The US games industry directly employs more than 143,000 people and directly generates $40.9 billion in economic output, the Entertainment Software Association said today as part of a 2020 economic impact report prepared for it by TEConomy Partners, a research firm focused on "innovation-based economic development."
"As our industry is growing, it's important for us to chart that growth as an industry so we can share that story with others," ESA president Stanley Pierre-Louis tells GamesIndustry.biz. "And for ESA in particular, being able to share it with policy makers is critical, especially now that we have a transition going on in the White House, when we look at what's going on in Congress with new members coming in, and when we look at the states.
"Our role is to really serve as the voice and advocate for industry at the federal and state level. Being able to quantify the impact we're having on the economy is critically important"
"Our role is to really serve as the voice and advocate for industry at the federal and state level. Being able to quantify the impact we're having on the economy is critically important."
The last time the ESA produced an economic impact report was in 2017. And while that report concluded the industry employed fewer than 66,000 workers and contributed a far smaller $11.7 billion to GDP, Pierre-Louis said those numbers can't be compared on an apples-to-apples basis.
"The prior [report] looked principally at the companies that are developing games and/or hardware, and that was the water's edge of what we looked at," Pierre-Louis says. "In this one, we were able to do a deeper dive into those companies and what else is out there, and we were able to expand it to look at different categories that are still very video game focused, but weren't included last time."
Among the businesses that fell into that newly widened scope were physical game distributors, gaming-specific retailers like GameStop, and arcades. In fact, according to the 2020 report, those categories comprised more than one-third of the industry in terms of employment. (The 2020 report is based on 2019 data, and so does not reflect any impacts of the COVID-19 pandemic.)
This year's economic impact report also recorded a larger average level of compensation for those directly employed by the industry. In 2017, the ESA found average compensation in the games industry of $97,000 per year. The 2020 report says direct compensation (pre-tax wages plus the value of benefits) of games industry workers equaled $17.37 billion, or an average of more than $121,000 per worker for the year.
When asked how average wages could have risen so dramatically despite such a large influx of presumably lower-paying retail and arcade jobs, an ESA representative attributed it to methodology differences.
"What's exciting about this new report is that TEConomy researchers built a customized database that better tracks and represents both the breadth and depth of the US video game industry's impact," the representative said. "The methodology and sources used were different than previous reports, which is why it is not possible to compare the 2020 report with the 2017 report to draw conclusions or compare."
"It's important not just because [$90 billion] a large number, but because... it speaks to the fact that our industry has really grown and blossomed..."
This year's report also examined the indirect and induced economic impact of the games industry, which includes the money companies in gaming spend on other American suppliers (software vendors, real estate, advertising, employment services, etc.) and the impact of their employees' spending. Put together, the games industry affects the employment of almost 429,000 people, creating $90.34 billion in economic output and generating $12.6 billion in taxes for federal ($8.2 billion) and state/local ($4.4 billion) governments, according to the report.
"It's important not just because [$90 billion] a large number, but because as policymakers think about the industries that are having an impact on our economy, our society, our culture, and who they should pay attention to, it speaks to the fact that our industry has really grown and blossomed, and also creates jobs and provides people with the ability to connect," Pierre-Louis says.
Much of the report was focused on the impact the games industry has on the US, so we ask Pierre-Louis if he sees the industry's increasingly global footprint and emerging development markets to be any kind of a threat to the US' pre-eminence in the industry.
He says the industry has been global for some time, with foreign publishers routinely setting up American offices while American outfits like Electronic Arts and Activision establish international outposts.
"It's hard to say it's going to swing one way or the other in an aggressive fashion," Pierre-Louis says. "And one might even say as we look at some of the policies related to immigration, as we go back to a more traditional look at how to bring foreign-born workers into the US to help add to the development of games and products we create, there are opportunities to do more hiring in the US. One of the things we try to do is hire locally and hire in the US and develop talent, but we also recognize there are foreign-born workers who have amazing skillsets and can help us create games and the innovations our industry needs to stay ahead and advance in ways the audience wants."
When we ask Pierre-Louis to clarify who he means by "we" when talking about a return to more traditional immigration standards, he says he's referring to government policy. But given the Trump administration's suspension of H-1B visas and often hostile, xenophobic stance toward immigrants, we ask if there's a danger that the US has become a less attractive destination for foreign talent, that it has lost access to some of the best and brightest talent from other countries.
"Everything we're seeing being signaled by the new administration is that we'll go back to that traditional norm, and that means there will be tremendous opportunities [to hire foreign talent]"
"I think workers are always looking for opportunities to be at the best companies and in jurisdictions where they feel the most welcome," Pierre-Louis says. "And traditionally, the US has provided those things: the best jobs and a fantastic environment in which to do the work.
"I think everything we're seeing being signaled by the new administration is that we'll go back to that traditional norm, and that means there will be tremendous opportunities for the US to continue its pre-eminence in hiring the best workers from around the world and creating the best games that the world plays."
Another question facing the industry as a whole is the impact of the pandemic. Square Enix is now shifting the majority of its Japanese workforce to work from home on a permanent basis. If this becomes a widely adopted policy in the industry and developers choose to live in less expensive locales, how disruptive could that be for existing US development hubs or the US industry as a whole?
"What we're seeing is that's expanding opportunities within the US for people within states who maybe couldn't move to a new location to be able to work at some of these leading innovative companies," Pierre-Louis says. "If anything, it increases the ability for companies to compete for the talent pool that is everywhere. If you don't have to move to a location and can do it from where you are, we're a country with amazing resources, with tremendous broadband growth and opportunities, and policies that are strong for business.
"I would anticipate the US remaining an important and growing hub for the workforce, irrespective of whether people are going to offices or working from home"
"I would anticipate the US remaining an important and growing hub for the workforce, irrespective of whether people are going to offices or working from home."
One issue that the industry has been asked about for years is loot boxes and their resemblance to gambling. Electronic Arts is currently facing a number of class action lawsuits in the US and Canada, and is appealing €10 million in fines from a Dutch regulatory body for violating its gambling laws. We ask Pierre-Louis if, given the greater implications some of the lawsuits have for the treatment of loot boxes in the US, the ESA is assisting EA in any way.
"We have not been involved in any of the litigations that were recently filed," Pierre-Louis says. "I will say our industry has been a leader in providing consumers with different options and ways to engage with content, and different ways to participate in those ecosystems. We are also the most responsive to consumer reactions because we're one of these industries where there's a high degree of participation by the audience around the products.
"There are many industries where you may like the product but you don't know who made it. We're an industry where you know who's producing that product because it's part of the culture of that company and those developers. So we're excited about those connections, but we're also excited about creating different ways to engage."
Ultimately, Pierre-Louis believes the biggest threat to the US games industry right now might be a deviation from the US government's existing stance toward the field.
"What we've seen is policies that have allowed our industry to try different things, to meet consumer demands and needs," Pierre-Louis says. "So long as we are able to keep those markets open and the opportunities to experiment with consumer demand open, we'll continue to see continued growth. We're excited about the opportunity to reach customers where they are and create experiences that meet and exceed their expectations."