Crandall and Sidak Release Report on the Entertainment Software Industry

July 13, 2006

Washington, D.C. – The video game industry has become a significant factor in the American economy by stimulating numerous and important innovations in the technology arena, creating jobs, and enhancing training and productivity in other industries, according to a study released today.

The study, "Video Games: Serious Business for America’s Economy," examines the stimulative effect of entertainment software on high technology sectors of the U.S. economy. Authored by Dr. Robert Crandall of the Brookings Institution and Prof. J. Gregory Sidak of the Georgetown University Law Center, the report found that the direct and indirect contributions of entertainment software to the nation’s gross national output exceeded $18 billion in 2004, a figure they said would steadily increase as the industry’s surging growth continues in the years ahead. A full copy of the study, funded by the Entertainment Software Association, can be downloaded here.

Noting estimates that video game software sales for consoles, PCs, mobile, and online hit $8.2 billion in 2004 and are forecasted to grow to $15 billion in 2010, the report estimated that the industry would support over 250,000 jobs by 2009--a 75 percent increase over the 144,000 full-time jobs the industry supported in 2004.

In addition to the economic benefits, the entertainment software industry is stimulating technological innovation and consumer demand in other areas, the report found.

The study also concluded that investment and innovation stimulated by demands of the video game industry have increased related technology sales, resulting in the introduction of new products into the marketplace more quickly than would otherwise have occurred.

New and faster central processing units, like those driving Microsoft’s X-Box 360 and Sony’s upcoming PlayStation 3 consoles, have been developed more rapidly because of the demand created by video game manufacturers, according to the study. For example, the PS3’s CELL processor is now being used by defense and medical companies.

Video games are also increasing the market for high performance personal computers specialized for gaming applications; in addition, the study’s authors calculated that about $73 million in high definition television sales (HDTV) can be directly attributed to sales of the Xbox 360 game console. The study also found that consumer demand for broadband Internet access is enhanced by the significant number of broadband users who subscribe to online gaming services.

The study also highlighted the benefits video games provide -- in training, education, and productivity -- through technology transfers to other industries. The report said that entertainment software is providing realistic and cost-effective training tools for the nursing, real estate, hospitality, advertising and medical professions, and for America’s armed forces.

"Video game software is allowing nurses and doctors to experience better simulations of medical scenarios for training purposes," the study says, adding that "medical imaging requires the same high-speed processing that entertainment software uses to create 3D images in real time."

Prof. Sidak and Dr. Crandall concluded: "Clearly, the entertainment software industry is not just about ‘fun and games.’ It is a serious business that improves training, efficiency, and productivity in a variety of industries and has led to innovation in other high-technology industries. Video games play an important role in maintaining U.S. leadership in information technology, which is critical to the future success of the U.S. economy."