From the economic point of view, this was the year video games overtook music and video, combined, in the UK. The industries’ respective share of the take is forecast to be £4.64 billion and £4.46 billion. (For purposes of comparison, UK book publishers’ total turnover in 2007 was £4.1 billion.) As a rule, economic shifts of this kind take a while to register on the cultural seismometer; and indeed, from the broader cultural point of view, video games barely exist. The newspapers cover the movies extensively, and while it isn’t necessary to feel that they do all that great a job of it, there’s no denying that they have a try. Video games by contrast are consigned to the nerdy margins of the papers, and are pretty much invisible in broadcast media. Video-game fans return the favour: they constitute the demographic group least likely to pay attention to newspapers and are increasingly uninterested in the ‘MSM’, or mainstream media.

There is no other medium that produces so pure a cultural segregation as video games, so clean-cut a division between the audience and the non-audience. Books, films, TV, dance, theatre, music, painting, photography, sculpture, all have publics which either are or aren’t interested in them, but at least know that these forms exist, that things happen in them in which people who are interested in them are interested. They are all part of our current cultural discourse. Video games aren’t. Video games have people who play them, and a wider public for whom they simply don’t exist. (The exceptions come in the form of occasional tabloid horror stories, always about a disturbed youth who was ‘inspired’ to do something terrible by a video game.) Their invisibility is interesting in itself, and also allows interesting things to happen in games under the cultural radar.

An example. One of the hottest philosophical topics on the internet is Ayn Rand. Her ‘objectivist’ philosophy, positivistic and materialistic and focused on the need to get society out of the way of the genius so that he can get on with his geniusness, is popular with a broad spectrum of alienated semi-young men tapping away at computer screens and dreaming of world domination. Complicating the picture is the fact that she was also the main intellectual influence on her close friend and protégé Alan Greenspan, author of the recent monetary boom we were all enjoying so much until it destroyed the world economy. The only thing which isn’t ridiculous about Rand and her ‘objectivism’ is the number of people who take her seriously. It would be a good time for someone to publish a work of fiction or make a movie going into Rand’s ideas and duffing them up a bit – for instance, imagining what it would look like if a society with no laws were turned over to the free will of self-denominated geniuses.

Well, someone has done that, except it isn’t a book or movie, it’s a video game. BioShock, which came out in 2007, was conceived by Ken Levine and developed by 2K Boston/2K Australia, and is set in an alternative-reality version of 1960. The main character – from whose perspective you play the game – is involved in a plane crash in mid-Atlantic, and ends up in an underwater city called Rapture which, he learns, was founded by one Andrew Ryan (spot the near anagram) as a genius-led paradise of unrestricted scientific experiment. The scientists invented a technology of genetic improvement, ‘splicing’, and under pressure to keep this secret, Ryan made a fatal mistake: he passed Rapture’s only law, forbidding contact with the surface. This law instantly made smuggling a profitable business, and a criminal empire developed. Rapture descended into civil war, and then into the world of the game: a dystopian horror in which genetically altered ‘splicers’ run amok. BioShock is visually striking, verging on intermittently beautiful, also violent, dark, sleep-troubling, and perhaps, to some of its intended audience, thought-provoking. The game was a huge hit, and I have yet to encounter anyone who has ever heard of it.

As a video game, BioShock fully subscribes to the conventions of the medium, and if you as a non-gamer were to pick it up and give it a try, it is these you would probably notice most. Not just the conventions of which buttons and levers you press to move about the world of the game (annoying and hard to recollect as these often are) and not just the in-game mechanics, such as the ‘plasmids’ which you have to inject to give your character the powers he needs, or the tapes which are conveniently left around for you to discover and play back to hear the story of Rapture; but also the whole package of conventions and codes and how-tos which become second nature to video-game players, but which strike non-gamers as arbitrary and confining and a little bit stupid. Northrop Frye once observed that all conventions, as conventions, are more or less insane; Stanley Cavell once pointed out that the conventions of cinema are just as arbitrary as those of opera. Both those observations are brought to mind by video games, which are full, overfull, of exactly that kind of arbitrary convention. Many of these conventions make the game more difficult. Gaming is a much more resistant, frustrating medium than its cultural competitors. Older media have largely abandoned the idea that difficulty is a virtue; if I had to name one high-cultural notion that had died in my adult lifetime, it would be the idea that difficulty is artistically desirable. It’s a bit of an irony that difficulty thrives in the newest medium of all – and it’s not by accident, either. One of the most common complaints regular gamers make in reviewing new offerings is that they are too easy. (It would be nice if a little bit of that leaked over into the book world.)

