For over five decades, video games have transcended humble beginnings as children's toys to become the heavyweight champion of the entertainment world and gaming marketing. 

Surpassing the combined revenue of movies and music, this industry behemoth weighs in at over $200 billion and projects a jaw-dropping $600 billion by 2030. With an army of 3 billion gamers strong, it's clear: video games are more than just a pastime; they're a cultural phenomenon.

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But how did these simple digital playgrounds evolve into the entertainment juggernauts we know today? This is where our story truly begins...

The early levels

The journey of video games began not with triumphant heroes, but with a humble tic-tac-toe champion. In 1950, Bertie the Brain entered the spotlight as the first publicly displayed video game. However, its reign was short-lived. Photos of the game invariably show it "losing" to human players, and it was dismantled after just two weeks.

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Undeterred by this early misstep, the 1950s saw the birth of the first game truly designed for entertainment: Tennis for Two. Created by American physicist William Higinbotham, a veteran of the Manhattan Project, it laid the groundwork for Pong, the game that would later catapult Atari to fame.

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In 1962, the Massachusetts Institute of Technology (MIT) entered the scene with Spacewar!, a thrilling 1v1 space battle simulation. This game marked a significant leap in reach, as its source code was shared among students and institutions, spreading its influence far beyond the confines of MIT.

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The 1960's saw a surge of university-developed games, but their accessibility remained limited. Remember, computers were still expensive and confined to academic institutions. The average consumer would have to wait a few more years before video games graced their homes.

From Uni to the mass

The 1970s witnessed a seismic shift in the video game landscape. Arcade cabinets, adorned with vibrant lights and beckoning sounds, began popping up like neon mushrooms alongside their pinball brethren. In 1971, Computer Space, a clunky but pioneering Space War clone developed by Nolan Bushnell and Ted Danby (two names destined for Atari glory), blazed the trail.

But it was Magnavox's Odyssey, released in 1972, that truly brought video games home. This affordable console, featuring a groundbreaking two-player table tennis game, opened the door for the average consumer to experience the pixelated magic.

Atari, however, wasn't about to be left behind. Soon after, they unleashed Pong, one of gaming's first big commercial success. 

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😀 Fun fact: The first pong machine malfunctioned soon after it was set up. Upon inspection, Atari discovered it had broken-down unable to handle the sheer volume of quarters put in it!

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Throughout the decade, arcades became pulsating hives of digital entertainment. Atari capitalized on Pong's success with a home version, but the market quickly flooded with copycats. While initially booming, this glut of Pong clones eventually led to a market contraction. But that didn’t last too long…

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Games in every home

As the 70s drew to a close, the video game landscape sprouted with new contenders. Magnavox, the pioneer with their Odyssey, returned with the Odyssey 2, one of the first cartridge-based systems. But it was Atari who once again stole the show with the Atari Video Computer System, later renamed the Atari 2600. This wasn't just a console; it was a revolution.

Atari pulled out all the stops, wooing the public with ad campaigns featuring iconic celebrities like Muhammad Ali and even James Bond. The strategy paid off.

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The Atari 2600 became a cultural phenomenon, selling a staggering over 30 million units. Home consoles were no longer a novelty; they were a dominant force.

With the 2600 leading the charge, a golden age of video games blossomed. Developers unleashed a torrent of imaginative titles

The crash of 1983

Atari's rise in the 1970s was meteoric. They captivated the world with the 2600, attracting brilliant minds like Steve Jobs and Steve Wozniak before they founded Apple. Even Bill Gates spent a short, eventful stint there. But in 1982, their wings began to melt.

Acquired by Warner Communications, Atari shed its freewheeling spirit for a corporate straitjacket. This exodus of innovation wasn't subtle. Senior developers, including Nolan Bushnell himself, bailed for not agreeing with the launch strategy for the 5200. 

The senior developers leaving the company were starting their own development firms (Activision is a huge example of that and is still one of the largest game developers in the world today). 

