Space invaded: video games’ stunning growth

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Hello and welcome to the Intelligence from the Economist. I'm Jason Palmer.

And I'm Ora Ugumbi. Every weekday we provide a fresh perspective on the events shaping your world.

If you were listening to the Intelligence at the beginning of Russia's invasion of Ukraine, you'll recall some truly haunting dispatches from a resident of Kharkiv we were in touch with today. We'll check back in with him to see how the intervening year has been.

First up, though, Video games have come a long way since the days of Donkey Kong. In the last 50 years, they've evolved from crude, blocky eight bit bloops into sophisticated worlds that are often perpetually online with their own virtual economies. Last year, some 3.2 billion people played video games. That's about 4 in 10 people worldwide, thanks in part to a big jump in lockdowns. And all those extra players mean big business and a levelled up influence for game makers globally.

Gaming's becoming a really huge industry. It's now much bigger every year in terms of its value than the cinema box office. It's bigger than video streaming, bigger than the music business.

Tom Wainwright is the Economist tech and media editor.

And as it comes to rival television as the main entertainment medium, I think the question is, how is this going to affect society?

Tom, just how big has gaming become?

Well, it depends which estimate you go by. But by one estimate, consumers are going to spend about $185 billion this year just on gaming content. And that doesn't include hardware or the advertising business. That increasingly comes with the video games industry. That's about five times the value of the cinema box office, about five times the value of recorded music. I mean, I remember, you know, when I was a teenager, games were a thing for children and teenagers and mostly boys. And now that's really changed. I saw study from here in the UK showing that among people in their 50s and 60s, more than half now play video games. And across the rich world, I think about 2/3 of people now are estimated to play games. Nearly half of them are women. So it's become, you know, much more like TV or music as a kind of almost universal medium.

Now you mentioned these comparisons with music and tv, which have obviously really kind of transformed and been changed by streaming subscriptions. What is streaming going to do for games?

Given what it's done in music and video, I think it's not surprising that people are excited about what it could do in gaming. There are various companies now that are doing things in this area. So Microsoft has a big streaming component as part of its Xbox game Pass service. Amazon has something similar. Nvidia has something similar. And the idea is that you'd be able to play potentially even sophisticated games on pretty basic hardware as long as you had a good Internet connection. So you wouldn't need to buy a $500 console anymore. You could just play on your TV. It's yet to kind of really take off though. And I think technically it's harder to stream games than it is to stream video or music. It's much more resource intensive. People who are real kind of obsessive gamers find that the performance is just not quite there yet.

Okay, so it sounds like we're seeing a bit of change in how people access these games, but how are the games themselves changing?

The business of making a game is becoming more like the business of making a film. And the budgets involved in these games have risen to kind of Hollywood style proportions. I mean, you're looking at hundreds of millions of dollars in some cases. One of the things that interests me about this is that it seems the gaming industry is making a slightly better job than Hollywood of dealing with these high costs. Because with gaming you can defray those costs over many years by having a game which is sort of always on. And a lot of the top games these days aren't ones where, you know, you release one game and then a few years later you have a sequel and so on, as you do with the movie business. It's become almost in some ways more like the TV business, where you have a kind of ongoing series, if you like. One example of one of these so called live service games is League of Legends, which is a very popular online multiplayer game where they have ongoing seasons and each season comes with new downloadable skins and cosmetic things. And one of the things about this game and others like it is that the online multiplayer nature of it has encouraged a professional esports world which revolves around the game. And in South Korea, where this game is extremely popular, I went to find out more about how this business is being monetized. I had a look around this college and in most ways it looks just like a regular kind of after school cramming college. They've got classrooms set up with desks for 28 or so pupils. You've got students sitting around teachers giving lectures. Instead of studying English or maths or whatever, they're studying video games. And I went in and watched some of these boys and they virtually all are boys. It was kind of 99% boys that the headteacher told me they'd been playing Valorant, which is an online multiplayer game. And the teacher was lecturing them on their mistakes and where they went wrong and what they should do differently next time.

Phoenix, please tell me you have the package.

I went to see a professional esports game while I was in Seoul and this took place at the League of Legends arena. In many ways, it was like going to a regular sports match. You know, you had a crowd that was cheering wildly. You had very excitable commentators, from what I could gather. They would say, describing the action and getting very excited whenever a player was killed or whatever. You had the athletes make their big entrance. They did warm ups, except it was with, you know, mouse and keyboard. You had referees who were making sure that everybody's equipment was in order. You could see why the boys, and they were, I'm afraid all boys wanted to do these athlete jobs. They were like rock stars. They made their entrance to, you know, thunderous music and there were crowds of girls waiting for them outside and lots of money at stake. Often the winners get presented with sports cars and that kind of thing. So for them it meant not just playing their favorite game in front of a big audience. It meant big money and lots of recognition as well.