So I’m guessing that if you played BioShock, that intelligent and thought-provoking game, your main reaction would be to be annoyed by all the things about it which seem stupid. Does that matter? Shouldn’t we just leave gamers to their annoying games, until they become less annoying? Is there anything that might be done about it, to make video games less offputtingly difficult/ arbitrary/self-segregating/stupid? One of the people who has most engaged with the question is also one of the few unquestioned geniuses in the video-game world, Shigeru Miyamoto. (Well, I say his status as a genius is unquestioned, but to those who don’t accept the cultural validity of video games, of course it’s very much in question – it would be like having a genius morris dancer. Suffice it to say that in the video-game world, including the many tens of millions of people who play his games, he’s an unquestioned genius.) Miyamoto has, throughout his career, engaged with the question of arbitrariness by making his games more arbitrary, more silly – by making that silliness part of the fun. He is the inventor of Mario and Donkey Kong and Zelda and Nintendogs: in other words, he’s Walt Disney. At his best, as in the recent Super Mario Galaxy, made for the Nintendo Wii, his games are visually beautiful, witty (a quality expressed mainly through the design of the many small planet-worlds in the game, heaving with imaginatively designed traps and enemies), and have a sublime, enchanting silliness. He dislikes narrative in game design, so his games don’t have a story (except for the Zelda series), but they do offer wholly satisfying worlds – this being one of the things video games do best. Also great fun is Super Mario Kart, a racing game, again silly, with a highly welcome low level of pick-up-and-play difficulty. In it, Donkey Kong (a large gorilla) can race Princess Peach (the multiply kidnapped sort of love object of the Mario series), an Italian plumber (the eponymous Mario), his evil twin, Wario, and a small green dinosaur called Yoshi, and so on, all of the vehicles being driven by various friends and family members, and comprehensible and playable by anyone over the age of about four. Miyamoto has said he likes the idea of creating games a grandchild and a grandparent can play together, and he has done more than anyone else alive to do exactly that.

It is no accident that Miyamoto has dedicated his career to the Japanese console-maker Nintendo, for whom all of his games have been designed. Nintendo began life in the late 19th century as a maker of card games, and that emphasis on gaming survived their transition to newer technologies. That might sound like a truism – video-game maker has background in games – but as it happens the company’s two great rivals have different histories. Sony is a consumer technology company, Microsoft is a software company, and both have been more reluctant than Nintendo to understand that what people mainly want to do with games is play; their interest has recently focused more on their desire to ‘win the battle of the living-room’. Translated, that means to sell consumers a super-powerful omnicompetent console which sits in the corner of the room and gives the parent company a share of all sorts of potential future revenue streams. Sony’s PS3 is a wonder of the world, with two astounding new technologies inside, the multi-threading Cell computer chip and the new generation Blu-Ray Disc; the Xbox 360 is a powerful computer in its own right; but the much lower-tech Nintendo Wii is a lot more fun than either of them.

If one were trying to find a point where video games are turning into a form of artistic expression, however, it might be towards the more powerful consoles that one would look. The Wii is great entertainment but in spirit it is closer to a toy than a game; I don’t mean that as a criticism, it’s a virtue. In the form of games such as those of Miyamoto, it is close to a spirit of pure play. This is often elusive in the darker types of video game. A common criticism of video games made by non-gamers is that they are pointless and escapist, but a more valid observation might be that the bulk of games are nowhere near escapist enough. A persuasive recent essay by the games theorist Steven Poole made the strong argument that the majority of games offer a model of play which is oppressively close to work. The Grand Theft Auto games, for example, are notorious (especially among people who’ve never played them) for their apparent celebration of random violence. The most recent iteration of the game, however, Grand Theft Auto IV, involves the main character having to spend a large amount of time building up his relationships, so that he can have people to help him do his criminal thing; and building up these relationships involves driving to see these people, taking them out to nightclubs, and sitting there with them. It’s not significantly less boring in the game than it would be in real life.

