Video games are one of the few definitive successes of the modern world. Roughly half of Americans in 2015 played video games – making for an average of two games in each game-playing US household. What’s more, 4 out of 5 US households had at least one device for playing video games.

The average gamer age is 35, but the demographics of gaming paint a very diverse picture. There are almost as many people under the age of 18 playing games as there are people that are 50 or older (26% to 27%) – and they’re not all men: 44% of gamers are female.

evolution-of-video-game-sales

All these make for a booming video game market that scores billions of dollars in revenue worldwide every year. While the heyday of video game sales has since passed (2008 to be precise – with 678 million titles sold worldwide) it’s worth reiterating how this whole industry has seen inner turmoil akin to the theory of evolution: it’s been survival of the fittest. This is what this article is going to highlight.

Video games before the video game era

There’s no certain way to say which was the first ever video game. While it’s conventionally accepted that the first ever video game was invented (rather than developed) by physicist Willy Higinbotham in 1958, there are many voices hinting to a previous release: a “video” game (sort of) built by a man named Edward Uhler Condon at the New York World fair in 1940, modeled after the ancient math puzzle of Nim (for those of you that are also fans of puzzles, here’s a browser rendition of Nim. It’s good fun.)

At any rate, the concept of video games first came about sometime in the 1950s as a “technological oddity”, something not quite understood in its capability but more attune with what it might become in the future. The advent of Sci-Fi as a mass-culture phenomenon spurred on by post-war idealism and new technology made for a void that would be filled up in the decades that followed. 

The first generation – from 1972 to 1980

(Notable platforms include the Magnavox Odyssey and the Coleco Telstar.)

Video games first came about as real consumer products in the 1970s. The very first one was Computer Space by Nuttin Associates which was published in 1971. Then, in 1972 Pong hit the scene, making Atari – the developing company – a household name.

The 1970s saw new technology come about (such as MSI and TTL) that saw cost reduction of personal computers to the rough $10,000 mark. While this didn’t open the gates for home-based gaming to launch, it did give enough leeway for the coin-based game operators to take up video games, thus laying the foundations for modern gaming. These early generations tackled some of the first trials in terms of user experience – and in many ways shaped the way we experience games to this day.

Even so, the birth of gaming wasn’t by any means a methodical endeavor. In many cases, first generation consoles sales failed to bring enough profits. Either by the fault of marketing or just because arcades were better equipped in the 70s to handle more entertaining games, the first video game consoles were almost always busts.

While Pong (and its derivatives) started losing popularity by the half of the decade, a few new titles based on racing, fighting and shooting came about and charged video games onward past the saturation brought upon by the ball-and-paddle paradigm. Notable games include Gran Trak 10 and Tank (1974), Wheels and Gun Fight (1975), Sea Wolf (1976), Space Wars (1978) and of course the now famous Space Invaders (1979).

Other than developing Pong, Atari also came out with the 2600 platform which helped make video games a thing one could enjoy even while at home. But the road from the 2600 to today wasn’t without any setbacks: arcade games were still of better quality, and people flocked to them more than to stores to get their own game consoles.

It seemed that – nifty as they might have been – home video game platforms were either too slow or too limited to truly become something that everyone could enjoy. At least until Nintendo came out with the NES in 1985 – but I’ll get to that in a minute.

It took a while, but by the end of the decade restaurants in the US started installing video game consoles at an ever increasing pace so that they could monetize on the new market. It’s during that time that we first saw game culture start defining itself – with most gamers being young kids, giving video game players a stereotype that persists even to this day.

The second generation – from 1976 to 1983

(It’s here we see the revolutionary Atari 2600 and the Colecovision console.)

