Competition and Innovation in the video games


“By the mid-2000s the development of computer-based video games had become a major international industry – dominated by companies in the UK, North America and Japan. But at the beginning of the industry (in the late 1980s) it was largely driven by individual developers writing programs in their bedrooms – it was a cottage industry. Then games cost as little as €6,000 (USA $6,250) to develop and required just a couple of people – a programmer and an artist. By the end of the 1990s there were more than 300 games companies in the UK alone. However, by the mid-2000s new titles were costing €3m to develop, needing teams of 30 or more programmers, artists, sound engineers and producers. Many expected development costs to rise to perhaps €15m per new title. This clearly had a major impact on the structure of the industry and how games companies were funded. Firms needed to be big to survive. Many of the company founders chose to sell out to corporate organisations or go public through a share flotation. Some companies, such as Rock Star. Had been founded in the UK but moved to the USA”. (Johnson et al., 2008, 514).

“The games business long ago outgrew its roots in the toy industry, but that could be nothing compared with the transition it is now facing. These high-performance boxes are weapons in a much bigger war: the struggle for dominance of all forms of home digital entertainment. The stakes for next-generation hardware leadership are enormous (…). It is about owning the set-box that may ultimately connect the living room to the Internet.” (Johnson et al., 2008, 515).


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