Graph

Something has been bothering me for a while now. It’s this claim that Video Games will overtake Movies as an entertainment industry. Sorry to tell you guys, but it just isn’t going to happen. I understand it’s the more interesting story to claim that the video game industry will be bigger than Hollywood, but it just isn’t going to happen. What you see in the graph above (via Matt Griswold) is:

Domestic video games sales vs. Domestic movie box office

That’s right, the figures you usually see don’t take into account DVD Sales, never-mind Digital movie downloads, VOD, or television rights. Hollywood made $15.4 billion on DVD Sales alone in 2007 (thanks to my friend Matt Griswold for the stat). Who knows that the digital movie numbers look like, but Disney alone sold almost 3 million movies on iTunes in 2007, with new releases running $15 a pop. And that is only one movie studio on only one of the available movie download services. And then there is the television market. Consumers pay for HBO so that you can watch the latest movies. HBO and networks pay a premium for the rights to air these films. In 2004 this equated to $16.6 Billion. I’m sure with the expanded cable line-up and introduction of OnDemand movies, these numbers have probably grown considerably We’ll include a conservative estimate of $17.5 billion for 2007). We won’t get into merchandise sales, because it gets too complicated (however, It wouldn’t surprise me if a movie licenses, like Star Wars, probably outperforms the merchandise sales for the entire video game industry… I could be wrong).

And to be fair, the video game sales numbers doesn’t account for the estimated $3 billion in digital game downloads, subscription services like MMORPG’s, Mobile (cellular) games and Downloadable content, which is estimated to be around $3 billion in 2007 (note: I’m not able to find an exact number on this one). I apologize ahead of time if I have gotten any of these numbers wrong. I’ve tried to find the fairest numbers available through internet search, and believe I have done a good job. But it should be noted that this isn’t a media study, and I’m only going off what is available publicly.
So here is the real world chart of the estimated gross revenue that Hollywood makes off movies vs. what the video game industry made off video game sales in 2007:

2007 Real Numbers

And to jump off the pure gross money conversation, it might be also interesting to discuss the people numbers behind both businesses.

And mainstream media immediately jumped on the story that The Heartbreak Kid opened to only half of it’s box office goal, a drop blamed on the release of Halo 3. I’m sure the fact that no one in America wanted to see The Heartbreak Kid had nothing to do with it’s lackluster box office efforts. But to give video games their due, Halo 3 did make $170 million in it’s first day of sales, a figure mainstream media was touting as “higher than Spider-Man’s record-holding opening weekend of $151 million.” But most reports failed to mention that a movie ticket costs only $9 while Halo cost $60 (and a whopping $130 for the Legendary Edition) a pop.

But let’s look at the real people numbers:

  • Halo 3 has sold over 8.1 million copies.
  • Spider-Man 3 sold 49.2 million tickets and an additional 7.1 million DVD’s.

This means that 70.5 million people have been “entertained” by Spider-Man 3 (not including television, digital and on demand viewing), compared to the 13.7 million people who have played Halo 3. It should be noted that I used multipliers on both the video game and dvd numbers to reflect the average amount of people to use said items per household.

And while Video Games will never come close to overtaking movies (at least in the foreseeable future), One thing is for sure, video games are big business. And that can’t be ignored.

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