Press Start to Play: Digital Trade in Video Games

Not Your Mother’s Pacman

When people think about “international trade,” we often conjure up images of container ships and freight trains, lumbering across land and sea hauling flats of cargo. While the physical movement of goods can be easy to conceptualize, within the growing networks of global supply chains and transnational connections there lies a much less apparent world of digital exchanges. Perhaps no better example illustrates this vibrant virtual economy than the massive global video game market.

As someone technically considered a millennial, video games have played a large role in my life, and I’m not alone. Today, over half of all Americans enjoy playing video games regularly. In the 80s and 90s, retailers pigeonholed video games as “boy’s toys.” Today, the average gamer is in their 30s, and over 40 percent are women. The industry has come a long way since the days of Pong, Pacman and Donkey Kong, and whether it’s on an iPhone or a high-performance PC, the modern American video game enthusiast enjoys a seemingly endless selection of choices, driven by international competition.

Growing Market for Games Worldwide

The global market for games is deceptively large, and its growing. According to a report from industry research group NewZoo, there are an estimated 2.2 billion gaming customers worldwide – nearly 1 in 3 people on earth – who are expected in 2017 to generate over $100 billion in gaming revenues, representing a year-on-year growth of 7.8 percent. Of these transactions, the vast majority were in “digital sales,” those bought with credit cards and delivered electronically over the Internet, with no physical product changing hands.

Newzoo Global Games Market

Trends in the video game industry offer insights into broader changes happening around the world. When broken down by region, the fastest growing market for games is the Asia-Pacific, accounting for nearly half of global gaming revenues, with China alone constituting one quarter. Of the various platforms on which to play games, the fastest growing sector is in mobile gaming, as people increasingly rely on their phones as their main computing device, especially in emerging markets.

A Flourishing in Global Product Diversity

Video games have evolved alongside the computers that run them, giving rise to an increasingly international and complex market of products. The earliest games were hardwired into integrated circuit boards and installed into bulky arcade machines. This costly production left the industry dominated by industry giants, mostly from the United States and Japan, and offered a limited number of choices to players. As micro-chips became faster and smaller, personal computers and gaming “consoles” brought the arcade into the home, and decoupled the hardware and software aspects of gaming. Companies dedicated solely to game development popped up around the world, designing products for standard platforms like the Nintendo Entertainment System and the Sony PlayStation.

The gaming industry has become a truly global enterprise. High end “triple A” titles – the gaming equivalent of a “blockbuster” film – garner development and marketing budgets in the millions of dollars, employing hundreds or even thousands of developers, designers, and artists, often from around the world. For example, in 2017 French developer Arkane Studios released its hit science fiction game, Prey. The game was developed using software from German company Crytek, and was published by Maryland-based Bethesda Softworks for PCs and gaming consoles made by American Microsoft and Japanese Sony Interactive Entertainment.

Beyond the big-name titles, the expansion of mobile and tablet devices has given rise to whole new genres of games. Finish developer Rovio introduced us to the playful gravity mechanics of Angry Birds, while Swedish developer King sparked the casual puzzler craze with Candy Crush Saga. Digital publishing platforms like Valve’s “Steam” for PC, as well as the Google Play and Apple Stores for mobile allow for “indie developers” to compete with large studios. Whether you’re a “hardcore gamer” with the latest virtual reality headset or just killing time with Sudoku on your phone waiting for the bus, we are all unwittingly engaged in a vibrant global market for gaming entertainment products competing for our attention.

Telling New Stories with Globalized Games

The growth in digital distribution networks also empowers small producers who may otherwise struggle to break into the market, particularly from underrepresented regions. Take for example the work of Cameroonian developer Kiro’o Games, the first video game developer to come out of Central Africa and developer of the Africa-themed fantasy game Aurion: Legacy of the Kori-Odan.

Aurion Game Homepage Screenshot

Facing a market saturated with “traditional fantasy” games, based largely on European mythology, Kiro’o Games leveraged digital trade and investment channels to create and publish Aurion, telling a uniquely African story based on local culture and folklore. Raising capital through online crowdfunding platform Kickstarter, the game released on the Steam gaming platform in 2016 to popular and critical acclaim. As the Internet continues to lower the barriers of entry to the global marketplace, creative industries like video games offer the potential to tap into latent human capital currently under-utilized in developing countries. (You can watch founder Olivier Madiba’s story on YouTube here.)

Growing Global Trade Byte by Byte

Games hold an increasingly central place in modern entertainment, from creating immersive experiences through Virtual Reality to improving learning outcomes through novel interactive educational tools. As global trade is increasingly measured in bytes rather than tons, the online digital marketplace for gaming is primed to set a new high score.