Video Game Development - History

History

The history of game making begins with the development of the first video games, although which video game is the first depends on the definition of video game. The first games created had little entertainment value, and their development focus was separate from user experience—in fact, these games required mainframe computers to play them. OXO, written by Alexander S. Douglas in 1952, was the first computer game to use a digital display. In 1958, a game called Tennis for Two, which displayed its output on an oscilloscope, was made by Willy Higinbotham, a physicist working at the Brookhaven National Laboratory. In 1961, a mainframe computer game called Spacewar! was developed by a group of Massachusetts Institute of Technology students led by Steve Russell.

True commercial design and development of games began in the 1970s, when arcade video games and first-generation consoles were marketed. In 1971, Computer Space was the first commercially sold, coin-operated video game. It used a black-and-white television for its display, and the computer system was made of 74 series TTL chips. In 1972, the first home console system was released called Magnavox Odyssey, developed by Ralph H. Baer. That same year, Atari released Pong, an arcade game that increased video game popularity. The commercial success of Pong led other companies to develop Pong clones, spawning the video game industry.

Programmers worked within the big companies to produce games for these devices. The industry did not see huge innovation in game design and a large number of consoles had very similar games. Many of these early games were often Pong clones. Some games were different, however, such as Gun Fight, which was significant for several reasons: an early 1975 on-foot, multi-directional shooter, which depicted game characters, game violence, and human-to-human combat. Tomohiro Nishikado's original version was based on discrete logic, which Dave Nutting adapted using the Intel 8080, making it the first video game to use a microprocessor. Console manufacturers soon started to produce consoles that were able to play independently developed games, and ran on microprocessors, marking the beginning of second-generation consoles, beginning with the release of the Fairchild Channel F in 1976.

However, the flood of Pong clones at the time led to the video game crash of 1977, which eventually came to an end with the mainstream success of Taito's 1978 arcade shooter game Space Invaders, marking the beginning of the golden age of arcade video games and inspiring dozens of manufacturers to enter the market. Its creator Nishikado not only designed and programmed the game, but also did the artwork, engineered the arcade hardware, and put together a microcomputer from scratch. It was soon ported to the Atari 2600, becoming the first "killer app" and quadrupling the console's sales. At the same time, home computers appeared on the market, allowing individual programmers and hobbyists to develop games. This allowed hardware manufacturer and software manufacturers to act separately. A very large amount of games could be produced by single individuals, as games were easy to make because graphical and memory limitation did not allow for much content. Larger companies developed, who focused selected teams to work on a title. The developers of many early home video games, such as Zork, Baseball, Air Warrior, and Adventure, later transitioned their work as products of the early video game industry.

The video game industry expanded significantly at the time, with the arcade video game sector alone (representing the largest share of the gaming industry) generating higher revenues than both pop music and Hollywood films combined. However, the home video game industry eventually suffered major losses following the North American video game crash of 1983. The home video game industry was revitalized soon after by the widespread success of the Nintendo Entertainment System.

With the ever-increasing processing and graphical capabilities of arcade, console and computer products, along with an increase in user expectations, game design moved beyond the scope of a single developer to produce a marketable game in a reasonable time. This sparked the beginning of team-based development. In broad terms, during the 1980s, pre-production involved sketches and test routines of the only developer. In the 1990s, pre-production consisted mostly of game art previews. In the early 2000s, pre-production usually produced a playable demo.

In 2000 a 12 to 36 month development project was funded by a publisher for US$1M–3M. Additionally, $250k–1.5M were spent on marketing and sales development. In 2001, over 3000 games were released for PC; and from about 100 games turning profit only about 50 made significant profit. In the early 2000s it became increasingly common to use middleware game engines, such as Quake engine or Unreal engine.

In 2005, a mainstream console video game cost from US$3M to $6M to develop. Some games cost as much as $20M to develop. In 2006 the profit from a console game sold at retail was divided among parties of distribution chain as follows: developer (13%), publisher (32%), retail (32%), manufacturer (5%), console royalty (18%). In 2008 a developer would retain around 17% of retail price and around 85% if sold online.

Since the third-generation of consoles, the home video game industry has constantly increased and expanded. The industry revenue has increased at least five-fold since the 1990s. In 2007, the software portion of video game revenue was $9.5 billion, exceeding that of the movie industry.

In 2009 games market annual value is estimated between $7–30 billion, depending on which sales figures are included. This is on par with films box office market. A publisher would typically fund an independent developer for $500k–$5M for a development of a title.

In the past several years, many developers opened and many closed down. Each year a number of developers are acquired by larger companies or merge with existing companies. For example, in 2007 Blizzard Entertainment's parent company, Vivendi Games merged with Activision. In 2008 Electronic Arts nearly acquired Take-Two Interactive. In 2009 Midway Games was acquired by Time-Warner and Eidos Interactive merged with Square Enix.