Video Game Industry In 2021: The Complete Investors Guide

The video games industry has become a force in entertainment. Long gone are the days playing Pac-Man at the local arcade. The industry’s revenue in 2020 was estimated to be nearly $180 billion. To put that figure into perspective, the entire global film industry’s revenue was $100 billion in 2019.   In the US, more than 214 million people play video games one hour or more per week and 75% of households have at least one person who plays.

The rise of video games was happening well before COVID, but the coronavirus pandemic drove it into hyperdrive.  People were stranded at home and turned to video games for entertainment. And it’s not just kids that are playing, adults are active participants as well

The VanEck Vectors Video Gaming and eSports ETF (ESPO), which tracks gaming stocks, has returned 82% over the past year. That figure is double the S&P 500’s return of 41%. The pandemic is not the only growth driver in the industry. With new technology such as virtual and augmented reality and games becoming more popular on our smartphones, the industry has plenty of growth ahead.

EA – The video game industry is massive. In 2020 it was estimated that the video game revenue was $162 billion. That’s significantly more than the entire global movie industry. Companies like Electronic Arts (EA), Activision Blizzard (ATVI), and GRAVITY (GRVY) are the forefront of the video game industry and should see continued growth for years to come.

History of Video Games

The video game industry is involved in the development, marketing, and sale of video games. The very first interactive electronic game was the cathode-ray tube amusement device in 1947. The device simulated an artillery shell arcing towards targets. A player was able to control the shell by adjusting knobs to change the trajectory. 

Two more games followed in the 1950s. In 1952, British professor A.S. Douglas created OXO., also known as tic-tac-toe, and in 1958, William Higinbotham created Tennis for Two on a large analog computer. In 1962, Steve Russell at MIT invented Spacewar!, a computer-based video game. Then in 1967, Ralph Baer, a developer at Sanders Associates, led the invention of a prototype multiplayer video game system that could be played on a television. It was called The Brown Box.

Baer is considered the “Father” of video games as his game led to a commercially viable industry in the 1970s. He licensed the device to Magnavox, which launched the Odyssey, the first video game home console in 1972. One of the Odyssey’s games became the inspiration for Atari’s Pong, the first arcade video game. This created an industry of both arcade games and home consoles that were essentially clones of Pong.

The industry became saturated and led to the video game crash of 1977. However, the industry bounced back with Taito’s Space Invaders in 1978, which led to the golden age of video arcade games. Arcades were located in shopping malls, storefronts, restaurants, and even convenience stores. Space Invaders was also licensed for the Atari 2700 home console during this time.

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