The final blow came with the release of E.T. the game. A licensed game from the movie with even Steven Spielberg working on the team as a consultant, the production was rushed for a holiday launch. It was developed for the 2600 and had plans to be ported to the 5200 later. E.T. was Buggy, repetitive, and frustrating, and it's still considered one of gaming's worst offenders.

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E.T. wasn't alone. A flood of low-quality, cash-grab games from greedy third-party developers swamped the market. Consumers, burned by repetitive pixelated duds, lost faith. Atari, one of the fastest-growing companies in American history, became the fastest-falling in 1983.

The "Great Video Game Crash" was swift and brutal. Images of truckloads of unsold Atari cartridges buried in a New Mexico landfill became a grim symbol of this industry apocalypse. It became known as the "Atari video game burial".

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By 1984, Atari was a shell of its former self, sold off by a disillusioned Warner Communications.

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The Plumber legacy

While the gaming market in the west was plummeting, the east saw a different story. A century-old company known for card and board games ventured into the booming market, creating their own home console inspired by Pong (although theirs was licensed with Magnavox). This company, of course, was Nintendo!

Their breakthrough came in the form of an unlikely duo: a mischievous monkey and a determined plumber.

Donkey Kong, first released for arcades, featured a mistreated ape who kidnapped his owner's girlfriend, the damsel in distress. Players took on the role of the plumber, tasked with rescuing his love from the clutches of the titular Kong.

Two iconic characters, and arguably the most famous mascots in gaming history, were born.

The plumber, later named Mario, captured the hearts of players. The game's success transcended arcades, with ports for the Atari and other systems bringing it to the US in 1982, just before the western market crash.

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While Nintendo was booming in Japan, the West faced a different reality. After the 1983 video game crash, the American market lay in ruins. But Nintendo wouldn't be deterred. They devised a campaign that would redefine the industry.

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Their genius lay in rebranding the NES. No longer just a video game system, it became a full-fledged entertainment system for the whole family.

The sleek redesign resembled a familiar VCR, bundled with the adorable R.O.B. robot that reacted to gameplay and the exciting light gun for immersive shooting games. This complete makeover transformed the Japanese console into a destined-for-greatness machine.

But Nintendo's brilliance extended beyond marketing. They took crucial steps to prevent pirate developers from flooding the market with low-quality games.

Third-party creators had to sign non-compete clauses, preventing them from porting their games to rival platforms for two years. 

Additionally, a proprietary chip ensured only official cartridges would work, granting Nintendo control over game releases. They even implemented their own seal of quality, guaranteeing a certain level of polish and fun.

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Yet, despite this control, Nintendo fostered an incredible library of iconic titles. Super Mario Bros., Mega Man, and the groundbreaking Legend of Zelda are just a few examples. This dedication to quality rekindled public trust in gaming, leading to a staggering 62 million units sold over the NES's lifespan – nearly double the Atari 2600's success.

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The 80’s and 90’s brawl

Nintendo may have dominated the Japanese home console market with the Famicon, but they weren't the only player. Sega, already well-known for their arcade prowess, entered the fray with their first console around the same time.

However, it was the Sega Master System that ignited the most famous rivalry in video game history.

While Nintendo reigned supreme in the US, their global reach was slower. European territories often waited until 1987 for the NES, and Brazil, a burgeoning gaming market, wouldn't see it until 1993.

This opened the door for Sega to conquer non-US markets, quickly making them the leading force outside America.

In the late 80s, Sega threw down the gauntlet with the Genesis (Mega Drive outside the US). Boasting 16-bit graphics and superior hardware compared to the NES, the Genesis made its intentions clear: dethrone Nintendo.

Their entire marketing strategy revolved around this, with the iconic slogan "Genesis does what Nintendon't" on every campaign.

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Nintendo, however, wouldn't be outsold for long. A year after the Genesis launch, they countered with the Super NES, leading the dawn of the 4th generation of consoles.

Recognizing the need for a mascot to rival Mario, Sega crafted their own hedgehog hero: Sonic the Hedgehog.

The 3rd generation, defined by the NES and Master System, laid the foundation for home console gaming, while the 4th generation, propelled by the bitter rivalry between Nintendo and Sega, cemented its legacy with two titans battling for dominance.

