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More Than Just Costumes: PAX and the Gaming Industry in Seattle

King County Bar Bulletin
September 2016

Overview

On a typical day in downtown Seattle, the corner of Pike Street and Sixth Avenue primarily is crowded with business professionals and tourists. But on occasion the vibe changes. You walk down the street to find the sidewalks riddled with costumed individuals and people in t-shirts wearing colorful badges.

Over Labor Day weekend, Seattle will watch as more than 70,000 avid professional and casual gamers descend on downtown Seattle for the Penny Arcade Expo (PAX), an internationally known convention created exclusively for gaming of all types.[1] Because of the volume of cosplay involved, you may understandably lump PAX with all the other conventions that have been held in the area: Emerald City ComiCon, Sakura-Con, Seattle Steamposium, GeekGirlCon or CanCanCon (okay, fine, we made that last one up).

But as any con-goer would tell you, each of these events is unique; designed for different purposes and appealing to different audiences. As attendees and supporters of many cons, we believe PAX is particularly noteworthy for its distinct connection to gaming and its impact on Seattle’s economy.

What Is PAX Anyway?

PAX began in Seattle in 2004 when the authors of the “Penny Arcade” video-game webcomic decided to host a trade show focusing on the community and culture of gaming. From that first show, PAX doubled in size, year after year, until in 2010 the creators expanded to Boston for PAX East in 2010. The Seattle and Boston cons represent the two largest gaming events in North America.[2]

PAX has continued to expand, creating PAX South in San Antonio and PAX Aus in Melbourne. PAX began in Seattle, but its local namesake has evolved from “PAX” to “PAX Prime” to “PAX West” to distinguish from other new PAX events. Despite (and perhaps because of) PAX’s increasing size and additional locations, tickets to PAX are notoriously difficult to acquire, selling out in minutes.[3]

And it’s easy to see why. Gaming is a universal hobby and a growth industry that should not be overlooked.

But, I Thought All Gamers Were Unemployed Millennials?

Gaming has a surprisingly diverse and widespread consumer base, particularly consumers of video games. According to 2016 statistics, 63 percent of U.S. households have at least one person who plays video games regularly (three hours or more per week).[4]

Source: Maeve Duggan, “Gaming and Gamers,” Pew Research Center, Dec. 15, 2015, at 2, available at http://www.pewinternet.org/2015/12/15/gaming-and-gamers/.

In spite of the ongoing stereotype that only teenage boys are gamers, the average video gamer is 35 years old and more than 25 percent of gamers are 50 or older.[5] Stigmatization likely causes inaccurate assumptions about the gaming market, which is larger and more diverse than one may expect. Forty-nine percent of American adults play video games, but only 10 percent consider themselves “gamers.”[6] Additionally, men are twice as likely to self-identify as “gamers,” but a nearly identical share of women and men report that they play video games.[7]

Other assumptions color opinions of gaming. For example, some may assume that video games are isolating; however, many games are social activities. More than half of the most frequent video gamers play with others, including friends, family members, parents and significant others.[8]

Board gaming is a growth and varied industry as well. You may have played a game or two of Monopoly in your day, but the board games available today may surprise you. These games are becoming more strategic and engaging. Enter stores such as Card Kingdom/Café Mox in Ballard or Gamma Ray Games in Capitol Hill and you will be overwhelmed with the variety.

While gender and household statistics are unavailable for tabletop gaming, sales data present a clear picture that the industry is experiencing significant growth. The North American hobby games market, which is defined by games that can be found at tabletop game stores such as Card Kingdom that are marketed toward gamers, increased in sales from approximately $735 million in 2013 to $880 million in 2014, a 20-percent growth rate in one year.[9]

Startup funding websites, such as Kickstarter, contribute to the board game market growth as well. Tabletop games (such as board and card games) raised more than $84.6 million on Kickstarter in 2015 alone.[10]

Why Should I Care?