What followed in the 1980s was the founding of many game development companies that are still alive and kicking. Advancements in hardware technology (which spurred leaps in software too, with amateur programmers from all over the world trying to design games better than stock versions) gave way to an ever increasing market that started eating itself up.

units-sold-in-the-80s

I say this because the 80s saw relatively few consoles competing on the market. Sales trends do show a pattern of evolution that distanced gaming from the 70s, but the experience failed to live up to the hype. The Atari 2600 was the platform that dominated the beginning of the decade, at least until 1983.

That’s because by 1983 there were so many consoles on the market with even poorer and unimaginative games that the entire market crashed (what’s now known as the 83’ North American video game market crash). Strangely enough, this crash left the PC gaming market relatively untouched.

Well, this low point in console popularity also coincided with the advent of the first few popular PCs, such as the Commodores and the first Apple computers. With all this talk about different platforms, let me just say that video game consoles are in effect just limited (or specialized) computers in themselves. What’s more, platform development companies often take to using PC hardware that has become mainstream (so as to avoid production costs associated with novelty tech) and build their game systems around them.

Anyway what these early computers brought to the playing field (so to speak) was software versatility that could rival most consoles, and also gave average users the chance to actually try their hand at incrementally improving what games were on offer, or even generate new demand altogether – with print magazines providing source codes for all sorts of early applications that PC users could actually use.

But what really made the PC game market launch was the introduction of true multiplayer game integration. The 80s saw PC users connect with other PCs, something consoles couldn’t facilitate at the time. While it’s true that console producers soon took sight of platform limitations and started introducing linkable consoles, the true drive behind this technology ended up being the PC.

Which brings me to the aftermath of the 1983 crash, and the birth of the NES. It came with a few minor (but very heavily felt differences) to what else was on the market at that time. For one, the NES introduced the first pad controller – making the whole experience much more enjoyable than what PCs and other platforms were offering. And it also rendered games of similar quality to those available in arcades, making the investment into a home video game system something to consider. The NES shot up in sales volume after its second year of release, nearly doubling the best performance of the 2600 prior to the crash of 1983.

The third generation – from 1983 to 1987

(This is where things become a bit more familiar to most of us. These years saw the launch of the NES, the SEGA Master System and the Commodore 64.)

top-sales_80s

In all, the 80s marked the appearance of a few titles that would later shape gaming culture and become valuable classics. Games like Asteroids, Pac-Man, Duck Hunt, Super Mario Bros., the Legend of Zelda and – of course – Tetris, made this decade the golden age of gaming worldwide.

The 80s ended with the apparition of the Game boy in 1989 – a bookmark in gaming history that would merit its own article. It saw a very timid appearance global markets – followed by a leap of immense magnitude, propelling gaming for the first time into the portable paradigm.

The fourth generation – from 1987 to 1995

(Here we see the SEGA Mega Drive (which I loved), the Super Nintendo, the Turbografx-16 and the Neo Geo.)

units-sold-in-the-90s

What followed in the 90s was a resurgence of game development platforms that tried to monetize on the new-found popularity – and accessibility – of home gaming. The NES kept selling but was soon overtaken by more advanced platforms such as the Super Nintendo Entertainment System.

In the 1990s we saw a significant shift in gaming along with the facilitation of 3D and faux 3D graphics. These advances, while still ancient when compared to the photo-realistic graphic rendering of today, made it possible for some of the first first-person shooters, real-time strategy, and MMO launches to hit the market.

It’s during the 90s that we also see the first time that PC game sales passed the 1 million mark. But two game platforms stand out: the first PlayStation, that skyrocketed sales and set a new benchmark for gaming popularity – and Nintendo’s third and improved console, the N64.

top-sales_90s

While more advanced in terms of processor power, the 90s failed to match the innovation that made previous decades worthwhile. Milking already popular titles that were revamped into new or alternative narratives, famous titles such as Super Mario and the Legend of Zelda dominated the first few years – albeit not with the same popularity.

But we also see some new releases that would only later reach their full maturity. 1991 marked the first appearance of Sonic the Hedgehog and SimCity – as well as the release of a few iterations of the Final Fantasy franchise, reaching all the way to VIII at the end of the decade.

