As a child of one of the first generations to grow up with video games, I can still vividly recall my parents' exasperation when I became engrossed in this new and alien entertainment. “It's just dots of lights chasing other dots of light around a screen!”, my father would dismissively remark.

In the most technical of terms he was entirely correct. The games of the 1980s were little more than dots of light chasing each other around. And for many people, whose perception is still stuck in those early primitive years of Space Invaders, video games are the pointless stuff of children, adolescents and men who haven't grown out of adolescence.

But last week's financial results from Game Group tell a different tale. The UK's largest specialist video game retailer has bucked the dismal business news by reporting that its like-for-like sales - sales at stores open more than a year - had climbed 28 per cent in the first half of this year. Its first-half profits will top £33 million, beating the most optimistic forecasts of City analysts by a third.

Game's stunning success in recent years has led to a huge stock market valuation. This mid-range high street retailer enjoys a valuation that is almost three times higher than Taylor Wimpey, the country's biggest construction firm. Game's impressive performance is not a one-off. Nintendo is now Japan's second most valuable company - trailing the car maker Toyota but ahead of giants such as Canon and Panasonic.

This commercial success should not surprise us. It is the result of the revolution that has seen the video game industry escape from the messy bedroom of the teenage boy.

The average age of a video game customer now hovers around the late twenties to early thirties. The variation on either side of that average reveals a fascinating picture, too. Many of the first generation of child gamers now approaching their forties have children of their own. Whole families now gather around a game console, just as in previous generations the family gathered to watch a video or Morecambe & Wise on TV or to play Monopoly together.

If you don't play videogames, you may consider this whole revolution irrelevant to you. The videogame industry - and stock market investors - disagree. The incredible strength of shares in companies such as Nintendo isn't a reflection of their present success; it's an expression of the market's belief that this industry still has an enormous amount of room to grow. Not slow annual growth as new consumers join today's ageing “gamer generations” - but the explosive growth that comes when everyone is converted to playing video games.

In the mid-Nineties, Sony began promoting the PlayStation in nightclubs rather than on children's TV. Game creators realised that it was young men, not schoolboys, who had become their primary consumers - a revelation that created a wave of action, crime and horror titles aimed at men in their twenties. Overnight, the industry added Grand Theft Auto and Resident Evil to a line-up previously dominated by child-friendly characters such as Mario and Sonic The Hedgehog. That was the first revolution in videogames.

We are now experiencing the second revolution as the appeal of the medium expands even further. Ten years ago, designers learnt how to create the medium's equivalents of Rambo, Goodfellas and The Matrix. Today the race is on to create the family and female-friendly gaming equivalents of Titanic, Sex and the City and Love, Actually.

Nintendo is chasing the girl market: it has created Nintendogs, a game which allows them to raise and interact with a cute virtual puppy; for health-conscious women, who previously saw games as the preserve of couch potatoes, it launched Wii Fit, a product that uses video game technology to track your weight and build exercise programmes. Rival firm Sony has appealed to young women with British-developed karaoke games. Even retirees are joining in. One of Nintendo's greatest success stories has been in appealing to the 65+ generation, thanks to games which track mental acuity and provide gentle, interactive brain and body exercises. Nintendo's Wii console is now a staple of many retirement homes.

With visuals that now match those found in Hollywood movies, the medium is becoming a powerful platform for storytelling. The Japanese firm Square Enix builds epic adventure games whose fantasy narratives appeal equally to both sexes. And posing the question - when will the gaming world produce its Citizen Kane? - misses the point. It already has: the complexity and sophistication of Bioshock, a title released last year, showed that gaming creatives have learnt every lesson cinema and TV have to offer.

As video games continue to break new creative and commercial ground, the conclusion the markets have reached is simple - and inevitable. Being a stranger to interactive entertainment will be seen as eccentric as watching TV on a black and white set. Soon, we will all be gamers.

Rob Fahey has been writing about the games business for 12 years, and is the former editor of GamesIndustry.biz

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