Gaming is a major industry and it is particularly important in King County. Local game companies bring in approximately $9.7 billion in revenue and approximately 16,500 employees work at nearly 300 game companies located in the Puget Sound area.[11]

Leading players in the industry choose to locate or hold operations in the greater Seattle area, including Microsoft, Nintendo, Valve, Big Fish Games and many more. Everyone knows Microsoft for its PC market; however, Microsoft’s gaming revenue is significant, having increased in the last year with sales of the Xbox, hardware accessories, subscriptions to Xbox live, and games.[12]

Valve may fly under the radar in non-gaming circles, but it is a major player in the industry. Valve is based out of Bellevue and is primarily known for Steam, the world’s largest gaming distribution platform used to install computer games. Steam controls half to 70 percent of the $4-billion market for downloaded PC games.[13] The company’s founder acknowledged in 2011 that, per employee, Valve is more profitable than Google and Apple.[14] Valve recently outgrew its previous space and will be moving into nine floors of new office space in Bellevue’s Lincoln Square.[15]

Nintendo has recently been a headliner in the news as its stock quickly skyrocketed with the release of Pokémon Go and then plummeted as investors realized that Nintendo had a limited stake in profits from the game.[16] It is releasing a new console, the Nintendo NX, next year.[17]

Big Fish Games is the world’s largest producer and distributor of “casual games,” which net sales primarily through mobile and online distribution platforms.[18] The company was sold in 2014 to a racetrack operator based out of Louisville for $885 million, but the gaming company operations and employees remain in Seattle.[19]

The effect of the gaming industry on our culture cannot be overstated. And it’s not likely to decline. The gaming industry is forecast for 30-percent growth between 2014 and 2019, from $15 billion in sales annually to $19.6 billion.[20] In only five years, the U.S. has experienced a 50-percent increase in video game design educational opportunities, with 390 colleges, universities and other academic institutions offering certificates and degrees in video game design.[21] While the greatest number of courses can be found in California, DigiPen provides a nationally recognized program out of Redmond.[22]

As video and board gaming become even more entrenched in our society, careers have been made not only in creation and marketing, but also in playing games. This profession is aptly-named “E-Sports” — a big business featuring audiences that can fill stadiums and gamers battling for millions of dollars in prize money.

In August, Key Arena hosted The International 2016, an annual tournament for Dota 2, a multi-player video game.[23] The tournament broke international records with a prize pool exceeding $18.5 million,[24] and at the time this article was written, the prize pool had topped $20 million.[25] The weeklong competition culminated in a 16-team, double-elimination bracket in front of a sold-out Key Arena crowd. The grand prize winner took home more than $6 million.[26]

When you see people near the Convention Center wearing badges, particularly during Labor Day weekend, it is worthwhile to consider how conventions play a part in the culture and economy of the Puget Sound region. Knowledge of these issues can keep you in touch with our culture and the industry around you.


[1] What Is Pax?” PAX West: http://west.paxsite.com/what-is-pax (last visited Aug. 4, 2016).

[2] Id.

[3] Jason Bohn, “PAX West Badges Availaaaaand They’re Gone,” Hardcore Gamer (June 7, 2016): ‎http://www.hardcoregamer.com/2016/06/07/pax-west-badges-availaaaaand-theyre-gone/210659/.‎

[4] “2016 Sales, Demographic, and Usage Data: Essential Facts about the Computer and Video Game Industry,” Entertainment Software Ass’n, April 2016, at 2, available at http://essentialfacts.theesa.com/Essential-Facts-2016.pdf.

[5] Id. at 3.

[6] Maeve Duggan, “Gaming and Gamers,” Pew Research Center, Dec. 15, 2015, at 2, available at ‎http://www.pewinternet.org/2015/12/15/gaming-and-gamers/. “Video Games” is defined as ‎games accessible on a computer, TV, game console or portable device such as a cell phone. ‎

[7]Id.

[8] Id.