Tom, as gaming becomes bigger and more influential, could there be some political significance of this growth as well? I'm thinking like what K Pop meant for South Korea and what Hollywood meant for America.

I think the Hollywood comparison is an interesting one because we all are familiar with the way in which over the past hundred years or so, Hollywood has been an amazing source of soft power for America. The power of films to transmit western value, values and so on. I think to the extent that games do become a source of sort of cultural soft power, it's going to be a much more sort of divided and even competition than the cinema business has been because Hollywood and American cinema have been so dominant for the last century. And in gaming, it's really not like that. So if you compare, say in the cinema business last year, of the 20 most successful films at the box office, 17 were made in America. If you look at the highest grossing mobile phone games, those top 20 came from nine different countries and the biggest contributor was China. And the kind of arguments we've heard about Hollywood in China, I think increasingly we'll hear about games in China. There's a very popular game called Genshin Impact, which is a Chinese made game. And there was a controversy recently where some users found that that game had installed, I think it was anti piracy software on their PC which continued to run even after the game wasn't running. And some people said, you know, is this a of spyware thing? And the developer said no, and they issued a fix and said it was just a bug. But I think we're going to have more of these concerns.

What does the future hold for games and gamers?

One of the things that a lot of people are kind of excited by is this thing that people refer to as the metaverse, and I think I'm almost loath to use that word because it was very, very fashionable a couple of years ago and it's since gone quite seriously out of fashion. But I think that the broad category of online live shared spaces is something that's not going. It seems like games are the best placed platforms to offer that kind of experience just because they're so used to dealing with these sorts of 3D worlds and having multiple players operating at the same time and so on. And we're seeing this, you know, all the time now with things like concerts taking place in Fortnite or festivals have been held in Minecraft. Loads of examples of games being the sort of new venue where these things happen. And I think people are a bit down on it at the moment because virtual reality has slightly sort of been put on hold, it seems. I think it's VR is going through a difficult period, but I don't think you need virtual reality to make use of these spaces. And it seems that insofar as these online spaces do get bigger and bigger, it seems like gaming companies, if anything, will be among the best place to take advantage of this medium.

Tom, thanks so much for joining us.

Thanks.

For a more in depth look at the business of video games, you can hear from Tom on this week's edition of Money Talk, our show on business and finance. Download it wherever you get your podcasts.

At the start of the war in Ukraine, we made contact with a resident of the besieged city of Kharkiv Dmitry.

Okay, so you wanted to know what's going on right now? They say there's gonna be shelling soon, and they advise everyone to go to the shelter. And, well, some people do, some people don't. It's scary. I'm half scared, half half shocked, really. I never thought this would happen to me, to this city that I grew up in. I figured it might be easier if I also sent you a voice memoir.

Dmitri was in regular touch with our former co editor Kim Gitelson. Over the course of last year. He told us about life on the front line of an invasion.

I woke up in the middle of the night to the sound of fireworks, and I remember thinking, like, who the hell would launch fireworks right now?

Kim has moved on from the Economist, and a year after we first spoke with Dimitri, we've been wondering how he's doing. So William Warren, our creative producer, got in touch.

Hey, Demetra, how are you doing? It's Will here. Really strange. I've obviously heard so much of your voice and you've never heard mine, so, yeah, nice to meet you. I started chatting with Dimitri on the first anniversary of the war, and honestly, it was a little awkward. I felt like I knew him incredibly well as I'd listened to hours of his voice memos when I edited the previous pieces with Kim, but he'd never heard my voice.

Well, nice to meet you, Will. So you're absolutely right. It's been quite a year, exactly a year, actually. And a lot of my friends are quote, unquote, celebrating lots of memory dives into what it was like to live here before the war. And oh man, those were the times. Not a lot of people have a correct picture of what it's like here. I remember myself hearing something like that a science paper on biology was published in 1943 or something, and thinking, wait, that's during the war. Was there science publishings during the war? And yeah, it turns out that even if a bomb destroyed a house next to you during the night, you still gotta go to work tomorrow. Yeah, we don't celebrate one year of war with like, balloons and stuff. More like people reflect on things and laugh a bit reading that stuff. Russian news channels posted this day a year ago. You know, like, we'll take Kyiv in less than three days, or Ukrainian air defenses are destroyed, no targets left, and Zelenskyy has fled the country, confirmed 100% stuff like that.

When we last heard from Dmitry on the show, he had just left his home.

