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Why Video Games Succeed Where The Movie And Music Industries Fail

And what the rest of the entertainment world can do about it.

[Image: Flickr user A.J Photo]

In September, a new pop-culture milestone was reached. The fourteenth installment of Grand Theft Auto did $800 million in worldwide sales in its first 24 hours. That was the biggest launch day ever for any piece of entertainment—any movie, any record, anything at all.

Grand Theft Auto V, by Rockstar Games, follows three lowlife characters through a sequence of high-speed car crashes, petty larceny, and other forms of simulated violence against the intricately detailed backdrop of Los Angeles. It is, according to the critics, a very, very good game. It also cost $266 million to make—more than any Hollywood blockbuster except the third installment of Pirates of the Caribbean.

GTA is not the only $100-million+ "tentpole game" out there, or the first one to beat Hollywood by the numbers. Last year, the category-leading first person shooter Call of Duty:Black Ops 2 made $1 billion in 15 days. It took Avatar, the top-grossing movie of all time, two days longer to earn the same amount.

The video-game industry is projected to grow from $67 billion in 2013 to $82 billion in 2017. At the same time, global movie revenue, both DVD and ticket sales, hit an estimated $94 billion in 2010, down 17% after inflation from 2001.

Why is the video-game industry on the ascendance? And are there any lessons that the movie (and to a lesser extent, the music) industry can take from its success?

I asked a couple of industry experts: Jason Della Rocca, former head of the IGDA, and founder of consulting firm Perimeter and incubator Execution Labs, and Wanda Meloni, founder of game analyst firm M2 Research. Here are their takeaways on what makes gaming the top dog of the entertainment industry.

There's a "pain in the butt factor" to pirating games.

The most obvious reason that piracy plagues games less than other forms of electronic media is the existence of specialized gaming machines. "Having the dedicated devices makes a difference," says Della Rocca. "It is quite a pain in the butt to get a cracked copy of a game and then modify my Xbox or Playstation in order to play that version, etc." However, he says, as technology changes, that advantage could disappear: "The retail business model (i.e., go to the store and pay $60 for a disc) has been in decline since the mid 2000s."

Could the movie industry do this? Blu-ray discs didn't get it there, but this year's Gravity is giving 3-D and IMAX another shot in the arm—and an experience you can't mimic at home. That said, overall domestic box office is pretty much flat since 2009.

You can't pirate a service.

Massively multiplayer online role-playing games (or MMORPGs) like World of Warcraft introduced the concept of social gaming. Players build a persistent identity, form relationships, and chat online with others. More and more genres of games, from shooters to sports, have some kind of social experience built in, and operate more as a service than as a product, says Della Rocca.

"With games as a service, you have a user account, you need to log into a server, there are constant updates, you are connected with other players live, etc. You cannot pirate a service!" says Della Rocca.

Not only is this arguably more engaging for people, the economics work out better too.

Musicians are making more and more of their money from full-immersion social experiences—that is, concerts and festivals—rather than recordings. Music subscription services like Spotify with social features are also growing, though none of them seem to be as sticky or as social as the best platform games.

Hollywood hasn't really tapped into the social part of the viewing experience. TV has done a better job of this, but not in a way that directly generates revenue. With all the excitement around Twitter and the "second screen," it seems like there might be a way to engage hardcore fans of, say, a franchise so that they feel more like part of an ongoing community.

Games come with more accessible price points and time commitments.

Going to the movies just takes too long, says Meloni. "You have to make the time, drive there and back, spend two hours sitting down." TV shows, though they're increasingly viewable on demand, do take up dozens of hours of couch time.

Games, by contrast, are going more and more portable and flexible. Some, like Call of Duty, have introduced lightweight versions meant to be played on mobile devices. Others, like Clash of Clans, offer some of the fun of massive multiplayer games—forming teams, conducting raids—but in much shorter, more manageable chunks. And then there is the absolutely enormous category of casual, puzzle-style games like Jewel Quest and Candy Crush Saga. The latter's creator, King, is headed for an IPO.

"Of course there are games that can be played for hours at a time, but there are a vast number of games that can be played in small increments of time," says Meloni. "It’s a combination of having a task or storytelling and social networking in a time frame that is defined by the consumer."

Supporting these formats, Della Rocca says, are new business models. More and more games are switching to freemium models, where it is free to play, but you pay for in-game services and upgrades.

Could the movie industry steal this concept? Well, short, mobile-optimized videos are a pretty big category already—they're called YouTube and Vine. Getting people to pay for them—that's another story. But has anyone really attempted to spend millions of dollars spinning out a Lord of the Rings-style cinematic narrative across multiple platforms? Or offering fans of, say, Judd Apatow films the chance to watch extra clips and bloopers over the web for $1.99 here and 99 cents there? Could be intriguing.

Smart gaming companies don't ignore women.

Meloni says an overlooked reason for the rise of gaming is that its core audience is getting wider, not narrower. "For many years the game industry has been seen as a consumer spend for the male dollar, and it really is not that anymore," she says. "Fifty percent of players are women of all ages." While big-budget movies continue to shoot for just one audience quadrant—younger men—the video game market is diversifying.

Can a stagnating entertainment industry pivot to an entirely different business model? Della Rocca has an example from—yes—the game industry.

"An interesting case study is Korea. Like much of Asia, there was no viable game business since everything was pirated. Then about 15 years ago, there was a tremendous business innovation, starting with buying play time at Internet cafes, then driving online game subscription models, and more recently pioneering free-to-play models. And now Korea is a multi-billion dollar game industry global juggernaut."

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