UA The Visual Capitalist portal put together a brief history of the gaming industry as an infographic, with the focus on the financial side and the biggest milestones since the first arcade cabinets and home consoles appeared.
The authors broke the growth of the interactive entertainment business down into these stages:
1970-1983: The origins
The first video game prototypes were built in labs back in the ’60s, but it was Atari’s release of Pong in 1972 that kicked off the growth of the whole industry. The table-tennis arcade game caused a real sensation among consumers and spawned countless successors. Five years later, Atari created its own home console, the Atari 2600, which became the first device of its kind to sell 1 million units.
The market was soon flooded with countless Pong clones, but it was revived in 1978 by the launch of Space Invaders. Arcade cabinets started popping up everywhere, and franchises like Donkey Kong and Pac-Man fueled further market growth. By 1982, the industry was generating more revenue than pop music and movie theater box office combined.
1985-2000: The crash and a fresh start
Unfortunately, the gaming industry grew so fast that keeping it stable turned out to be a real challenge.
Eager to cash in on the growing home console market, Atari licensed an extremely expensive port of Pac-Man and a video game adaptation of Steven Spielberg’s “E.T.” Both were rushed to market, which badly hurt their quality and led to massive financial and reputational losses.
Other companies also suffered a series of serious failures making games and consoles, triggering a slump across the entire industry. At the same time, personal computers were becoming an increasingly popular gaming device, especially after the Commodore 64 launched in 1982.
Nintendo became the console market’s savior. In 1985, it released the NES, known as the Famicom in Japan (widely known across the former Soviet Union through its clone, the Dendy). The company bet on high-quality games and consistent marketing. Its Duck Hunt, Excitebike and Super Mario Bros. revived the console market.
Nintendo hoped to cement its dominance with the launch of its handheld Game Boy and the new SNES (Super Nintendo Entertainment System) home console in 1989 and 1990-91 respectively. But its competitors weren’t sitting still either.
In 1988, Sega introduced the Sega Mega Drive console (known in the West as the Genesis), followed by its handheld, the Sega Game Gear. Both devices’ marketing campaigns were built around their raw power.
A little later, Sony joined the race, releasing the PlayStation in 1994. Instead of cartridges, it used CD-ROMs, which increased the storage capacity available for some games. It also became the first console to top 100 million units sold. From then on, Sony would set the pace in the format race with the PlayStation 2 (DVD) and PlayStation 3 (Blu-Ray).
Estimated total console sales by manufacturer (1970-2020)
Microsoft also recognized the importance of gaming and released the DirectX API, which made life much easier for computer game developers and let them build more technologically advanced games. The corporation would later carry the letter “X” over into the name of its own console.
2001 to today: the online boom
But it was the growth of the internet and mobile phones that pushed the gaming industry’s revenue from the tens of billions of dollars into the hundreds of billions. Two examples illustrate this well:
- In 2001, Microsoft launched Xbox Live, which gave subscribers access to multiplayer and voice chat for a monthly fee. It quickly became a must-have expense for many console owners.
- In 2004, Blizzard launched the MMORPG World of Warcraft, also using a monthly subscription model. At its peak, it reached 14 million subscribers.
Throughout this period, the leading companies saw huge potential in handheld gaming and tried to capitalize on it. Nintendo carved out a niche with its Game Boy line, while Nokia and BlackBerry added small games to their phones. But it was Apple that made the real breakthrough here. Its App Store (soon followed by Google’s equivalent platform for Android) paved the way for developers of paid, free, and free-to-play games.
Today, Microsoft and Sony keep releasing new consoles while also building out subscription-based cloud gaming services. Amazon and Google have their own offerings in this space too, with an emphasis on being able to play across several different devices.
Major game acquisitions since 2014
By 2020, there were over 2.7 billion gamers worldwide, and how they choose to spend their money will keep shaping the history of video games as we know it.
