The following video is part of our "Motley Fool Conversations" series, in which senior technology analyst Eric Bleeker and Chief Technology Officer Jeremy Phillips discuss topics across the investing world.
Everywhere you look, there are signs of the video game industry's success: Mobile phones delivering games are booming, and the talk in entertainment is next-generation "smart TVs" with built-in gaming. Yet, the video game industry as we know it is in a tailspin. Video game researcher NPD reported that sales of video games fell 34% in January alone!
As Jeremy and Eric discuss, even while an industry grows in terms of overall use, that doesn't always equal additional profits for the industry itself. Take, for example, newspapers: While more people might read newspapers online, profits went into a tailspin as the business model of the industry was disrupted. Similarly, the traditional model of selling video games at $60 a pop is now being disrupted by cheaper mobile games. Simply put, the profits in video games are beginning to shift to the companies who own the gaming platforms, like Apple and Microsoft.