The video game business is changing rapidly and it seems like several leading companies have lost their vision of why they do what they do.

The perfect storm of technology change, an economic downturn, and the explosion of social media has paralyzed many stalwart companies who have been leaders. So what's next and what does this mean for all of the people who work in the business?

First, video games as a business has been hard to understand for people not in the business. Wall Street has paid little attention to the sector relative to other technology areas. A top executive shared with me his thoughts recently that the business is “opaque” and “hard to understand.” A recent string of inexplicable statements and terrible decisions by Activision's CEO Bobby Kotick has got to make us all wonder how the biggest player in the industry can be so out of touch with the new realities (more about that later).

Second, the market has evolved rapidly over the past 30 years and even more radically over the past 5 years with the latest console cycle. It's important to understand the DNA of many of the early game companies – they started as arcade coin op vendors, some even as providers of pinball and other entertainment machines to restaurants. They then discovered their digital elixir's power over their audience, burned the code onto a disc or cartridge, put it in a box, shipped it to retail and hoped it sold through.

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