One Up

Video games such as Fortnite, Minecraft, and Pokemon Go have been business successes in recent years, but the industry has not always been that way. As with any field of business, there have been crashes and other market disruptions. Even so, these firms march on, thriving in the face of digitalization and adopting unusual strategies like giving content away for free in order to build market share and draw in customers. The author draws on three decades of industry data to explain how video games have transitioned from the fringes of the media and entertainment industry to become a mainstream form of entertainment. By analyzing dedicated game designers like Activision Blizzard, Electronic Arts, and Valve, as well as more diversified firms like Apple, Microsoft, and Tencent, he concludes that video game companies flourish wherever they bring the same level of creativity to business strategy as they do to game design. This style of business model innovation is illuminated by case studies of how these companies have succeeded-or failed-to grow--