The FTC has noted that video games are now five times as big an industry as the movie industry.

This comes from their administrative complaint filed vs the Microsoft acquisition of Activision Blizzard King. In line 22 of the complaint, they had this to say:

“Today, gaming is the largest category in the entertainment industry, with revenues that far exceed those of both the film and music industries. This year, the gaming industry is expected to be worth more than $170 billion in global revenues, five times greater than global movie box office revenues.”

It’s perhaps no secret to say that video games have outgrossed movies for a significant period of time now. Around 2012 to 2013, the amount of revenue made by the industry in total started outpacing that of Hollywood, but we can look at individual examples as well.

Call of Duty: Black Ops 2 made $ 1 billion in only 15 days. James Cameron’s Avatar, the highest grossing single movie of all time at the year it was released, needed 17 days to hit the same figure. And they both came out in 2012.

A year later, Grand Theft Auto 5 started its ascent to the top. Costing $ 266 million to make, it made $ 800 million in its first 24 hours.

It must also be said that it isn’t entirely accurate to make a one-to-one comparison between launch sales for movies and video games, as there are many differences in their business models.

Movie, in particular, have had multiple potential revenue streams. Aside from the initial release in America, there is the potentially bigger global film markets, particularly in China. TV syndication and home video have also been other places where movies add to their sales numbers, or rebound from poor launches. Of course, most recently all of these revenue streams have been outstripped by video-on-demand streaming. To be fair, that may partly explain why the money in movies is not as good as it used to be.

Video games usually have only one launch, and games are usually expected to release in a matter of days around the world, if not on the same day. While video games don’t have exactly the same ancillary markets movies have, they do have many other ways to make revenue.

For example, there are fans who will spend the money to double dip or triple dip on the same game on multiple platforms. Today it’s well known that games released on PC can raise sales of the same game on console, like God of War from 2018.

And then there are the many different monetization models, which gamers have willingly dabbled in through the years. From DLC and updated special editions, to season passes and microtransactions, to gacha and lootboxes, video game companies have run the gamut of selling so many other items on the same game over and over.

Today, the predominant model that makes the most revenue for video games is still microtransactions on mobile. For console players, however, live service games have proven highly lucrative, to get players to commit to individual titles, in a similar way to how mobile games get their players to come back to their games.

The live service game model is built around building communities of players, and then courting those players to buy microtransactions, in many ways incentivized as part of their community interaction. This model, like microtransaction based mobile games, particularly target whales, individual players who spend hundreds and thousands on these smaller transactions.

It’s these whales that have driven the jump in revenue for video games, not necessarily in ways that are ethical for the consumers. Nonetheless, this is how video games have taken a huge jump over other media in terms of revenue.

Source: FTC, Fast Company