Video games
The art form cinema didn't see coming
Description
In 2023, the global video game industry generated around 185 billion dollars, more than Hollywood's worldwide box office and the global recorded music business combined. This is not a marginal comparison. Video games are, by commercial scale, the largest single entertainment medium in human history. They have also been the most systematically underestimated treated as a children's product for longer than they deserved, dismissed as non-art by critics who never played them, and routinely left out of the cultural conversations about twentieth- and twenty-first-century media.
The underestimation was almost total for the first thirty years of the medium. When Roger Ebert in 2010 finally said out loud that video games could never be art, the statement registered as a mildly notable cultural dispute which already told you something about how far the medium had come by that point, since the same claim in 1995 would have been non-controversial wisdom. Ebert eventually walked the claim back. By that point, games had already made the argument for themselves.
What makes the history worth telling is that nothing about the industry's current scale was obvious as recently as twenty years ago. The medium has been pronounced dead at least four times after the 1983 crash, after the mid-1990s 3D transition wiped out most of the existing publishers, after the 2008 financial crisis, after the mobile wave was supposed to commoditize consoles. Each of these supposed deaths was followed by a larger rebirth. Understanding why means understanding what games actually are as a form, and why that form scales in ways nothing else in entertainment quite does.
The question we're asking: how did a medium treated as a toy for thirty years become the largest entertainment industry on earth?
What we'll see: the arcade birth, the console consolidation, the transition to mainstream art, and the platform-era economy.
Table of contents
01The arcade and the first crash
The first commercial video game was Atari's Pong in 1972 a two-paddle ping-pong simulation built by Nolan Bushnell and Allan Alcorn that grossed more in its first year than any pinball machine ever made. Pong was not the first video game in existence; that distinction goes to Spacewar!, developed at MIT in 1962 on a DEC PDP-1 and passed around university computer labs for a decade before the commercial industry existed. But Pong was the first to demonstrate that the medium could be a mass consumer product, and its success set the template for the next decade.
The template was the arcade. Cabinets were placed in bars, bowling alleys, and eventually dedicated arcade venues. The economics were brutal and beautiful: a quarter per play, a cabinet paying for itself in a few months if the game caught on, pure margin after that. Space Invaders in 1978 caused a coin shortage in Japan. Pac-Man in 1980 sold over 400,000 cabinets worldwide and became the first game to generate a meaningful merchandise business. Donkey Kong in 1981 introduced both Nintendo to the North American market and a character Mario who would go on to become the most commercially valuable fictional figure in entertainment.
02The Nintendo rescue and the console wars
Nintendo had been a playing-card company in Kyoto for nearly a century before entering the electronic games business in the 1970s. Its Famicom console, released in Japan in 1983, was an unexpected hit. Brought to the US in 1985 as the Nintendo Entertainment System, it entered a market American retailers had written off Toys R Us executives told Nintendo that American consumers were done with video games. Nintendo's solution was to market the NES as a toy, bundle it with a plastic robot, and impose iron control on its software ecosystem through strict third-party licensing.
The strategy worked. Super Mario Bros., bundled with the NES, became the best-selling game of the 1980s. Within three years of the American launch, Nintendo had approximately 90 percent of the American video game market and had restored the industry to roughly its pre-crash scale. The lesson Nintendo had learned from the crash that a platform holder needed absolute control over software quality to protect the overall experience became the governing principle of the console industry for the next forty years. Sega challenged Nintendo in the early 1990s with the Genesis and Sonic. Sony entered in 1994 with the PlayStation, using CDs instead of cartridges to attract the publishers Nintendo had alienated. The PlayStation went on to sell over 100 million units.
03The mainstream turn
The decade that mattered most for games' cultural legitimacy was the 2000s, and the turning point was the sixth console generation PlayStation 2, Xbox, GameCube. The PS2 shipped in 2000 and sold more than 155 million units over its lifespan, still the best-selling console ever made. Xbox arrived in 2001 as Microsoft's first entry into hardware outside computer peripherals. The three-platform competition pushed budgets, production values, and editorial ambition upward simultaneously. Grand Theft Auto III in 2001 was the pivotal title an open-world crime game that was genuinely transgressive, widely banned, and a commercial phenomenon. It made the case that games could do what 1970s New Hollywood had done for film: hold grown-up moral complexity in a mass-entertainment package.
Online gaming transformed the economic model at the same time. World of Warcraft, launched by Blizzard in 2004, reached twelve million subscribers at its peak and proved that a game could be sold as a service monthly subscription, continuous content updates, social infrastructure layered on top of play. Xbox Live, launched in 2002, made online multiplayer a default expectation for console games. Counter-Strike had already proven on the PC side that online shooters could generate tournament scenes. The pieces of what would later become esports and live service were all in place by 2006, even if nobody yet knew what shape they would take.
04The platform era
By the mid-2010s, a handful of games had become platforms in their own right. League of Legends ran a decade of continuous updates and hosted a world championship that filled the Beijing Bird's Nest. Fortnite, launched in 2017, earned Epic Games a reported five billion dollars in 2018 alone. Roblox, built as a user-generated platform rather than a game, went public in 2021 at a valuation over forty billion dollars. These were not titles competing on retail shelves. They were persistent online spaces, closer to social media than to the consoles of the 1990s, and the competition between them was increasingly a competition for player attention itself.
The live-service model came with its own pathologies. Battle passes, loot boxes, and the psychological engineering of player retention have drawn regulatory attention —Belgium and the UK have investigated loot boxes as unlicensed gambling. Unions have started forming among developers for the first time in the industry's history, partly in response to the crunch cultures that the live-service treadmill intensified. The industrial problems of games now look less like those of Hollywood and more like those of Silicon Valley.
05Conclusion
The reason games matter culturally is not that they are now bigger than film and music. The reason they matter is that they are the first mass entertainment medium in which the audience is also the author of the experience. A film runs the same way every time. A game, by contrast, is a set of possibility spaces that the player walks through, fails in, and re-enters until they have made something out of the encounter. This is a different relationship between audience and medium than anything that came before, and the culture has not yet fully absorbed the consequences.