Why do video game companies lose money?


I initially posted this on r/gaming but got downvoted and removed lol.

I'm writing an article for my school paper, and I wanted to discuss video games and the questionable practices that many video game companies are doing. Beyond just false marketing and promoting gambling, it seems that many of these companies have negative earnings (TTWO and RBLX are examples). Certain do make money (EA and ATVI) but after employing some of those aforementioned questionable practices.

Video games is a big hundreds-of-billions dollar industry that is ever-growing. Sure it may take a long time and lots of money to develop a game, but then wouldn't that game flip many times its original investment? What's causing this trend for these companies to lose money like this?


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