Economics (Ohga Shrugs)

The Economics of the video game industry are a key part of its existence. A vast majority of games are made by for-profit organizations, with the few exceptions mostly being low-budget affairs.

Methods of Revenue
The main source of revenue for the video game industry is a combination of hardware and software. Hardware companies, most notably Nintendo and Sega, sell game systems typically in the $100 to $400 range, depending on the age of the technology and its exact specifications. However, game consoles are usually sold for a minimal profit, or even sometimes at a loss. Therefore, the main source of profit for these companies, like most gaming companies, is software.

Traditionally, the cost of a retail console game on optical media has been approximately $50 for a new, high quality game. Lower budget games might be priced as low as $20. Cartridge-based games typically cost as much as $60, but after Nintendo switched to optical media in 2001, prices went down to $50. However, starting in late 2006, certain companies began charging $60 for what they considered "next-gen" games. These higher prices did not deter sales, so that by 2012, $60 has replaced $50 as the standard price of a high-budget console game. However, less expensive games are still released on consoles, for as low as $20.

Handheld games, meanwhile, typically cost $30 until the Nitro-era, with some games rising as high as $40. Even since 2006, however, $40 is widely seen as a top price for handheld games.

The price of software goes in several directions. First, a portion of the cost goes to the store or establishment selling the game. Some money goes to the game's publisher, some to the manufacturer, some is sent to the creator of the hardware hosting the game, and typically under 10% goes to the actual game developers.

Size of The Gaming Industry
The exact size of the video game industry is hard to gauge, especially outside of major countries such as the United States and Japan. However, it is known that the video game industry makes tens of millions of dollars a year, with many estimates saying that revenues should exceed $50 billion by 2015.