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PurposeThe purpose of this paper is to identify, characterize, and discuss paradigm shifts that have occurred in the video game industry with some emphasis on competition and competitiveness.Design/methodology/approachBasically, the paper depends upon a review of the literature associated with video game development. Past history is taken from texts and academic papers dealing with the subject. More current observations are taken from the business and popular press. These observations are placed within a context associated with the classic papers on industry evolution, paradigms, paradigm shifts, competition, and competitiveness.FindingsIt is difficult to capture present shifts in such a fast‐growing industry, but these shifts seem clear: the original entry of video games into the arcade sector that led to the industry and the demise of pinball; the development of the home cartridge and console that made the industry a home‐based phenomenon; the entry of independent game‐publishers that made the industry a two‐tiered one; and the development of massively multiplayer online role‐playing games (MMORPGs) that changed the way games are played.Originality/valueThe video game industry is an interesting one to follow. To an extent, its development characterizes our generation – fast paced, technologically oriented, and targeted toward the young and young at heart. This paper takes the subject away from a historical or anecdotal approach and places it within the context of industry evolution, paradigms, and paradigm shifts. It thus should be of value to students of not only video games, but also the evolution of rapidly growing industries and establishment of competitive advantages.

This article presents a study of the knowledge work involved in the development of video games. The success of these games is based on the ability to create a sense of immersion for the gamers. In the case presented here, dedicated gamers were also preferred when hiring personnel to develop the games. Speaking about the know-how of this specific group in terms of phronesis , the detailed and practical understanding of a particular field, enables an understanding of the idiosyncratic competence of this group and its importance for the development process. The video game development process is also structured to enable an open-ended process under the continuous influence of the gamers. The article concludes that innovative and creative work needs to be able to exploit a variety of competencies and that the notion of phronesis has to date been relatively under-theorized and therefore deserves more detailed attention.

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