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From headphones to games

The home console market had become a two-horse race, dominated by Nintendo and Sega. But then, a new player entered the arena with unexpected force: Sony, the tech giant behind the iconic Walkman. Their entry, the PlayStation, sent shockwaves through the industry.

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In an era with various contenders like the Apple Bandai Pippin, Sony carved out a distinct space by appealing to a broader audience. While they had playful offerings like the beloved Crash Bandicoot, they also dared to introduce more mature themes with titles like Metal Gear Solid, boasting immersive narratives and complex characters.

This bold direction redefined video games, pushing the boundaries of what the medium could be and opening the door for young adults as a key demographic. Their global slogan, "Do not underestimate the power of PlayStation," echoed this shift.

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Nintendo countered with the Nintendo 64, and Sega presented the Sega Saturn, but the PlayStation reigned supreme. With a staggering 102 million units sold compared to the N64's 32 million and the Saturn's meager 9 million, PlayStation's impact was undeniable. It had not just entered the game; it had rewritten the rules.

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The following generations

Sony's PlayStation 2 had taken the previous generation by storm, and expectations for its successor were stratospheric. To launch the PlayStation 2, they tapped the visionary David Lynch, whose commercial became an instant classic and a pop culture touchstone.

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But a new giant was stirring. Microsoft entered the fray with the Xbox, marking the beginning of a heated console war.

While Nintendo's GameCube (21 million) and Microsoft's Xbox (24 million) enjoyed respectable sales, Sony once again dominated, with the PlayStation 2 reigning supreme as the all-time best-selling console with over 150 million units sold a number unbeaten up to this day. However, this generation wasn't just about Sony's continued mastery; it was about the escalating battle with Microsoft.

The seventh generation saw a three-way brawl erupt. Sony, Microsoft, and Nintendo went head-to-head with distinct offerings:

• Nintendo Wii: A family-oriented console with innovative motion controls through its Wiimotes. The Wii became a ubiquitous sight, from living rooms to retirement homes, where seniors reveled in virtual bowling and tennis without leaving their armchairs.
• Xbox 360: A pioneer in online gaming, the Xbox 360 introduced Xbox Live, the first dedicated console online service for downloading games, cloud saves, and even streaming apps like Netflix and YouTube. It also innovated with "Connect," a motion-tracking peripheral that powered popular games like "Just Dance," and introduced achievements, a badge system rewarding in-game accomplishments. The Xbox 360's head start, released nearly a year earlier than its rivals, also played a significant role in its success. However, a crucial factor in its appeal in underserved markets was its susceptibility to jailbreaking, enabling pirated games to be played.
• PlayStation 3: Entering with an air of overconfidence, Sony initially faltered. They banked on Blu-ray discs as the successor to the PS2's DVD success, leading to a sluggish sales start. However, the PS3 found its footing upon course correction: a slimmer "PS3 Slim" model, a robust online service, and critically acclaimed exclusives like "God of War 3" and the groundbreaking "The Last of Us," which many consider one of the greatest games ever made (further cemented by its recent HBO adaptation).

Instead of diluting the market, the fierce competition spurred record sales figures. While Sony lost some ground, the combined total for all three platforms soared to almost 300 million units. Surprisingly, Nintendo emerged on top this generation with 102 million units sold, followed by the PS3 with 87 million and the Xbox 360 with 84 million.

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The 8th and 9th generation (current) of consoles witnessed a shift in the landscape. Fanbases solidified, with fervent PlayStation and Xbox loyalty dividing the market. Nintendo, however, charted a distinct course, prioritizing handhelds with the Wii U, 3DS, and Switch, collectively racking up over 125 million units sold. In the home console arena, Sony maintained dominance with the PS4, outselling the Xbox One 106 million to 58 million.

This division largely stems from a fundamental change in the industry. Technological advancements became commonplace across manufacturers, diluting the hardware arms race. The battleground shifted, with both performance and, more crucially, game libraries becoming the new battlefields. The war moved from silicon chips to studios, with engaging titles holding the key to victory.

