The video game industry has in three decades gone from a garage hobby to a global multi-billion euro media industry that challenges the significantly older and established cultural industries. After decades of explosive growth the industry surprisingly finds itself in a crisis – in terms of sales, future trajectories and creative paradigms. The global gaming culture receives substantial attention from society, media and academia – but the industry itself appears in comparison as an enigmatic terra incognita with astonishingly little dedicated research. This thesis aims to amend this situation by presenting a study at the cross-section of the video game industry, game studies, literary theory, cultural industries and business studies. It deals with the following question: how does the global game industry relate to its own product, in terms of communication and media dimensions, and what are the (business) consequences, in terms of production, strategy and commercial/creative innovation, of this relationship? This study’s departure point is constituted by a comprehensive description of the industry’s structure, dynamics and processes, based on extensive interviews with industry professionals. It is followed by an examination and comparison of the game industry with other media/cultural industries in relation to their economy and business dynamics. With inconclusive answers regarding the medium-industry relation, this study proceeds by exploring literary theories from the field of game studies, in order to gain insights into the dynamics of medium and industry. Literary theories from ludology and narratology provide rewarding perspectives on this inquiry, since it is found that the ontological dichotomy of simulation vs. respresentation present in the interpretational realm of the game medium is also reflected in the industry and its dynamics. This has pivotal consequences for the analysis of the game industry. This study concludes by positing the current critical condition of the industry as an extremely decisive moment in its history: will it become a truly universal mass-medium, or will it continue down its subcultural path? Subcultural “interactive cinema” meets mass-cultural media of simulation – how will the industry evolve? / QC20100708