New Business Models for the Computer Gaming Industry: Selling an Adventure

New Business Models for the Computer Gaming Industry: Selling an Adventure

Martin Heitmann (Technische Universität Berlin, Germany) and Kay Tidten (Technische Universität Berlin, Germany)
DOI: 10.4018/978-1-60960-567-4.ch024
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Abstract

Nowadays, managers in the computer and video gaming industry are forced to reevaluate their companies’ strategic position within the value-added chain, as traditional business models show a tendency to erode. While there are some striking parallels to the music industry, like facing the threat of acts of piracy, indicating what future developments might be expected, there are also best practice examples from the computer and video gaming industry to learn from. Thus, it is imperative to have a look at the changes in competitive settings within this industry and analyze adequate examples regarding how to setup new profitable business models. In order to evaluate the changed business models in a meaningful way a systematic approach is advisable. Therefore, a short ontology of business models is given first, supporting the illustration of recent developments in the industry and which will guide the presentation of selective cases. Three major implications for managers in the computer and video gaming industry will be identified. These include a need to centralize the game experience, a stronger shift towards online distribution channels and the development of a collective sense of identity by target communities.
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Computer And Video Games Industry Overview

The computer and video games industry produces entertainment software and hardware for both personal computers and video consoles (e.g. Microsoft® Xbox or Nintento® Wii™). With the ongoing technological progress in computer hardware and telecommunication, the computer and video games industry evolved to a diverse and lucrative industry: In 2009, U.S. customers spent $ 10.5 billion on retail purchases for computer and video games, compared to $ 5.6 billion in 2000; a growth of 187% in only eight years (Entertainment Software Association, 2009).

Figure 1.

U.S. computer and video games sales in billion dollars (Entertainment Software Association, 2009; NPD, 2010)

Among the leading companies in the computer and video games industry are Activision Blizzard Inc., Electronic Arts, Take-Two Interactive Software Inc., and Konami Corporation (Datamonitor, 2009a). In 2008, former game developers and publishers Vivendi Games and Activision® merged to Activision Blizzard™ and, as of 2009, surpassed Electronic Arts® as the largest video game company in the world by net revenue (Activision Blizzard, 2007, 2008, 2009; Electronic Arts Inc., 2007, 2008, 2009).

Figure 2.

Net revenues in billion dollars (Activision Blizzard, 2008, 2009; Electronic Arts Inc., 2008, 2009; Konami, 2010; Microsoft, 2008, 2009; Take-Two Interactive, 2009, 2010)

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