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Games: From Donkey Kong to Dominance

Posted on Saturday, Dec 1st 2007

By Gabe Zichermann, Guest Author

By now, I’m sure you’re familiar with the story of Pong, Atari and the founding of the modern videogame business. In the time before the Atari 2600’s ubiquitous brown box and its legions of cartridge-crazy followers, computer scientists and nerds had long toiled to bring games to the emerging technology platforms of the day. Nolan Bushnell’s brainchild wasn’t the first to create a digital game – not by a longshot; but it was the first to make games in the home an achievable, even desirable thing. And, as the iPod handily reminds us, desire can drive an entire nascent business from obscurity to fortune in the blink of an i.

With desire at its back, the videogame industry has come a long way since 1978 and the tireless efforts of pioneers like Atari, Nintendo and Sega, emerging as a global powerhouse of entertainment. Games in 2006 were a $32Bn business, with all the excitement and brand power of any other media, but with the added spice of a generation that prefers interactivity. In the last ten years alone, the games industry has become larger than first-run film, men 18-35 play more games than watch TV, and women over 40 have become the fastest growing segment of new players. The basic question of games’ media supremacy has changed from if to when.

The industry generally uses the following taxonomy and market sizes to refer to its various components:

US Market Sizing (2006)

* Overall US Market Size $ 15 Billion
* Console Game Software $ 6.6 Billion
* PC Games $ 970 Million
* MMOG/Virtual World Games $ 790 Million
* Casual Games $ 450 Million (Est)
* Funware/Social Games $ 10 Million (Est)

In this series, we’ll explore the history, current status and future promise of the interactive entertainment industry, as viewed through an entrepreneurial lens. There are additional parts of the business that we’re not going to cover here. These include arcade games, location-based entertainment (such as in amusement parks) and serious (training and educational) games. Although each of these categories is worthy of discussion, we’re going to focus on the more consumer and Internet-aligned sectors of the gaming business.

While it’s been many years since the sound of a school bell was a regular part of my life, I can clearly remember what it meant: freedom … to play Atari. Today’s generation of players may be more preoccupied with Nintendo Wii and World of Warcraft than Joust and Donkey Kong, but their desire to play remains the same. Lucky us.

This segment is a part in the series : Games

. From Donkey Kong to Dominance
. Console Games – Hardware + Software = Ka-Ching!

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Gabe, the PC Game Industry gets an unfair shake unfortunately by data such as yours above. Although you don’t list the source, it appears to be from NPD. NPD has some huge failings in this data.
1. Overall Console Game Revenues include Hardware while PC Game Revenues are software only.
2. MMOG’s & Casual Games revenues are 99% PC and should be reflected as such.

By my math, assuming your data above is accurate PC Gaming should look like this…
1. All Gaming PC Revenues (Dell, Alienware, HP Voodoo, Falcon, Velocity, etc…)
2. All aftermarket Addon Graphics Card Sales (NVIDIA & ATi)
3. All aftermarket add on CPU’s
4. All aftermarket add on memory
5. All aftermarket add on Gaming Peripherals
6. All PC Game Sales (Retail)
7. All PC Game Sales (Online – you know personally that this isn’t in the $970M) from sites like
8. All Casual Online Game Sales
9. All Casual Online Game Advertising Revenues
10. All in-game Advertising Revenues
11. All iCafe’ & LAN Party gaming related Revenues.
12. All micropayments from Free 2 Play online games (paypal etc…).

I would estimate (all anyone can do) that this figure would make the PC Gaming U.S. figures at LEAST equal to the total quoted for Console ($6.6B), but likely much higher.

We need to rebel against bad data from NPD if PC Gaming is to survive! Uniformed publishers that look at the NPD data would undercall the market potential by a substantial mark…


Randy Monday, December 3, 2007 at 4:32 PM PT


Good comments all. Actually, I wrote a post later in the series about the PC games industry in which I talk a bit about the changing nature of the business. Truth be told, I agree with you 100% and few folks in the business have done more than you and me to try and redefine the categories used by NPD et al. This year marks the 8th that I have advocated with Martin (Zagorsek and his peers at NPD) for a change in the way PC games are tracked and defined.

But I think your point should be seen in even broader context than you’ve placed it. The nature of the entire games industry is changing and the “shrink wrapped” part of it (and, as I advocate on my blog) the whole core games category, is imperiled. The recent merger of Vivendi and Activision, IMHO, merely affirms that.

Gabe Tuesday, December 4, 2007 at 8:24 PM PT

I enjoy this post very much, I’m going to link back to your blog in my next article.

PC Fighting Games Wednesday, October 14, 2009 at 8:01 AM PT

I am really impressed with the evolution of home gaming systems, mainly the PC. Arcades from the 80s as we use to know for those growing up in those days, are long gone. I use to believe there would never be any home gaming system that would rival the arcades back then. May we all treasure the experience. Long live PC gaming and all other gaming systems for in home entertainment.

E Stephens Wednesday, December 9, 2009 at 12:36 PM PT