Peter Molyneux, a brilliant British game designer with a particular interest in ‘God games’ – games in which the player creates a world – had a great notion in a game called The Movies, which came out in 2005. In it the player designs and then runs a movie studio, starting at the birth of the medium and running all the way into the near future: he builds the studio, sets budgets, hires directors, manages the careers of stars, co-ordinates the production of the film, and then, within the game, actually gets to make animated films in the relevant style of the period, from silent to early colour to the present day. The player can then upload these films to the internet where anyone can watch them. The Movies is an example of just how sophisticated video games can be; but it also has a not so subtle flaw, in that the business of running the studio, in the game, is all too realistic: it’s almost as much of a budget-juggling, ego-massaging, logistics-forecasting pain in the bum as it would be in real life.

That’s not atypical. Most games, as Poole argues, are work-like. They have a tightly designed structure in which the player has to earn points to win specific rewards, on the way to completing levels which earn him the right to play on other levels, earn more points to win other rewards, and so on, all of it repetitive, quantified and structured. The trouble with these games – the majority of them – isn’t that they are maladapted to the real world, it’s that they’re all too well adapted. The people who play them move from an education, much of it spent in front of a computer screen, full of competitive, repetitive, quantifiable, measured progress towards goals determined by others, to a work life, much of it spent in front of a computer screen, full of competitive, repetitive, quantifiable, measured progress towards goals determined by others, and for recreation sit in front of a computer screen and play games full of competitive, repetitive, quantifiable, measured progress towards goals determined by others. Most video games aren’t nearly irresponsible enough.

So, on the one hand, we have those games which manage to achieve a pure state of play – too few, but they do exist. In addition to Miyamoto’s masterpieces, I should mention the magnificently goofy series of games jointly produced by Lego: Lego Star Wars, Lego Indiana Jones and Lego Batman. They are perfect games for an adult and a child to play together, and the recasting of the characters in the form of animated Lego lets a child play with things with which he is fascinated but of which in the movies he’s scared; it’s difficult to be frightened of a waddling Lego version of Darth Vader who regularly falls over. The games also, crucially, give the child a sense of agency – that he has entered the story-world of the movies and is playing inside it.

This sense of agency is the cultural and aesthetic USP of video games. The medium doesn’t have, and probably never will have, a sense of character to match other forms of narrative; however much it develops, it can’t match the inwardness of the novel or the sweep of film. But it does have two great strengths. The first is visual: the best games are already beautiful, and I can see no reason why the look of video games won’t match or surpass that of cinema. The second is to do with this sense of agency, that the game offers a world in which the player is free to act and to choose. It is this which gives the best games their immense involvingness. You are in the game in a way that is curiously similar to the way you are in a novel you are reading – a way that is subtly unlike the sense of absorption in a spectacle which overtakes the viewer in cinema. The interiority of the novel isn’t there, but the sense of having passed into an imagined world is.

At the moment this is, for the most part, about entertainment. An example is the genre that has grown up in video games, known as ‘survival horror’. The basic premise is that you go into a bad place and have to escape, and to do so need to fight off zombies or variations thereof. This sounds like many a movie: what’s different is that you aren’t watching this, but playing it. The person moving down the darkened hallway, listening to the sinister creaking noise coming from behind the wall, is you. The best of these games use sound to great effect; the interiors are underlit, and the monsters, when they arrive, genuinely feel as if they are coming to get you – not the you watching the story, but the you inside the story. If this makes them sound frightening, they are, but in the cathartic way of a good scary film, and this is one instance where video games seem to me much healthier than their cinematic equivalents, which have currently abandoned themselves to a revolting vogue for ‘torture porn’. Resident Evil 4, to name the generally agreed peak of the genre, is a better scary entertainment than any horror film made in years, and if you can play it at night with the lights out, you have steadier nerves than I do.

