U.S. Video Game Industry Growth Eclipses National Economy

November 27, 2007 | By: James Brightman

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Underscoring the importance of the video game industry, the ESA's latest study shows that growth of the industry in the U.S. has far outpaced growth of the national economy.

Economists Incorporated recently conducted an economic impact report for the Entertainment Software Association (ESA). The study Video Games in the 21st Century: Economic Contributions of the U.S. Entertainment Software Industry found that the game industry's annual growth rate from 2003 to 2006 in the U.S. exceeded 17 percent. During the same period, the U.S. economy grew just four percent.

It's yet another sign of the strength of the booming video game business, which the ESA says directly employs more than 24,000 individuals in the U.S., with an average salary of $92,300 as of 2006.

"Computer and video game companies play an ever increasing role in our nation's growing economy," said Michael Gallagher, CEO of the ESA. "These companies and their colleagues across the nation are making entertainment software one of the fastest growing industries in the United States."

The ESA study also found that the game industry's value added to U.S. Gross Domestic Product (GDP) in 2006 was $3.8 billion; in 2003-04 and 2005-06, the industry's contribution to real growth exceeded its share of GDP by more than four to one; the entertainment software industry directly and indirectly employs more than 80,000 people in 31 states; and, U.S. industry employees received total compensation of $2.2 billion.

The ESA examined the industry on a state-by-state basis as well, and not surprisingly California was found to be the largest employer of computer and video game personnel comprising about 40 percent of the entire U.S. video game sector. California game companies provided over $1.8 million in direct and indirect compensation to Californians last year. Furthermore, the game industry in California alone grew by 12.3 percent last year, which is almost three times faster than the state's overall growth. Overall, video games added $1.7 billion to California's economy.

While California clearly leads the video game charge, Virginia's computer and video game industry also grew by 552 percent in 2006, which is more than 172 times as fast as the commonwealth's overall growth. In addition, Washington state (home of Microsoft and Nintendo) ranked second nationally in computer and video game personnel in 2006, with 9,284 direct and indirect employees at more than 59 facilities across the state. On the east coast, New York also has a big impact. The state's entertainment software companies directly and indirectly employ 4,415 individuals at more than 25 facilities.