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Who’s got the best game?

In today's age of near-identical console technology, the true battleground for gamers' hearts lies not in specs, but in the promise of the next blockbuster AAA title.

These meticulously crafted, heavily anticipated spectacles generate hype on par with Hollywood premieres, and with it, the potential for both soaring triumphs and spectacular flops.

Much like a blockbuster movie, a AAA game's marketing is a carefully curated symphony of anticipation.

Months, sometimes years, before release, studios tease trailers and demos, whetting gamers' appetites with cinematic cutscenes or tantalizing glimpses of gameplay.

Take the recent teaser for GTA VI. With GTA V boasting the title of second-best-selling game of all time, trailing only the colossal Minecraft with its 190 million copies sold, and Rockstar's latest masterpiece, Red Dead Redemption 2, revered as one of the greatest games ever made, the hype surrounding the new GTA was almost unbearable.

Fueled by a steady drip of leaks over the past few years, from maps and character reveals to glimpses of development footage, Rockstar finally dropped the official teaser in December 2023.

The response was nuclear. Within 24 hours, the video amassed over 96 million views, a figure that has now ballooned to over 170 million. Beyond the official channel, fan-created content dissecting and speculating on the teaser racked up a further 250 million views on YouTube alone.

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Another trend blurring the lines between video games and Hollywood is the increasing presence of A-list talent.

Norman Reedus, fresh from his iconic role as Daryl Dixon in The Walking Dead, or Mads Mikkelsen, Cannes' Best Actor for his chilling performance in The Hunt, both graced the world of Death Stranding, a game conceived by Hideo Kojima, one of gaming's most revered auteurs.

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These celebrity crossovers are a testament to the ever-evolving landscape of video games, showcasing their ability to rival Hollywood in both ambition and impact. And as the lines between mediums continue to blur, the fight for our precious gaming hours is sure to reach epic, and ever-more-entertaining, proportions.

More recently we had Keanu Reeves playing a major character in Cyberpunk, one of the most hyped games of the past few years. 

Cyberpunk, though, had a really rough start. There was a lot of anticipation for its release, since the developers were CD Projekt Red, which was the house behind The Witcher 3, which had won many game of the year awards when it was released and it is one of the most influential RPG’s ever made with an amazing open world, an incredible and complex skill tree and a great story with 36 possible different endings.

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Their teasers of the game showed what could be the best game in history, but instead of actual gameplay, they used cinematics.

It was supposed to have amazing storytelling, a gameplay in a free world where you could basically do anything and interact with any other NPCs (Non playable characters), an awesome cyberpunk futuristic 80’s setting. But by the time it was released it was a major flop.

The promises from the teasers weren’t in the game and the gameplay was so full of bugs that the game felt unfinished. The development was also really bumpy for CD Projekt Red, with many delays over the years after it was announced and even accusations of workplace abuse. The game was so badly received by the public that most gamers asked for refunds and the game ended-up being removed from the PlayStation store and Steam.

They did come back though. They released over the following years many patches fixing the game and ended up winning the best Ongoing game at The Game Awards, the most important award in the industry. Not only that, they also released a DLC (Downloadable Content) expansion of the game with Idris Elba as a new character in the storyline.

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Many other games can be used as examples here both of success and failures in the industry, but marketing has always had a major role in the industry, from huge success cases like GTA V and the PlayStation 2 to incredible failures like The Day Before and E.T. and major comebacks like Cyberpunk and No Man’s Sky.

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What about the other platforms

Something we haven’t touched on this article yet is the rise of other platforms. As the war for consoles was going on in the 90’s and 2000’s, the accessibility to PCs and PC gaming has also risen.

Unlike consoles, where you have to change your device every generation in order to keep up to date with games, with PCs you can have a machine that will last much longer by simply upgrading it.

They also give you a lot more flexibility, as the PCs can be used for gaming, but can also be used for work, study and any other type of entertainment really.

