[OPINION] The economic impact of gaming: Balancing innovation and regulation

Gaming has definitely come a long way since the days of Pac-Man and Space Invaders. Today, it is a multi-billion dollar industry that spans mobile devices, consoles, and PCs, with millions of players all over the world. As someone who has spent countless hours playing Call of Duty and multiplayer online battle arena (MOBA) games such as Mobile Legends and DOTA, I can attest to the power of gaming to transport us to new worlds and challenge us in exciting ways. But beyond the fun and entertainment it provides, gaming is also a major economic force, creating jobs and contributing to the growth of economies around the world. 

The economic impact of gaming

The global gaming industry is booming, with revenues estimated at $184 billion in 2022 according to Newzoo, a market intelligence firm focused on the gaming industry, and projected to reach $211 billion by 2025. This explosive growth is fueled by a combination of factors, including the rise of mobile gaming, the popularity of esports, and the increasing availability of high-quality games across platforms. 

Gaming has a significant impact on the economy through job creation. The US video game industry alone employs more than 143,000 people and supports an additional 215,000 jobs, as reported by the Entertainment Software Association in 2020. Additionally, gaming contributes to the economy through the sale of hardware, software, and accessories. In 2020, MarketWatch reported hardware sales for gaming in the US reached $4 billion, software sales reached $38.4 billion, and accessory sales reached $2.1 billion. The popularity of Twitch and YouTube also provide additional revenue streams for gamers and gaming companies. 

The gaming industry has likewise led to the creation of new technologies and the development of related industries. Graphics processing and computer hardware developed for gaming have been applied to other fields such as virtual reality, machine learning, and medical imaging. Furthermore, gaming has spurred the development of industries such as esports, which has become a major driver of economic growth. Esports tournaments attract massive crowds, both online and in-person, and create jobs and tourism opportunities. In 2020, Deloitte projected the esports industry to have generated $1.5 billion in revenue, and reported creating new opportunities for players, coaches, and support staff.

Drawbacks and controversies surrounding gaming

Critics argue that gaming is addictive and can lead to behavioral and health problems, especially for young people. Some studies have linked excessive gaming to poor academic performance, social isolation, and sleep disturbances. In extreme cases, gaming addiction can even lead to the neglect of basic needs such as food and hygiene. While gaming addiction is not officially recognized as a disorder in the Diagnostic and Statistical Manual of Mental Disorders (DSM-5), the World Health Organization (WHO) does include “gaming disorder” as a condition in its International Classification of Diseases (ICD-11).

While the vast majority of gamers do not engage in violent behavior, studies have suggested that playing violent video games can increase aggressive behavior and desensitize individuals to violence, raising concerns about a potential link between gaming and violence.

Gaming has also been linked to potential impacts on mental health. While gaming can provide stress relief and entertainment, it can also contribute to feelings of anxiety, depression, and loneliness, particularly when played in isolation for long periods of time. Experts have likewise raised concerns about its impact on attention and cognitive function among young people.

To address these issues, there have been calls for greater regulation of the gaming industry, such as restrictions on violent or addictive games, and requirements for warning labels or age restrictions. Some countries have also implemented measures to combat gaming addiction by limiting minors’ playing time.

Legislation and regulations and its potential impact on the industry

The gaming industry is subject to various regulations that impact the production, distribution, marketing, and profitability of games. One of the most significant regulations affecting the industry is the Children’s Online Privacy Protection Act, which requires online businesses to obtain parental consent before collecting personal information from children under 13. Another key legislation is the Video Game Health Labeling Act, which mandates the inclusion of warning labels on video games containing violent or sexual content. Similarly, China has implemented strict regulations on the amount of time minors can spend playing games and the number of new online games that can be released.

Additionally, several countries have taken steps to regulate loot boxes in video games, which have been classified as a form of gambling in some countries such as Belgium and the Netherlands. Loot boxes, which are virtual items that can be purchased with real money and provide players with a chance to obtain rare or valuable in-game items, are a significant source of revenue for many games. 

In contrast, the Gaming Accountability and Modernization Enhancement (GAME) Act proposes measures to support the industry, including the creation of a national clearinghouse for sports betting data and the establishment of minimum standards for consumer protection and responsible gaming practices. The bill also aims to protect the intellectual property rights of gaming companies and address online piracy of video games.

The need for balance between regulation and innovation

Achieving the right balance between regulation and innovation is crucial for the long-term success of the gaming industry. While regulation provides stability and attracts investment, policymakers must be careful to avoid overregulation that can stifle innovation and limit the industry’s ability to respond to changing market conditions and consumer preferences. A risk-based approach may be adopted, with different levels of regulatory scrutiny depending on the level of risk, to ensure that regulation is proportionate and targeted. In addition, regulators and industry stakeholders can collaborate on voluntary codes of conduct and best practices to support responsible growth and innovation while protecting consumers and promoting overall societal well-being.

Ultimately, the gaming sector has the potential to be a force for good, including providing entertainment, social connections, and economic opportunities to people worldwide. As gamers and consumers, we also have a role to play in shaping the future of the gaming industry. By being aware of the potential risks and benefits associated with gaming and making informed choices about the games we play and how we play them, we can contribute to ensuring that gaming continues to be a positive force for economic growth and social welfare. – Rappler.com

Amiel Guiteng is a versatile writer with a commerce and finance background, who enjoys exploring the impact of business and technology on society. With experience in various industries, he brings a diverse perspective to his work.