True online multiplayer gaming (or at least the grandfather of how we know it today) also came about during the 4th generation. All these being said, PCs still weren’t platforms specifically designed with gaming in mind – so when the Dreamcast console came about in 2000 with multiplayer-ready ability, the world of gaming took the ultimate turn that steered the whole industry in the direction we know today.

In many ways, all our modern gaming consoles are modeled on (or follow the lessons learned from) Sega, with their iconic Dreamcast console.

The fifth generation – from 1993 to 2000

(Most of these systems can still be found in old hardware stores, and include the Amiga CD32, the Atari Jaguar, the Sega Saturn, the first PlayStation and of course the Nintendo 64.)

The fifth generation of games brought us true 3D graphic capabilities. Notable releases include Super Mario 64 (1996) on the Nintendo N64. Graphic operating systems such as Windows 95 also came out during that time, and the expansion of the internet boosted the PC game market in ways that were previously unimaginable.

The now familiar concept of LAN-party was soon born in the early years of the 90s, with hardware and software facilitating seamless user experience – which of course made gamers spew towards multiplayer play.

It’s with the advent of new hardware power that we also see new genres becoming popular, such as fighting games. Street Fighter and Tekken (in multiple iterations) stand out in this respect, and the final years of the 90s were dominated by variations of Pokemon themed titles.

units-sold-in-the-2000s

The turn of the millennia saw 32-bit gaming become a thing, and even more very popular gaming platform releases. In 2000 Sony released the PlayStation 2 that sold incredibly well (and also offered backward compatibility to the games of the previous generation PlayStation) – but also the PlayStation 3 in 2005, that slowly but surely kept Sony in the grips.

The sixth generation – from 1998 to 2004

(The revolutionary Dreamcast and its progenies, among which the PlayStation 2, the Nintendo GameCube and the Xbox.)

The turn of the millennia marks some very familiar platform launches in the market: the PSP, the Xbox 360, the Wii – and a new portable platform from Nintendo, the DS.

By this time the titles released should be far more familiar to us. Developers such as EA started churning out successful titles either in their Need for Speed series or as part of their EA Sports division.

top-sales_2000s

The 2000s also saw a cold war went lukewarm between PC, portable and console game developers. Still, we see that the PC gaming market was rarely (if ever) a serious contender, at least when it came to looking at market figures. Given how PCs had (and have) vastly more powerful hardware architectures, why is this so?

Well, we all know PCs run games better at the end of the day – given that they’re not subject to limitations that are an integral part of gaming consoles. But there are countless reasons why playing video games on consoles is a more rational way of spending your money.

For starters, a console costs significantly less than a specked-up PC (consoles price in at around $350 on average nowadays, while a gaming PC can fetch up to $10.000). Secondly, consoles require less attention to technical specs and load games faster (except for the $10.000 computers, of course).

You can also argue that video game platforms are marketed and designed as an integral part in home entertainment system, that they don’t have any compatibility issues and / or software requirements that the end-user need worry about, that their games are tailored to each platform (so development is often times better and faster than it is for PC games), that there isn’t much of any technical knowledge required to successfully run a game on a console and that – at the end of the day – modern video game consoles also facilitate multiplayer games a lot easier than do PC games.

The seventh generation – from 2005 to 2011

(Modern gaming full way: PlayStation 3, Xbox 360 and the immensely popular Nintendo Wii.)

The 2000s saw the overwhelming popularity of the Nintendo Wii as a new and interactive way for people to enjoy video games. Ongoing tech and software R&D also made possible the release of the greater part of the Grand Theft Auto franchise from Rockstar Games (I admit Grand Theft Auto 3 blew my mind after the first 5 minutes into the story).

