The video game industry needs to evolve to survive.

It makes no sense to compare the *creation* process of movies to video games, yet ignore their revenue streams while contemplating "death"? Bigger (not necessarily better) movies have product placements, licencing revenue (happy meals, lunch boxes), pay-per-view, pay TV (HBO, Showtime), DVD, and network TV to tap in addition to the money from tickets. Video game publishers get one shot -- the initial sale of their (boxed) game.

Theaters also have a larger potential audience (going to a theater vs. owning a console/PC) and appear to cost less to consumers - $10/ticket for movie or $15 for a DVD vs. $50-60 for "full" games.

Video game companies have been trying to add value to the purchase of a new game, like Gears of War 2's map pack bundled with every pressed copy of the game. They are also trying to simulate product placement by selling ads in games, though that has been a tough sell to advertisers so far. A feat made all the more difficult by the nature of the fantasy worlds in video games -- Sci Fi (Halo, GoW), Fantasy (World of Warcraft), and gangster violence (Grand Theft Auto and its imitators).

The subscription model required to maintain a virutal world has only worked well for a handful of games so far, and the barriers to entry (costs, servers, etc.) keep out most potential competition. The market for people willing to spend $10/month plus expansions is quite lucrative for Activision/Blizzard, but few other players.

A problem with "1,000 Portals" is the difficulty of standing out from the crowd in digital distribution. Look at the iPhone apps market, Microsoft's Community Games, or the countless number of for a cost PC games. It *might* happen, it might not. The video game crash of the mid 80s happened due to the glut of bad product. But the costs of creating a game is a lot lower now than then, so time will tell if digital distribution of smaller-budget games will be a successful evolution of the industry, or if it kills itself trying to stick to the "box" method of gaming delivery.

Outside of all this, a better comparison for video games' business would be the music recording industry, which is facing a similar death spiral, made all the worse due to decades of gluttony and a failure to evolve into a digitial distribution model. Video game publishers should learn from them, while they can.