[9] ‎“Hobby Games Market Climbs to $880 Million,” ICv2 (July 20, 2015): http://icv2.com/articles/‎markets/view/32102/hobby-games-market-climbs-‎‎880-million.‎

[10] Samit Sarkar, “Gaming Kickstarters raised $133.6M in 2015, 76 percent more than 2014” ‎‎(update), Polygon (Jan. 14, 2016): http://www.polygon.com/2016/1/14/10768490/kickstarter-‎games-stats-2015-tabletop-video.‎

[11] Taylor Soper, “Here’s why Seattle — not Silicon Valley — is the gaming industry’s epicenter,” ‎Geekwire (Sept. 17, 2013): http://www.geekwire.com/2013/big-fish-coo-seattle-epicenter-‎gaming/.‎

[12] Joe Skrebels, “Microsoft: Xbox Revenue Up, Hardware Sales Down,” IGN (April 22, 2016): http://www.ign.com/articles/2016/04/22/microsoft-xbox-revenue-up-hardware-sales-down.

[13] Oliver Chiang, “The Master of Online Mayhem,” Forbes (Feb. 28, 2011): ‎http://www.forbes.com/forbes/2011/0228/technology-gabe-newell-‎videogames-valve-online-mayhem.html.‎

[14] Id.

[15] ‎“Valve to Take Nine Floors in Lincoln Square Expansion,” The Registry (Aug. 11, 2016): ‎http://news.theregistryps.com/valve-to-take-nine-floors-in-lincoln-square-expansion/.‎

[16] Yuji Nakamura & Takashi Amano, “Nintendo Slumps By Most Since 1990 on Dashed Pokémon ‎Go Hopes,” Bloomberg (July 25, 2016): http://www.bloomberg.com/news/articles/2016-07-‎‎25/nintendo-set-to-plunge-after-saying-pokemon-go-s-impact-limited.‎

[17] Paul Tassi, “The Nintendo NX Could Do Some Serious Damage With a ‘Zelda,’ ‘Mario,’ and ‎‎‘Pokémon’ Launch,” Forbes (Aug. 5, 2016): ‎http://www.forbes.com/sites/insertcoin/2016/08/05/the-nintendo-nx-could-do-some-serious-‎damage-with-a-zelda-mario-and-pokemon-launch/#2cf‎7ad45318f.‎

[18] “About Big Fish,” Big Fish Games: http://www.bigfishgames.com/company/ (last visited August 8, 2016).

[19] Taylor Soper & John Cook, “Big Fish Games to be Acquired for $885 Million By Racetrack ‎Operator Churchill Downs,” Geekwire (Nov. 12, 2014): ‎http://www.geekwire.com/2014/churchill-downs-acquires-big-fish/.‎

[20] Dean Takahashi, “U.S. games industry forecast to grow 30 percent to $19.6B by 2019,” June 2, ‎‎2015: http://venturebeat.com/2015/06/02/u-s-games-industry-forecast-to-grow-30-to-19-6b-by-‎‎2019/.‎

[21] Robin Valentine, “Video game degrees in the US increase by 50 percent in five years,” Sept. 11, 2014: http://www.gamesindustry.biz/articles/2014-09-11-video-game-degrees-in-the-us-have-increased-by-50-percent-over-the-last-five-years.

[22] DigiPen was ranked No. 4 in the top 50 undergraduate schools for game design in 2016. Princeton Review, Top Game Design Press Release, “The Princeton Review Ranks Top 50 Undergrad & Top 25 Grad Schools to Study Game Design for 2016,” March 15, 2016: http://www.princetonreview.com/press/game-design-press-release.

[23] “The International Battle Pass,” DOTA 2: http://www.dota2.com/international/battlepass/ (last visited Aug. 11, 2015).

[24] Kellen Beck, “‘Dota 2’ International breaks esports prize pool record at more than $18.6 million,” ‎Mashable (July 27, 2016): http://mashable.com/2016/‎‎07/27/dota-2-prize-pool-record/#oDJAICdHosqd.‎

[25] Id.

[26] Id.

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