And since 2007 we’ve also started seeing a fledgling market in gaming that has continued to grow and even trigger the apparition of completely different gaming communities. That year marks the entry of smartphones with app stores onto global markets. Following this, global video games sales started a lunge downwards (after 2008, of course) as more and more people have taken to mobile gaming.

Fuelled by blisteringly fast improvements in tech over the past decade, mobile gaming has become so popular that it has actually overtaken console gaming in terms of revenue volume last year.

The eighth generation – from 2012 to this day

(Further development of tried and tested platforms: the Wii U, the Xbox One and the PlayStation 4.)

units-sold-in-the-2010s

Our current times have seen an overall decline in sales of video games, but an increase in mobile releases. In wake of smartphones, the PSP and the DS have all but disappeared completely – but it’s not just portables that have taken a hard hit.

In fact, all game platforms have seen a reduction in sales volume year-to-year after the turn of the decade, with very few exceptions: the Xbox one and the PlayStation 4 (arguably the single drivers of the video game market in the first part of the decade).

top-sales_2010s

The 2010s haven’t seen many completely original titles released, with development being centered around adapting previous releases with new narratives, or furthering of previous stories. Call of Duty and Battlefield stand out in this respect, as do the FIFA soccer games.

But the banalization of smartphones has made for a paradigm shift in gaming, offering development companies a completely new market to acquire.

So who made all this possible?

Since the beginning of the gaming era we’ve seen thousands of development companies crop up – and ultimately very few of them surviving to this day.

market-leaders-in-game-development

In fact, since the 1980s we’ve only seen 4 companies dominate in terms of sold titles annually: Atari,  Nintendo, Sony and EA. These have managed to control the market in terms of worldwide sales one way or another ever since gaming became a thing – and while in the early days we saw these companies take up nearly the entire market (notably Nintendo) it’s nowadays that we see a much fiercer competition being waged.

best-performing-game-developers-all-time

At the end of 2015, it was Nintendo that had the largest all-time sale volume, despite the fact that the company came in fourth in terms of how many games it has developed over the years. In second place came Electronic Arts – with a whopping 1351 titles launched under its name since its founding in 1982.

A look at genres over the years

Genre popularity – while technically a wildcard depending on the quality of the games released – has shown a fair few patterns over the years. In order to best understand these, I’ve split all major video-game categories by clusters defined by how many units they have sold.

It looks that the most popular titles overall have been games that were either action, sports, role playing or shooting related.

At the opposite side of the spectrum, I’ve found games from genres such as simulation, adventure, puzzle, and strategy – with platform, racing and fighting games somewhere in the middle of the two tiers.

game-genre-popularity

Useful as this classification might be, I admit a few things would require further explanation in order to do justice to the whole picture. That being said, not all game genres have had the same chance to shine, in part due to hardware and graphics limitations that have only recently become easy to overcome.

While simulation games today have incredibly realistic and complex mechanics, their very early iterations were – at best – far cries from the reality that they were trying to depict. This made for more fast-paced level based titles to become a thing with consumers.

The grandest of the grand

The methodology for this article has been structured around unit sales and not revenue. Given a revenue POV, the picture would look slightly changed – but the gist of it is this: the best-selling game of all time, in terms of units shipped to consumers, is Wii Sports with a whopping 82 and some million units sold worldwide. Released in 2006 alongside the Nintendo Wii, it’s also the best-sold video game of all time that happens to be dedicated to a single platform.

most-sold-games-by-units

But the true winner with respect to all time revenue (again, at least until 2015) is the mighty Space Invaders – developed for the Atari 2600. Stories say that following its initial launch, Japan faced a coin shortage as everybody flocked to the arcades to take a knack at it. In all, Space Invaders has raked in a massive $13.9 billion.

 

This post wouldn’t have been possible if not for Gregory Smith’s work on Kaggle and the information put forward by VGChartz. A big thank you to everyone out there making data an integral part of the internet.

Happy holidays and a wonderful new year!

Have anything to add to this? Tweet me at alexgabriel_i.

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