The Evolving European Video Game Software Ecosystem - The Video Game Industry: Formation, Present State, and Future - page 201

industrial sector in its own right and also as a driver of productivity and
innovation in other industrial sectors and in public services, and that it
is therefore important for Europe be competitive. However, although the
European ICT sector has some comparative advantages in, e.g. telecom
equipment, telecom services, automotive electronics and software, overall
it is comparatively weak. In comparison to other regions, the sector is rela-
tively smaller and less R&D intensive, and it also has a trade defi cit to its
main competing regions. In many parts of the ICT sector (including pack-
aged software, web services, consumer electronics and computer manufac-
turing) the world leaders are found in other countries and regions, notably
in the U.S. and East Asia.
At the same time, there are opportunities for Europe to improve. Inno-
vation is crucial and it is particularly important that Europe remains at
the forefront and innovates in those emerging technologies that have the
potential to disrupt the current industrial structure, business models, value
chains and markets. These disruptions could change the competitive posi-
tions of companies, nations and regions. And in this respect, policy can
make a dif erence. The project therefore selected six “industries” with these
characteristics, i.e. being emerging and having potential to disrupt the cur-
rent industrial structure, business models, value chains and markets, of
which video games was one (the others being Web 2.0, RFID, emerging
display technologies, robotics and automotive embedded software).
Why were video games (software) chosen for the purposes of the proj-
ect? Firstly, the video game industry is clearly of growing importance as a
driver of economic growth, value added and job creation, in Europe and
elsewhere. In fact, the video game industry, in particular its software 3 seg-
ment, is one of the more dynamic industries of today's economy. Since its
emergence in the 1970s, it has developed into an estimated €40-50 billion
market. Video games hold a signifi cant and growing share of the industries
to which they are usually classifi ed, be it the media, content and enter-
tainment industries or the software industry (see Box 11.1 and Box 11.2).
For instance, from 2005 to 2009, the global revenues of video games grew
annually at 16 per cent—a pace more than fi ve times faster than the total
media and entertainment industries (PricewaterhouseCoopers 2009). In the
U.S. only, the value added of video game software was estimated at US$5
billion in 2009 (growing annually with 11 per cent since 2005). There,
the industry directly employs thirty-two thousand people, and the total
employment that depends on game software now exceeds 120,000 (Siwek
2010). In addition to being a growth industry in its own right, video games
indirectly drive growth in global technology markets such as PCs, mobile
phones and broadband. They also generate important technological spill-
overs, where technologies initially developed for video games are increas-
ingly used in other applications and sectors.
However, given this phenomenal growth, as such, video games are not
really “emerging” any more. Therefore, although still of ering industrial