Another example of games which exploit the involvingness of the form to good effect is the category of ‘shooters’. There are first-person shooters, in which the player’s point of view is the same as the character’s, and third-person shooters, in which the player looks at the character from the outside. There is a whole sub-genre of shooter in which creeping and crawling around are as important as the actual fighting; these are ‘stealth’ games, and the best of them, the Metal Gear Solid series, are widely seen as the pinnacle of the shooter form. To my mind, they’re over-rated. Their creator, Hideo Kojima, likes long cut scenes: the film-like interludes which break up the gameplay action, and which, because they can be made to a higher level of animation, often provide the most visually arresting sequences of a game. Combined with a taste for bizarrely complicated, recursive plots, and long sequences of wordy explicatory dialogue, this turns the games into a bit of a drag. The Metal Gear games foreground one of the problems with games, which is that the writing in them – and there’s more writing, more dialogue and more acting than non-gamers think – tends to be pretty lousy. The effort put into the imagining and realisation of worlds, especially the visual detail of those worlds, isn’t matched by the stories told and the words spoken.

At their best, though, shooters are entertaining, in the way that action films are entertaining, only better. Call of Duty 4, for instance, a first-person shooter, set in a more or less realistic present day, is faster and more thrilling than its Hollywood competitors, because it’s more involving. It’s not Jason Bourne shooting and being shot at, it’s you – and by the way, the idea that these games encourage fantasies of invulnerability is, it seems to me, wrong. Even playing them on the easiest setting, you the player are killed, and often, which is frustrating and even upsetting; you certainly feel less invulnerable than you do watching a shoot-out on TV. In 2004 the commercial version of a game developed as a training tool for the US army was released. Full Spectrum Warrior, interestingly and necessarily realistic, is less about shooting and more about movement and seeking cover. It is set in a carefully non-specific Middle Eastern country, and in 2006, with the lessons of Iraq percolating through the system, a sequel came out, with various tweaks and improvements, and one big change: in this version, the player can be killed.

Games are not, in general, better than films. But they are often better than huge-budget Hollywood films. Games whose main aim is to provide unreflecting entertainment are (it seems to me) getting to a point where they are often more entertaining than expensive movies with the same aim. To their target demographic, this seems so obvious it’s barely worth stating; and when it is stated, the logic is clear. ‘Games have to be better than films because they cost more,’ is how one gamer puts it. A movie costs eight or nine quid (as much as double that for the DVD) and lasts a couple of hours, a game costs 40 quid and lasts for up to 40 hours of normal gameplay; but many games now have an extra dimension in that they can be played online, with and against other players. Call of Duty 4 has an especially active online community, who play in teams, and regard the online aspect as the best thing about the game. The young men (mostly) who shell out their 40 quid are a demanding audience.

Too demanding, perhaps. I’m not the target demographic, obviously, but I find many games too hard to play: the levels of frustration and repetition are too high. Gamers sometimes complain about this, but they’re just as likely to complain about the opposite, and one of the great things about difficulty for the game-making companies is that it stretches the play out – you can turn a five-hour game (too short for the hardcore fan) into a 20-hour one simply by making it harder to save your progress and restore your in-game health. It’s boring and annoying for the non-hardcore player. The trouble is that this hardcore player is a deeply desirable demographic: young, male, with disposable income, susceptible to advertising and marketing, hard to reach through other media, and keen to try the new thing. Gaming is profitable and has grown fast, and this audience has allowed it to do so, so the industry is to a large extent focused on giving the boys what they want.

And what do they want? The same thing the audience for any new medium always wants: they want pornography, broadly defined. They want to see things they aren’t supposed to see. This is why video games, in general (and away from the world of Miyamoto-san) are so preoccupied with violence – it’s what young men want to see. (Pornography in the sexual sense is less of an issue: they can get that from the internet, any time they want.) Their rule-bound, target-bound educations and work lives leave them with a deep craving to go and commit imaginary crimes – as well they might. Not all games are cynically, affectlessly violent, but a lot of them are, and this trend is holding video games back. It’s keeping them at the level of Hollywood blockbusters, when they could go on to be something else and something more.

