California is the birthplace of such global pop-culture sensations as the Beach Boys and Mickey Mouse. But in the 21st century, it has become the driving force behind a new generation of entertainment heavyweights: The Sims, Guitar Hero and World of Warcraft.
In recent years, the state has witnessed an explosion of new jobs and global exports from the video game business, which is expected to deliver nearly $50 billion in sales this year despite the brutal economy.
Global financial woes have dragged down game makers' stock prices and are dampening consumer spending heading into the holidays, when the industry typically generates 40% of its annual revenue. Still, analysts say that video games generally hold up well during economic slowdowns, and they expect 2008 sales to reach record highs.
So far, at least, game companies say they haven't scaled back their hiring plans. The state that gave birth to Pong in 1972 has become home to more than 18,000 video game workers, nearly half of the industry's domestic workforce. Tiny companies and giant corporations are braving high taxes and the soaring cost of living to tap into the state's unique blend of engineers in the north and artists in the south.
The Los Angeles area is ever more essential to game development because of its collection of composers to score soundtracks, writers to script plots and dialogue, artists to bring characters and lush environments to life and actors to perform so their movements can be digitally captured.
"Southern California is built on the Hollywood dream factory, and games have become a part of that," said Joseph Olin, president of the Los Angeles-based Academy of Interactive Arts and Sciences.
PricewaterhouseCoopers projects an annual growth rate of 9% for the next five years in global software sales for the video game industry, nearly double the rate that the consulting firm forecast for movies and theme parks, and about triple the rates projected for book and magazine publishing.
The game industry has traditionally thrived, even when consumers tighten their purse strings, because many players believe games provide more bang for the buck than other forms of entertainment, such as movies, sporting events and concerts. A $50 game can provide dozens if not hundreds of hours of amusement.
"We're still going to spend the same amount of hours entertaining ourselves," said Michael Pachter, an analyst with Wedbush Morgan Securities. "It's just a matter of which entertainment we choose to buy, and games are still perceived to be a super value."
Adam Noel is among the legion of consumers who drive game sales. The 28-year-old credit analyst says he doesn't go to the movies as often as he might -- so he can spend more than $600 a year on video games.
"Games are obviously more expensive than movies," the Koreatown resident said as he prepared to buy Fable, an action fantasy game for the Xbox console, at a GameStop store on Beverly Boulevard. "But you spend so many more hours playing a game. With a game like Final Fantasy, you can clock more than 60 hours playing. That averages out to less than a dollar an hour."
As they pump out these games, Southern California companies such as Activision Blizzard Inc. and THQ Inc., along with Silicon Valley's Electronic Arts Inc., claim most of the credit for having generated thousands of new jobs.
EA has hired about 2,500 people a year -- including some 300 new college grads -- for the last several years.
"We can't get them into our studios fast enough," said Cindy Nicola, vice president of talent acquisition for the game publisher, based in Redwood City. "Making games is very hard. It takes a lot of people who have both technical and artistic skills."
They include Chance Glasco, a 27-year-old who is responsible for handcrafting hundreds of animations for Activision's shoot-'em-up game franchise Call of Duty. His sole job is to animate the hands and arms of players as they pick up and fire weapons in the game. On a recent afternoon in the Encino studio where the game is made, Glasco deftly manipulated a pair of disembodied arms around an AK-74 assault rifle on a computer screen with a few clicks of his mouse.
"I decide what the hands will do and how they do it so they have personality," he said. "I think of each finger as an individual actor."
The attention that the animators lavish on such minute details explains part of the franchise's success. The last Call of Duty installment sold 11 million copies, becoming one of the top-selling games for Activision. This year, analysts expect the Santa Monica company to rack up $4.8 billion in revenue and nearly $800 million in profit.