Halo 3 - Is the Video Game Industry Getting Bigger Than the Movie Industry?

Published 9/26/07 (Modified 3/9/11)
By MoneyBlueBook

Microsoft released Halo 3 - its highly anticipated Xbox 360 video game on Tuesday to much hype and acclaim. In case you didn't know, some enthusiasts have called it the biggest day in entertainment history. I think the only other game that could possibly top Halo 3 in the future is Blizzard Entertainment's upcoming Starcraft 2, but that's a story for another day. The Halo series have been very fun to play, and many people are going to be forking over their money to buy this must-have game. Although I used to be a big computer gamer and still enjoy the occasional video or computer game, today I prefer to just read about it and follow the industry spectacle.

Blockbuster Games are Big Money

According to media reports, when Halo 3 comes out Tuesday, the video game is expected to pull in more than $150 million in sales in the first 24 hours, outshining the $151 million that the Spiderman 3 movie did during its entire three day opening weekend in May.

What does this all mean? It means that the video game industry has finally flexed its muscle and shown that it's a force to be reckoned with. Popular blockbuster video games have become extremely profitable, with profit margins up to 90% compared to 40% or so for big time successful movies. Highly anticipated games can now easily outsell at retail what movies rake in at the box office.

Video Games Trumping the Movie Industry?

This made me wonder. Has the video game industry finally exceeded the movie industry? Has Hollywood finally lost its cutting edge touch and has it finally been pushed aside by the next generation of entertainment? The truth of the matter is that Hollywood is still firmly on top.

Successful video games are certainly very lucrative and popular games and systems can generate a substantial amount of sales, but unlike films, they are only limited to one outlet, which is retail. Video games are also still primarily constrained by its narrow fan base - mostly young men. In contrast, movies have a broad mainstream audience and have numerous sales outlets other than theaters. Movies can branch off into licensed video games, toys, and other merchandise. There is also further revenue from sales of DVD's, Blu-Ray, and even future broadcast rights.

Interesting Trend in Entertainment

But I think with the continual growth and shift of video games into mainstream entertainment, if it wants to stay on top, Hollywood is ultimately going to have to rethink it's model. The average gamer's age is 29 and it's steadily getting older. Some are also starting to encounter this interesting dilemma:

1. Stay in the comforts of your home and play a really great video game with your friends while eating cheap snacks and drinks, or
2. Go to a theater and pay upwards of $10 per person, while paying rip off prices for your popcorn and coke, and sitting through introductory commercials for a movie that may or may not turn out to be any good.

I know I'm oversimplifying things, but it's an interesting comparison. Frankly I don't really remember the last time I sat through a movie and though the price I paid for the movie and snacks was definitely worth the overinflated price. :)