The gaming industry is around 50 years old now, with the first arcade titles produced in the 1970s. Since then, the industry has changed dramatically, with new ways for players to enjoy content, evolving revenue models, and different approaches to marketing.
The first gamers had to leave their homes and head to an arcade to play their favourite titles. They’d need to push coins into a machine to receive a certain number of lives or time. Once they’d used these up, they’d need to put more coins in to continue playing.
These new gaming machines, and the games played on them, may seem primitive now, but back then they were cutting edge.
Home Consoles and Computers
In the 1970s, “consoles” began to hit the market that allowed users to play a number of different pre-loaded games. Some, like the Home Pong machine, only played one title.
It wouldn’t be until the second generation of consoles and the growing prevalence of the home computing market in the late 1970s and early 1980s, that consumers could buy additional games to play on their devices.
The most popular of these was the Atari 2600, which had more than 400 games released for it.
From then until the 2000s, the model for gaming was fairly consistent: consumers would buy the game upfront and be able to play it as much or as little as they wanted, lend it to friends, and sell it on when they no longer wanted it.
Return to Pay-to-Play
Video game arcades of the 20th century required customers to pay a small fee each time they played. The more they used the game, the more they paid.
The traditional console/PC business model moved away from this, and worked well for some time. However, as hardware became more powerful, games were costing more to develop and publishers wanted a way to recoup those costs.
Towards the end of the 2000s and early 2010s, companies had set their sights on the second-hand games market, since until then they had no way to monetize these resold copies. Publishers like EA and Ubisoft began to charge a fee to anyone wanting to play online with a game that had already been used.
This was met by a backlash from players who felt like they were being punished for exercising their legal rights. As a result, this practice was quickly ended and replaced with what we have today.
Microtransactions, which are where gamers make multiple small payments to a publisher to get access to additional content, began appearing during the PlayStation 3 and Xbox 360 era.
Players could pay for DLC packs, which would give them access to extra maps, characters, missions and weapons. This is something that continues today, with many games becoming “free-to-play”, meaning no upfront fee is paid, but with optional microtransactions used to generate revenue instead.
The pay-to-play model also exists within iGaming, since the nature of these games requires players to place wagers on each game they play.
In both cases, most players seem happy with this format, since they’re receiving something in exchange for their money.
Appealing to Different Demographics
For more than a decade now, gaming companies have been moving away from just targeting males under 30, since they can acquire far more customers and generate far more revenue by catering to both genders and a much wider age demographic.
Nintendo was one of the first companies to do this. They created the Nintendo DS and Wii in a way that would encourage people to play games together as a social activity, with games like Dr Kawashima’s Brain Training, Mario Kart Wii, Wii Fit, Cooking Mama, and Animal Crossing to go along with it.
Casual mobile games are the latest iteration of this. Games like Candy Crush have a much wider appeal than battle royale games like PUBG.
iGaming companies have also created content that can help novice players pick up the basics of games like poker. For example, companies like 888 Poker have produced guides on how to play Texas Holdem that outline the rules of the game and use images to illustrate how each round of the game works.
Research conducted by AppLovin among US and UK participants found that around 70% of smartphone owners play games on their mobile devices. Incredibly, 86% of respondents to the survey that were aged 55 or older have played games on their smartphone at least once, showing the mass market appeal of mobile gaming.
One of the most noticeable changes to the gaming industry in recent years has been the explosive uptake of mobile games.
Portable gaming has been around since the late 1970s, though these early models used LED lights instead of a video screen. The first real handheld console was the Nintendo Game Boy, which first went on sale in 1989.
Since then, several other devices from Nintendo have been incredibly popular, as was the PlayStation Portable from Sony.
However, the handheld era is now over. Nintendo’s only current console is the Switch, a hybrid device that works as a home and portable console.
The demand for handheld devices has been completely decimated by smartphones. They can offer a comparative gaming experience, don’t require the player to buy or carry around a second device, and are incredibly easy to use.
In mature markets like the UK and USA, around 80% of the population owns a smartphone, while on a global level, around 3.5 billion people own one. That’s equivalent to around half of all humans living today. They’re also used regularly, with most adults spending at least 30 minutes a day using messaging apps. Most users are familiar and comfortable with their devices.
In 2020, revenue from games played on smartphones is expected to hit $77.2 billion, more than five times the total revenue of Nintendo.
The gaming industry has evolved dramatically in the last five decades. We’ve come full circle, moving away from the arcade model back to the modern free-to-play games and microtransactions.
The industry has become more inclusive, better serving female and older players. This has helped it to dramatically increase its sales.
The drive for inclusivity is partly helped by mobile devices, though this has also meant the discontinuation of traditional handheld consoles.