I have moved from Kharkiv, which is really close to the border, to Dnipro and it's slightly further away, but not far enough to be honest. So it's not completely safe here either. As for the how my life has changed, well, there's so much to unpack here. So the first thing is danger. Of course, I wasn't used to the constant feeling of danger from multiple angles. Mostly it's about shellings. A lot of people learn to differentiate between different sounds to determine the amount of danger they're in. This is especially true for those in Kharkiv, which is about 30 km or something from the border. That's apparently enough for those infinite artillery rockets to be launched from Russia's territory. When I was on Kharkiv, I've been listening to this every day, all the time. Now that I'm a little further away, I can tell that I'm already messed up in the head. Like, no doubt about it, every time someone drops something heavy, my heart skips a few beats. Then there's the fact that I'm in a foreign city and my friends, my family, well, basically everyone I knew is scattered around the world and there is no reunion on the horizon. Like I think some of them probably won't come back, even if it ends tomorrow. I remember the feeling like in the middle of 2020. Now multiply that by 10. A lot of businesses didn't work as they used to, especially during the first month. Prices skyrocketed. Curfew at 11pm the conscription is in full effect to the point that some guys don't want to go outside too much to avoid being presented with an invitation letter. Power shortages. That means no water, no heat. You know, at some point I had to sit with no power half of the time for weeks. And I think I had it easier than most. I mean, I'm sure I had it easier than most. Especially the soldiers, of course. Basically, we are a blackout ready nation at this point. I have a portable gas oven and supplies for a couple of months at least. I feel like I'm on a trip or something. I guess we are as prepared as we can be. You know, it's kind of funny because when the power is back, everyone stops whatever they were doing and puts everything on charge. Take a shower because you don't know when the next time is going to be. Do the dishes, do the laundry. Times when there was no power shortages in your building for some time you'd be sitting there with all the power thinking, all right, I did the laundry and the dishes and I took a shower twice. I'm out of ideas. Of what to do, like, how do I pass this gift?

Further on, in March last year, Dmitry and his mother traveled around Kharkiv delivering food and medicine parcels to those who were vulnerable. He told us about five hour queues to pick up essentials like bread. I wanted to know how the situation had changed in the past year and whether people were still helping each other out.

I already told you a few stories of me volunteering in Kharkiv in the beginning of the war. And at some point I was talking to a friend of mine who was eager to do something too, but he was on the other side of the country with his family. And so I was like, hey, I'm an IT guy and you're into management. Maybe we could use those skills somehow. And we came up with a volunteering service so that people would be able to easily distribute supplies, because from my experience, there was just so much extra work you needed to do on top of actually helping. The idea was a website where you could submit a request for help with a map and stuff. And, you know, like one of those ads like, there's a hot chick 1km from your location. Well, it's something like that, but with food or whatever. Instead, from regular people to regular people. Most people are kind of numb to the most of the terrorists that are going on, which is not good, to be honest. But what can you expect after a year of this? Actually, the last big explosion that I had to live through, I was gonna numb to it too. They say there should be at least two walls between you and the outside. But I live in a small studio on the highest floor, so I don't really bother. The blinds happened to be raised and I happened to be facing the window when it hit. I didn't know what it was or how big it is. I just heard a loud boom and I saw a big column of fire somewhere behind the next building. So I grabbed my go bag, put on a coat, and went to the underground parking. There was no electricity even before it happened, so I had to go down 17 floors, all the while thinking that, hoping that there will be no second one. Lots of people were already there with their children and their pets. And at some point I managed to find a spot with the signal and downloaded a picture of where it hit. And it was a typical Khrushchevka, I think it's a type of an old Soviet style building with many entrances, usually no more than 10 stories high. We still have those. In the middle of that was a gaping hole, like a huge hole in Place of top seven floors. And at first I was speechless. I was like, what? No way. Then I recognized the building. It's actually really close to me. I actually checked that later and it's 300 meters from where I am.

Dmitry sent me images of the aftermath of the attack. Smoke could be seen rising over a burning building block. At least 45 people were reported to have died. The EU declared the attack a war crime.

For the next several days, there was a rescue operation. Officials and volunteers were clearing the debris, distributing food, and pulling people out of the rubble. Some were trapped there for more than 24 hours. And it was in January. Some people couldn't go down anymore, and they used the flashlights on their phones so that the rescuers noticed them on the high floors. And I wanted to maybe go help or something with the supplies. But when I got there later that night, it felt like half of the city was there helping. I still don't know if it was a deliberate shot or they were just aiming somewhere else, but. But there aren't any military targets here, as far as I know. And I checked, of course, There was a massive shelling of the whole country tonight. I'd say that is one of the best ways to wake someone up at 3am Those missiles work better than any alarm clock. I got from the bedroom to the parking lot in like a minute.

I woke up early on March 10, and it was all over the news. Russia had just launched a massive wave of strikes to punish Ukraine. I immediately went to my phone to check in on Dmitry, but he had already sent me an update as well as a video check out how people.

React to the siren.

