HOW VIDEO GAMES MAKE AS MUCH MONEY AS FILMS

With television and movie streaming being commonplace in our everyday life and the wealthy lifestyle that some Hollywood stars sport, it would be easy to assume that Hollywood is one of the big moneymaking businesses in the field of entertainment. After all, “Avengers: Endgame” made about $2.8 billion in box office revenue, just shy of the approximately $2.85 billion record set by “Avatar.”

Yet over the past decade, the video game industry has seen several titles easily surpass those marks.

There are two factors that allowed video games to do this, the first being the move to digital retail platforms. Prior to consoles, computers, and phones having digital storefronts where games could be bought and downloaded, there would be a limited number of physical copies available for games in circulation. This was due to a combination of disc or cartridge manufacturing costs, as well as having to predict supply-and-demand trends. As such, the number of times a game could be ‘sold’ by the publishing company was also limited. However, digital storefronts don’t face that issue and have the benefit that games released on them will still be available for purchase long after their initial release.

Movies, on the other hand, have limited box office runs, meaning that there are only certain spans of time where revenue from ticket sales can be accounted for. And while retail versions and digital rentals do bring in some money when the movie is no longer in theaters, they do not make nearly as much as their theatrical counterparts in sales. DVD and Blu-ray sales of Avatar made about $429 million between 2010 and 2014, and while digital rentals can be profitable, the shift to streaming services renders this moot.

By comparison, in 2013 the free-to-play mobile game “Candy Crush Saga” made $1.33 billion in revenue.

This is where the second factor that allowed video games to break through the billions on single titles comes in. In-app purchases, sometimes called microtransactions, allow game developers to sell cosmetics, power-ups, currency, or new game content for real money, with free-to-play games that use this model typically being called “freemium.” While there are some full-price games that have had remarkable financial success without this model, the numerous mobile ‘freemium’ games that have broken the $1 billion earnings threshold are a testament to its potency. As of this year, the lifetime revenue of a few top games are Candy Crush Saga, at about $6.4 billion, another puzzle game in the same vein called “Gardenscapes,” at $3 billion, and the strategy game “Clash of Clans” at $7.7 billion.

Chances are, new games using this same model will still see success going forward, as evident by a game called “Genshin Impact” having earned $2 billion in revenue since its release last year.

While the video game industry’s revenue has ridden on unimpeded by the ongoing pandemic, the movie industry did suffer a major hit to box office revenue as a result of theater closures. However, the latter will undoubtedly see an increase now, with theaters beginning to open again – so long as everyone makes sure to stay safe, once there.