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Video Games Thriving During Covid-19, Threatened by Regulation

Even before the global pandemic, video game industry growth was on a tear. Some predict that the industry will surpass $300 billion by 2025. In 2019 the global market was clocked at $152.1 billion, a 16 percent increase over 2018, and sported 2.5 billion players. But now the sales of video games and the number of people playing online games have shot through the roof as people have been required to stay at home.
Animal Crossing, Doom Eternal and Call of Duty: Warzone have all smashed records. Yet sales were increasing even before government-mandated home confinement. A research analyst at Global X confirmed that consumers were spending nearly two-thirds more on video games as compared to the same time last year. As people seek to make or maintain connections, online games that are collaborative and allow for communications have been booming.
Video games have become, like movies and television, a force of entertainment and pop culture. As its footprint has grown, the industry’s significance to public policy has grown as well.
Just last year the U.S. outpaced China to become the number one global gaming market. And more than 57 percent of all game developers already reside in the U.S., according to the Game Developers Conference. That positive effect is being felt domestically. Even as thousands of companies furlough workers, there are 10 times more video game companies hiring than firing, according to Candor.
Technologies developed for gaming and entertainment often migrate into the larger economy, and virtual reality (VR) and augmented reality (AR) are likely next. Nearly four out of five Americans who have experienced AR have done so playing video games, and currently North America leads in the adoption of VR with an 8 percent rate, according to GlobalWebIndex. Augmented reality is already being used in many retail applications, and virtual reality is transforming industrial design and manufacturing.
But some policymakers will not be able to resist the regulatory impulse. Various parts of the gaming ecosystem are already under attack on antitrust concerns, misunderstandings about business models (“loot boxes”, etc.), the tired old tropes about video game violence, and government regulation of free speech on the internet. Too often, these efforts are based on misunderstanding, poor quality “research,” and just plain old opportunistic politics.
The video game industry innovates incredible, useful technology, creates high-paying jobs, and has been mostly immune to the Covid-19 economic setbacks. It’s a competitive advantage for the United States, and we should be vigilant against uninformed efforts to unnecessarily regulate or restrict its growth and innovation.