It is estimated that there are over 1.75 billion PC gamers in the world. Most of the games found on consoles can also be found on PCs. Actually, Microsoft actually has a PC game pass, which gives you access to a large library of games. Sony’s exclusives are beginning to be ported to PCs as well, with titles like Horizon Zero Dawn and the Last of Us added in the list.

Alongside the PCs, we have the rise of mobile gaming which corresponds now to around half of the revenue in the industry. Out of the estimated 200 billion dollars revenue from the industry, around $108.15 billion is from mobile gaming and is projected to reach $339.45 billion by 2030.

The smartphones are increasingly evolving and have the hardware needed to play even the most demanding games.

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Free to play, really?

The past years have seen a rise in Free to play games. Fortnite, PUBG, Roblox, Free Fire are all in this list. The free to play games and game modes is probably one of the best ways the industry found to create additional revenue. Microtransactions.

And the microtransactions are not limited to the free to play games, paid games such as FIFA, GTA, Red Dead Redemption 2 and many others have adopted the microtransaction model within their extra online game modes.

Cosmetics, new playable characters, in-game coins all cost real money. So instead of spending 50 bucks for a game or playing only the story mode on the game you own, you can buy different skins or get premium players packs spending extra dollars. And that is a goldmine.

In 2022, the global online microtransaction market was valued at USD 75 billion ⅓ of the whole gaming industry revenue. GTA online alone made $500 million in Q3 2022 from microtransactions and FIFA’s FUT, one of their online game modes, generated 29% of EA's revenue in 2020.

The market is going hard in that direction and games invest hard to generate revenue from it.

Fortnite is famous for their online events. Every season and chapter has a big launch event, where players log in the game at the same time to watch the new season unfold and see the new map and the skins and prizes for the new Season Pass. They also do from time to time in-game events where they bring in big names from music to perform inside the game. Ariana Grande and Travis Scott are some of these names.

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Ariana Grande

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Travis Scott

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Roblox also jumped in the trend and brought their own attractions for in-game concerts with Royal Blood and Lil Nas X.

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Lil Nas X

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Royal Blood

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Esports

During the past few years another phenomenon appeared, e-sports. Professional competitions and content creators started popping up everywhere and people became addicted to it.

The numbers of the esports market speak for themselves.

The market size is estimated to be around 1.72 billion dollars  and expected to grow to over 6 billion by 2030.

The number of esports viewers worldwide passed the 500 million mark in 2023 and the 6th channel with most subscriptions in YouTube is a gaming channel PewDiePie.

Over 7 billion hours of gaming live content was watched across all platforms just in Q3 2023.

Now if you think that esports championships are amateurish, just watch below the opening ceremony for the 2023 League of Legends World Championship which was sponsored by Mastercard.

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All this shows that esports are here to stay and have the potential to grow and be consolidated in the sports world, presenting itself as a great marketing medium for audiences of all ages.

Conclusion

The video game industry has transcended its humble origins as mere "kids' toys" to become a cultural titan, the second-largest entertainment segment, rivaling even television.

The children who once pixelated adventures with Pong, Space War, Mario, and Sonic are now adults, and their passion for gaming evolved alongside the medium itself. Today's games, empowered by cutting-edge technology, weave narratives as breathtaking as they are immersive, told not just through text and cutscenes, but through breathtaking gameplays.

Screenwriters, composers, and designers have become integral architects of these digital worlds, crafting experiences that captivate audiences as deeply as any film or novel.

Even seemingly competitive shooters like Fortnite and Warzone boast rich backstories, often unfolding like serialized sagas across their seasonal updates. This narrative depth, coupled with the industry's booming strength and enthusiastic player base, presents a wealth of opportunities for both marketers and developers.

It's time to discard the outdated lens of "child's pastime" when viewing video games. They are, instead, a prime example of industry evolution at its finest, a testament to the power of creativity and technology to forge connections and ignite imaginations on a global scale. So, let's celebrate the rise of this interactive storytelling giant, and its unwavering ability to captivate hearts and minds across generations.

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Wrapped up by the sound of The Rolling Stones - Start me up