In the video, you can see people walking by as if nothing significant is happening. Children are enjoying themselves in the playground. One child is riding a hoverboard. Nobody seems to be too bothered. It seems like something they've got used to. And I wonder if this is something Dmitry has got used to or if he's even thinking about leaving Dnipro or the country. His family is scattered all around the world, but being a young man, it's harder for him to leave.

Man. I think some have already moved out and moved on from all this. It kind of makes me sad to hear people say things like, yeah, I'm not planning on going back. And they sell their flats and just scatter around the world. But, you know, that's actually a small portion of people. In my experience, most of those who went abroad in the beginning came back already. Back then, people fled the country because they weren't sure, the country would exist in the month. It's hard to just leave everything behind and move, especially when you're not 20. The idea, I think, has crossed minds of everyone and it has been discussed so many times. But me personally, that thought is nagging at me every time I come back from the parking lot after another missile. I don't really have like a lot of experience living abroad. Actually none. But from what I hear from a lot of Ukrainians, they like it better here and not just because of some kind of patriotism. It's. I don't know, it could be a culture gap or something. But I remember I was talking to a friend of mine who moved to Austria and I told her that I hate the curfew and I really want to just, you know, get together with friends and party all night long. And she's like, well, you probably won't like it here because all the bars close at 11 and the town is practically dead at night. My dad, who says that he's tired of Turkish cuisine and he just wants our food, real food. Everyone has something.

Dmitry and I continue to catch up over the next several weeks. We talk about the news and also just chat. He teaches me how Russian speakers use double brackets at the end of messages, kind of like how English speakers use smiley faces. He clearly loves Russian culture. His first language is Russian and he speaks it more than Ukrainian. After all that has happened, I wonder how he feels towards Russia and the Russian people.

I've lived my whole life in Kharkiv and everyone in Kharkiv and Dnipro speaks Russian. It's not a surprise to anyone. Obviously Russia had a lot of influence on Ukraine throughout history. And for the most of its life, Kharkiv has been a link between our countries. I mean, it's the reason it prospered. And you know, they say that Russian speaking people are being oppressed in Ukraine and they are coming to rescue us. You know, for those few groups who actually tell me that I have to speak Ukrainian, I guess I tell them the same thing that we tell the Russians, which is it's none of your business. You tell me how to live my life and I'll tell you to go screw yourself. My hometown, Kharkiv, for the most of his existence since USSR has been mostly pro Russian and well, I'm not proud of that, but I guess it was expected given that it was like a gateway to Russia. For the past year, I don't think I've heard a single person express love the occupants. Even those who had are like, oh yeah, I see it now. And I mean, how could you after thousands of people from your city were killed. Like, imagine preaching something like that in a bar next to people who lost their homes or their loved ones. You just get beat up. I actually am. There was, there was this bartender I met and he had his hand in plaster. I asked him what happened and he was like, well there was this guy and we didn't agree on a few war related things. But what I noticed is that Ukrainian made stuff suddenly got popular because for the most of my life I was used to imported being a synonym to expensive and of great quality. We're just now proud and supportive of using our brands and I mean we actually have good things like clothes, toys, the music. Oh my God, the music. The amount of it Ukrainians generated for the past year blows my mind. It's like Ukrainian culture just had the biggest boost. And the irony is that all of it happened because of those who claim Ukrainian culture doesn't even exist and the whole country is just a part of Russia. I think a lot of Ukrainians have cut all the connections to Russia that they had before 2022. We don't speak to our relatives in Russia. We try to avoid Russian content. Even though I have a pretty good reason to. I don't hate Russians. A lot of them are just clueless. And although most of Ukrainians would agree with me, in my heart I believe that we could have been just as easily brainwashed and dangerous thinking that Russians are the good guys if we didn't see with our own eyes the rockets. Dead civilians. Mariupol.

Dmitry told me one member of his family is planning to return to Ukraine, back to Kharkiv. Dmitry's less certain about whether he'll return to the city. He writes, it's been kind of loud there lately from the shellings. Can't say it's as dangerous as it was a year ago, but it still is.

We'll continue to keep in contact with Dmitry. After his invasion of Ukraine, President Vladimir Putin shut down Russia's last remaining independent news channels and websites. But in the years since, Russian journalists have regrouped in cities across Europe. On this week's episode of our newest show next year in Moscow, we hear that those journalists are now back online and on air, beaming the truth about the war into the country they left. Download all the current episodes of next year in Moscow, wherever you get your podcasts. And the new episode from tomorrow. That's all for this episode of the Intelligence. The show's editors are Chris Impey and Jack Gill. Our deputy editor is John Joe Devlin and our sound engineer is Will Rowe. Our senior producers are Sam Westrin and Rory Galloway. Our creative producer is William Warren. Our producers are Alize Jean Baptiste, Kevin Kaners, Barclay Bram and Sarah Larnyuk. With extra production help this week for Maggie Khadifa and Peter Granitz. We'll all see you back here on Monday.