Wednesday, October 12, 2011

Growth in the Entertainment Software Industry

According to the ESA (Entertainment Software Association), during the first few years the entertainment software industry made a decent amount of sales revenue. In 1996 it made $2.6 billion in sales revenue, but thirteen years later it rose to $10.5 billion in sales revenue demonstrating an increase in demand of entertainment software. As new consoles and newer games are introduced into the market, the demand increases for these goods, and so do sales for the products. The growth has also caused sales to increase in other locations. The Xbox 360 has caused consumers to purchase HDTVs. "Approximately $73 million in HDTV sales can be directly attributed to the XBox 360 game console." The increase in demand for entertainment software has also lead to an increase in jobs. Texas is ranked second nationally in computer and video game personnel in 2009, with 13,613 employees. The new jobs impacted Texas’s economy and provided and annual growth of about 13.7 percent from 2005 to 2009, thus improving the state economy. The software industry is rapidly growing and is bettering the economy in general. As new products are produced, demand for the products increases to a point where the demand for certain products become inelastic for people who are greatly interested in gaming. Certain genres or a game series can interest people greatly and cause them to not care about the price of the game when it comes out. An example for the inelastic demand could be seen when the new Halo game came out and people waited outside stores ready to purchase the game, when after a month or two the price dropped. The demand for the game series became inelastic for some players because they had greatly enjoyed the previous games. The industry is trying to attract consumers by constantly producing new games and consoles tailored to the public’s general interest. As the industry grows it will continue providing new jobs and will help fuel the economy.


Andrew Boyd said...

I agree with you fully Daniel. The gaming industry has boomed over the last decade. Not only has the gaming industry grown, but it has effected other technology industries like HDTVs(as you said). From an economics stand point, an Xbox 360 console and an HDTV are seen as compliments. In some cases venders such as Best Buy will sell these two gadgets together in a package. I also agree that a lot of gamers demands are inelastic. No matter how much the new Call of Duty or any other popular video game costs, they will still be in the long line on opening release day to get their copy. The gaming industry effectively shifts demand by using advertising. They advertise their new product months before it comes out which causes a rise in deman for that product.

Daniel said...

Thank you for commenting. I agree that Xbox 360 and the HDTVs have become compliments to each other, and that now HDTVs are generally sold together with the Xbox 360s. Also, advertising, as you said, plays a major role in the increase and shift of demand, but it also does that in several other industries besides the gaming one.