By Emil Bjerg
Enormous innovation and growth make the gaming industry one of the most exciting niches to follow. Here we detail the link between technological innovation and economic growth in the gaming industry.
The gaming industry is “experiencing an unprecedented surge in popularity and profitability”. PWC projects that the revenue of the gaming industry will rise from $262 billion in 2023 to $312 billion in 2027. According to PWC, “This growth is fueled by the industry’s ability to captivate a wide audience, particularly young adults — a demographic advertisers are willing to pay a premium to reach.”
Driving the growth is also an enormous technical innovation, transforming the industry in these years.
Generative AI Leading Innovation
As PWC writes “The video game industry has been on the cutting edge of tech for decades”. Technological advancements quickly find their way to the gaming industry. Take Generative AI that is revolutionizing how games are developed and experienced, enabling a level of personalization previously unimaginable by allowing for the creation of dynamic content that adapts to individual player preferences and behaviors. For instance, games like No Man’s Sky utilize generative algorithms to create over 18 quintillion unique planets, ensuring that each player’s experience is distinct and engaging.
Generative AI is being deployed to give non-playable characters a much more spontaneous, varied dialogue. As MIT Technology Review writes that startups are “employing generative-AI models, like ChatGPT, are using them to create characters that don’t rely on scripts but, instead, converse with you freely.” Further, generative AI can help players generate their own worlds, maps and gameplays, allowing for new levels of personalizations.
A survey by A16Z, a venture capital firm, that has invested more than 1.2 billion USD in gaming companies working with generative AI, shows that 87% of game studios said they were already using AI in the workflow. Many use image generators like Midjourney in their design, others use AI agents to test games for bugs. Generative AI can automate various aspects of production, including coding, art creation, and dialogue scripting, allowing developers to focus on more creative tasks and creating bigger, more immersive worlds.
The Industry Innovates Outside Gaming
The video game industry functions as a technology incubator, where successful innovations can be employed in other industries.
NVIDIA is the obvious example: the company started making waves in gaming with its RIVA 128 and its GeForce GPUs, which revolutionized graphics rendering and set new standards for visuals in gaming. In recent years, NVIDIAs innovation laid the groundwork for advancements that extend far beyond gaming, influencing sectors such as artificial intelligence, healthcare, and cloud computing.
Other gaming companies are innovating outside the industry as well. Physics-based game engines serve as great examples, with their innovations crossing over to sectors like digital twins for architecture, engineering, construction and automotive design.
Another example is extended reality; an umbrella term that encompasses immersive technologies, including Virtual Reality (VR), Augmented Reality (AR), and Mixed Reality (MR), which is increasingly used for education and training. For instance, VR simulations can provide students with hands-on experiences in a controlled environment, enhancing learning retention. Studies have shown that students using VR for learning retain information significantly better than those using traditional methods.
In other words, the potential for cross-industry success creates an even stronger connection between technological innovation and growth in the gaming industry.
The enormous innovation in the gaming industry makes the director of the NYU Game Center Frank Lantz ask, “What comes after the video game? Maybe we’re on the threshold of a new kind of game.” As we may be on the threshold of a new kind of game, the gaming industry is as interesting as ever to follow.
