To start, let's actually define what we're talking about. According to Wikipedia, a "console game" refers to a specialized single purpose electronic device that connects to a standard TV or video monitor (as opposed to a stand-alone handheld device or PC game designed for your computer). Game multimedia usually comes in the form of a cartridge, or more recently, higher capacity CDs. Newer systems allow games and demos to be downloaded directly from the internet, while older consoles came with a fixed selection of built-in games.
Though this form of entertainment may appear to be all fun and games, it is in fact big business. According to an article on Gamespot, in 2004 video game sales reached $5.2 billion (160.7 million units). Twelve game titles sold more than 1 million units each in 2004 (see below for a fuller list of the top selling titles). The 3 largest markets for computer and video games are the United States, Japan, and the United Kingdom, also in that order as the largest producers of video games.
The major players in the market for video game consoles today are Sony's PlayStation 3, Nintendo's Wii, and Microsoft's Xbox 360. While the choice in gaming systems may seem limited (don't forget that in addition to consoles, video game aficionados still choose from handheld devices, PC-based, and online games), the variety of game software developers is much broader. Companies such as Electronic Arts, 989 Studios, Activision, Midway Games, Rockstar, and TakeTwo (among numerous smaller development studios) churn out ultra-realistic basketball and football simulations, intense shoot-em up's, and stunningly rich graphics for film-inspired games.
With 3 major console manufacturers fighting for a slice of the gaming market pie, competition is ferocious. Recently, it became clear that the competitive landscape has shifted in favor of Nintendo, as the original creator of Mario hit it on the money with the Wii by creating an

Examining this industry from a business perspective leads us to inquire about pricing strategy and revenue streams. Clearly, console manufacturers charge consumers for the physical hardware - $249 for a Nintendo Wii, $499 for a Sony Playstation 3, $299 for a Microsoft Xbox - but what is surprising is that all of these industry players barely break even, if not even lose money, on each console sold. The reason for this is that the real money in this segment is made on the royalties they each charge the software developers for every game produced for their respective gaming systems. With games averaging $50 a pop, this is what translates into the billions of dollars that makes this market so lucrative.
However, both software developers and console manufacturers are constantly looking for new avenues of growth. The most promising trend to offer significant payback is advertising.

So what does the future hold in store for video games? One trend that has been emerging recently is that of games based on popular films - and vice-versa. Movies Lara Croft: Tomb Raider took its origins from the popular video game, whereas a game like GoldenEye was inspired by the popular James Bond 007 film series. But this is just one of the few things we've seen happening lately in the game industry. An essay on PBS on the Future of Video Gaming proposes a few directions that this form of entertainment may take us in: "It's feasible that millions of people will soon compete in a virtual world for the right to become Donald Trump's
