The Overview and History of Gaming

Considered by some as a curiosity in the mid-1970s, the computer and video game industries have grown from focused markets to mainstream. They took in about USD$9.5 billion in the US in 2007, and 11.7 billion in 2008 (ESA annual report).

Modern personal computers owe many advancements and innovations to the game industry: sound cards, graphics cards and 3D graphic accelerators, CD ROM and DVD-ROM drives, Unix and CPUs are a few of the more notable improvements. UNIX in particular was developed in part so that the programmers could play a space traveling game.

Sound cards were developed for addition of digital-quality sound to games and only later improved for music and audiophiles. Early on graphics cards were developed for more colors. Later, graphics cards were developed for graphical user interfaces (GUIs) and games. GUIs drove the need for high resolution, games drove 3D acceleration. They also are one of the only pieces of hardware to allow multiple hookups (such as with SLI or CrossFire graphics cards). CD- and DVD-ROMs were developed for mass distribution of media in general, however the ability to store more information on cheap easily distributable media was instrumental in driving their ever higher speeds.

Modern games are among the most demanding of applications on PC resources. Many of the high powered personal computers are purchased by gamers who want the fastest equipment to power the latest cutting-edge games. Thus, the inertia of CPU development is due in part to this industry whose games demand faster processors than business or personal applications.

Ben Sawyer of Digitalmill observes that the game industry value chain is made up of six connected and distinctive layers:

1. Capital and publishing layer: involved in paying for development of new titles and seeking returns through licensing of the titles.
2. Product and talent layer: includes developers, designers and artists, who may be working under individual contracts or as part of in-house development teams.
3. Production and tools layer: generates content production tools, game development middleware, customizable game engines, and production management tools.
4. Distribution layer: or the "publishing" industry, involved in generating and marketing catalogs of games for retail and online distribution.
5. Hardware (or Virtual Machine or Software Platform) layer: or the providers of the underlying platform, which may be console-based, accessed through online media, or accessed through mobile devices such as the iPhone. This layer now includes non-hardware platforms such as virtual machines (e.g. Java or Flash), or software platforms such as browsers or even further Facebook, etc.
6. End-users layer: or the users/players of the games.

The game industry employs those experienced in other traditional businesses, but some have experience tailored to the game industry. For example, many recruiters target just game industry professionals. Some of the disciplines specific to the game industry include: game programmer, game designer, level designer, game producer, game artist and game tester. Most of these professionals are employed by video game developers or video game publishers. However, many hobbyists also produce computer games and sell them commercially.

William Higinbotham, a nuclear scientist, created Tennis For Two on October 18, 1958. It was never commercially released because it wasn't meant to be an actual video game, but an electrical experiment although in 1982 Creative Computing magazine has said it was the first. The game used actual screen representations of the match. However, while Tennis for Two is the most notable of the video game predecessors, Cathode-Ray Tube Amusement Device created in 1948 by Thomas T. Goldsmith Jr. and Estle R. Mann is considered the oldest one known.

Two other notable predecessors were created as well. In 1951 the Nimrod computer was built by a team at Ferranti International and first displayed to the public during that year's Festival of Britain’s Exhibition of Science. The computer was designed specifically to play the centuries-old game Nim and used lights to represent the location. The following year A.S. Douglas at the University of Cambridge created OXO (or Noughts and Crosses). It was designed to study the interaction between human and computer. Neither Nimrod nor OXO were designed to be entertaining.

There is still debate as to whether any of these can be classified as the "first video game" as the term "implies that electronic signals are converted to images on a screen using a raster pattern, a series of horizontal lines composed of individual pixels." Oscilloscopes, which Tennis for Two was played on, did not use the raster process.

By the late 1970s, the computer game industry formed from a hobby culture, when personal computers just began to become widely available. The industry grew along with the advancement of computing technology, and often drove that advancement.

In the mid 1980s the industry crashed due to the production of too many badly developed games (quantity over quality), resulting in the fall of the North American industry and giving rise to the Japanese industry, particularly the games company Nintendo.

The 1990s saw advancements in game related technology. Among the significant advancements were:

• The widespread adoption of CD-based storage and software distribution
• Widespread adoption of GUI-based operating systems, such as the series of Microsoft Windows and Mac OS
• Advancement in 3D graphics technology, as 3D graphic cards became widely adopted, with 3D graphics now the de facto standard for video game visual presentation
• Continuing advancement of CPU speed and sophistication

Today, the video game industry is a juggernaut of development; profit still drives technological advancement which is then used by other industry sectors. Though maturing, the video game industry is still very volatile, with third-party video game developers quickly cropping up, and just as quickly, going out of business.

Early on, development costs were minimal, and video games could be quite profitable. Games developed by a single programmer, or by a small team of programmers and artists, could sell hundreds of thousands of copies each. Many of these games only took a few months to create, so developers could release several titles each year. Thus, publishers could often be generous with benefits, such as royalties on the games sold. Many early game publishers started from this economic climate, such as Origin Systems, Sierra Entertainment, Capcom, Activision and Electronic Arts.

As computing and graphics power increased, so too did the size of development teams, as larger staffs were needed to address the ever increasing graphical and programming complexities. Now budgets can easily reach millions of dollars, even if middleware and pre-built game engines are used. Most professional games require one to three years to develop, further increasing the strain on budgets.

Some developers are turning to alternative production and distribution methods, such as online distribution, to reduce costs.

Today, the video game industry has a major impact on the economy through the sales of major systems and games such as, Grand Theft Auto IV, which took in over USD$500 million in sales during its opening week. The game's income was more than the opening weekend of Spider-Man 3 and the previous title holder for a video game Halo 3. Many individuals have also benefited from the economic success of video games including the former chairman of Nintendo and Japan's third richest man: Hiroshi Yamauchi.

The video game industry is currently facing financial strains as it attempts to fairly compensate its talent, while continuing to turn a profit. The result is that the game developer—the traditional source of new games—is essentially dying out or is being incorporated into large publishers. The game industry is currently experiencing a phase of consolidation and vertical integration as a reaction to spiraling costs. This climate has also given birth to vibrant indie game developers comprising tiny companies trying to use the internet rather than traditional retail channels to reach an audience.

Video game industry practices are similar to those of other entertainment industries (e.g. the music recording industry), but the video game industry in particular has been accused of treating its development talent poorly. This promotes independent development, as developers leave to form new companies and projects. In some notable cases, these new companies grow large and impersonal, having adopted the business practices of their forebears, and ultimately perpetuate the cycle.

However, unlike the music industry, where modern technology has allowed a fully professional product to be created extremely inexpensively by an independent musician, modern games require increasing amounts of manpower and equipment. This dynamic makes publishers, who fund the developers, much more important than in the music industry.