It seems clear to me that by the time my children are adults, video gaming will be a medium whose importance and cultural ubiquity are at least as great as that of film or television. Whether it will be an artistic medium of equivalent importance is less clear. One of the problems is that the new consoles are difficult and expensive to create games for: no one can create a game for the PS3 or Xbox 360 without access to significant amounts of capital. The next generation of consoles is a long way away, and this will likely be even more the case by the time they’ve grown up. As the tools of filmmaking have got cheaper, those for game making have got more expensive; this might mean that the game industry never gets to move on from the need to create blockbuster equivalents. Already the industry suffers from an excessive proliferation of sequels – always a sign that the moneymen are in charge. Games do a good job of competing with blockbusters, but it would be a pity if that was the summit of their artistic development.

There are, however, glimpses of what games might one day be. Will Wright is another generally acknowledged genius of the game world. His first great creation, The Sims, took the ideas of Abraham Maslow about mankind’s ‘hierarchy of needs’ (food, shelter, security and so on, up to ‘peak experiences’) and applied them to a game in which users could set the rules for their various characters, and then allow them to go off and interact with each other. The interactions can be unpredictable. ‘Mum, what’s “intimacy”?’ an 11-year-old Sims player of my acquaintance asked her mother. A day later, she came into the kitchen again, outraged: ‘Mum, my character’s just had a baby!’ The Sims too suffered from sequelitis, but Wright went off to design another game, called Spore, arranged in five separate stages. In the first, you begin by designing single-cell organisms and supervising their fight for life; then you arrange their development into intelligent creatures; then you develop a tribe; then a civilisation, all the time arranging the parameters of the game-world. In the last stage, your civilisation travels into space, where it can be uploaded to the internet and allowed to interact with the other space-going civilisations developed by other players of the game. At the moment there are tens of thousands of these planetary civilisations to explore. There is a strong sense in Wright’s work that the most interesting thing about his games is what is done with them by the user; that the user’s experiences and reactions and creativity are the most important thing about the game.

There – I’ve done it. I’ve used the ‘c’ word. From the aesthetic point of view, a lot turns on whether games offer their users actual creativity, or whether it is just some horrible corporate simulacrum. The PS3 has a wonderful new game called LittleBigPlanet, in which you play a sock-like creature who travels through game levels full of puzzles and obstacles, and governed by fascinatingly realistic physics – and then offers you a full set of tools to design game levels of your own, and upload them for others to play. All the specifics of the levels are up to you; you can fill them with photos and music of your own choice, you can do whatever you like. That’s fun. Is it creative? I’m not sure: part of me wants to say that it isn’t, that nothing within a world so fully made by a corporation can be truly creative. But it isn’t so far off creativity, and it is possible to imagine a day in which games like this cross over to offer real freedoms, and therefore the real possibility to make something new, something of your own.

The other way in which games might converge on art is through the beauty and detail of their imagined worlds, combined with the freedom they give the player to wander around in them. Already quite a few games offer what’s known as ‘sandbox’ potential, to allow the player to ignore specific missions and tasks and just to roam around. (Many people’s favourite aspect of the Grand Theft Auto games involves their sandboxiness. A favourite sandbox activity in the California-set Grand Theft Auto: San Andreas was simply driving to the coast and watching the sun go down over the ocean.) I think more and more games will make this central to the user’s experience of the game, and one straw in the wind here is Fallout 3, a new game from the producer Bethesda. It’s set in a post-apocalyptic 2277, and your character begins the game living in Vault 101, a bomb shelter set near the ruins of Washington. The game has the usual props and targets, but one of the most striking things about it is the opportunity it offers to explore the bombed-out, desolate, intensely evocative city. This is something which, once you’ve done it, I suspect will be difficult to get out of your head – and it is a glimpse of what games can do at their best. The next decade or so is going to see the world of video games convulsed by battles between the moneymen and the artists; if the good guys win, or win enough of the time, we’re going to have a whole new art form. At a moment when there’s less good cheer than there should be, it’s something to look forward to.