study: Sega 38 2 Market Structure, Audiences and Software Production 43 Case Study: Electronic Arts 54 Case Study: Activision-Blizzard 63 3 Video Game Hardware, Distribution and Retail 80 Case Study: Microsoft 87 Case Study: Sony 97 4 Video Games and Other Related Industries 111 5 Labour and Production in the Global Video Game Industry 140 Case Study: Electronic Arts, Rockstar and Labour 155 Case Study: Hollywood Unions, Video Games and Labour 159 Conclusion: Making Sense of the Global Video Game Industry 166 Bibliography 175 Index 217 Copyright material – 9781844573172 Introduction: Video Games as a Global Phenomenon Ten years ago, a book attempting to justify video games as a unique cultural industry would have been a tough sell. The common view was that they were just toys – admittedly fancy, costly toys, but toys nonetheless. Today, however, that view has changed. Video games have emerged as a fully developed indus- try that not only competes with but also often complements a wide variety of other cultural industries. Educators and academics have recognised their poten- tial value as teaching tools since the first prototypes were developed in the 1960s. Similarly, concerns over potential negative effects, whether from too much time spent with video games or from exposure to violent content, have dogged the industry since at least the early 1980s. In 2004, the global video game industry first earned more than Hollywood’s domestic box office, a marker often used to demonstrate its growing impor- tance. Moreover, a number of major media and communication companies began to use video games as integral parts of branding and advertising, includ- ing franchises such as Harry Potter, Lord of the Rings, James Bond and the NFL (Bloom, 2001; Bloom and Graser, 2002). Even popstar Britney Spears has a video game. The industry, which has tried to follow the Hollywood film system throughout its history, has even created its own hall of fame and the ‘Walk of Game’ in San Francisco (Harris, 2005). One doesn’t have to look far for examples of how significant and deeply ingrained video games have become in our day-to-day lives. They have been involved in a political scandal, as when a Norwegian representative was caught playing one during a major policy debate (CNN, 2003). Special ‘serious’ video games have been created for a variety of purposes. Serious games, which use the mechanics and capabilities of video games for training, have been used in a variety of areas including a number of political campaigns in the US. In fact, the ability of video games to energise the youth vote has led some experts to predict they’ll soon become a mainstay of most political campaigns (Foster, 2004b).Video games are being used as a part of medical treatment and have been the focus of debates about youth violence (AP, 2005b, 2005c; ESA, 2001; Johnson, 2004; New Zealand Herald, 2003). Industry studies show that video games are less and less toys for kids (ESA, 2002, 2004, 2005a, 2006, 2007). Increasingly, they’re facing the same questions of intellectual property Copyright material – 9781844573172 2 T H E V I D E O G A M E B U S I N E S S ownership and piracy as the recorded music and film industries (Chazan, 2005; Veiga, 2004). Moreover, the pedagogical value of video games has become so widely accepted that a school district in Michigan loaned PlayStation 2s to students to help them take advantage of educational software (Laskowski, 2005). Even the US military has shifted its long-standing use of video games into overdrive. The US Marine Corps has begun to use video game first-person shooter Doom (1993) to help teach its recruits tactics (McCune, 1998). Similarly, the US Army spent millions to develop and market its own video game, America’s Army (2005), to inform potential recruits about army life (Brickner, 2004; Nichols, 2009; Wadhams, 2005). Other groups have taken note, with Hezbollah creating two video games to help bolster its cause, while Damascus-based Atkar Games has created two games geared towards countering portrayals of Muslims in most Western-designed video games (Nichols, 2009). Most tellingly, an increasing number of universities around the world offer courses in video game studies and even degrees in video game design (Barlett, 2005; Carlson, 2003a; Foster, 2004a). Work in the video game industry has come to represent a major new hope for professional training in universities. Jobs in the industry have been described as ‘some of the best jobs the American workplace has to offer’ (Richtel, 2005b). In spite of this, increasing numbers of employees are leaving the industry or filing lawsuits citing unfair labour practices (ea_spouse, 2004a, 2004b). Understanding how the industry works is of paramount concern to video game studies, as education in the field is becoming professionalised. But there are other reasons a detailed examination of the industry is needed. Understanding the forces that produce video games that are violent or feature questionable portrayals may help provide solutions to those problems. Moreover, because the video game industry is seen as a desirable field to be employed in, with various policy and education institutions targeting game development for funding, an understanding of how different the video game industry is from other industries is needed. Changing technologies, including mobile phones and cloud-based services, are forcing the industry to adapt both its products and its structure. Time will tell whether these technologies repre- sent a significant threat of disruption to an industry that is heavily concentrated and focused on only a small portion of the global market. Contextualising the potential for such a change is particularly important, as the industry, while global in terms of production, is much more limited in terms of consumption. Estimates suggest that eight countries made up approximately 80 per cent of global video game hardware consumption in 2009. The United States, Canada, Japan and a number of countries in Western Europe are the major consumers of video game products. Software production is even more Copyright material – 9781844573172 I N T r O D U c T I O N 3 concentrated, with three countries dominating the production of the bestselling video games of all time: the United States, Japan and the United Kingdom (Nichols, 2013). Such concentration has left many countries and regions to fend for themselves. Countries currently representing markets so small that sales data are rarely included in industry reports – such as Brazil, Argentina and India – are all likely to become important sites for game development (Peréz Fernández, 2013; Portnow et al., 2013; Shaw, 2013). In some cases, these differences can be explained in relation to infrastructure, particularly as the video game indus- try continues to push towards cloud-based gaming, which requires high penetration of networked technology and reliable, high bandwidth (Aslinger, 2010, 2013). Similarly, the advent of mobile gaming and of digital distribution has opened up game development in places poorly served by the mainstream industry (Moss, 2013). In other cases, political and cultural differences may play in. In a number of countries in the Middle East, for example, one limit on the penetration of video games is due to state concern with their apparent Western influences (Lien, 2013; Šisler, 2013). Finally, there are countries that are also limited by simple economics and labour factors. Lebanon, for example, has struggled bringing together workers who have the skills to make games, even as it has struggled with the political dimensions of gaming (Lien, 2013). In con- trast, some countries able to supply the raw materials for the industry’s products or where they may be assembled include the Democratic Republic of the Congo, Ethiopia, Mozambique, Bolivia, Peru and China though the high cost of the final product leaves many unable to afford them. The STudy of Video GameS The formal study of video games is just beginning. As games have gained in pop- ularity, with expanding audiences and incorporation of more sophisticated technologies, they are now recognised as a unique embodiment of culture wor- thy of study. It is not uncommon for this study to come under the lens of cultural and textual analysis, research which insists that video games can have legitimate artistic value because they can – though not always – maintain complex narra- tives and design elements. More than simple entertainment, video games have become texts to be unpacked and analysed. The ability of video games to fulfil ideological roles has resulted in their reeval- uation by policy makers. Governments around the world have begun to ask questions and seek solutions to the problems and potentials raised by video games. Even seemingly unlikely institutions such as the US Army have increas- ingly integrated video games into their recruiting efforts (AP, 2002; Huntemann, 2009). Beyond this ideological and pedagogical potential, there are other industry- related concerns that, until recently, have received less attention. First, a number Copyright material – 9781844573172 4 T H E V I D E O G A M E B U S I N E S S of European countries and American states are actively working to subsidise local video game production because it is seen as a fast-growing, highly prof- itable, competitive industry. Second, questions dealing with software piracy and intellectual property are posing problems to the industry but have received lit- tle attention compared to piracy in film and recorded music. Because of this, it is surprising that the production of video games – the under- standing of how the industry is structured and why – has been left largely unaddressed.