The aim of this thesis is to research the dynamic video game industry through its history, and the development of modern business models and market relations supported by the advancement of technology. Based on the studied literature on video games, thesis will provide examples of companies, games and market analysis for drawing conclusions. The criteria for choosing the thesis topic were the dynamism of the industry, high concentracion of competition, technological trends and industry-specific business models. The modern video game industry consists of three sub-sectors which are the game console industry, the computer video game industry and the mobile game industry. Each of them has a large impact on the industry with their technological advancements and games, and the video game industry is predicted to continue its continuous growth. The historical development of the industry talks about the beginnings of the industry and about some of the main physical and legal persons such as Atari and Ted Daybney and William Nutting, as well as games, gaming machines, consoles, business practices and market movements that characterized that historical period of the industry. Also the industry crash of 1983 shows how lack of adequate marketing and bad products can really do a lot of damage to the national video game industry of the USA and it also shows that even in the early days the consumers are the biggest critics of games and companies and that the masses can really influence the video game market. With digitization and advancement of technology, the video game industry has almost moved completely to online forms of trade and distribution. The digitization of the banking systtem and online banking have allowed the development of microtransactions and the zero marginal cost model that is largely responsible for the success of the modern video game industry. Finally, the thesis talks about the price architecture of video games and price discrimination and it also shows how companies try to differentiate products and attract as many customers and players as possible through price discrimination.