Video gaming market has gone significant modifications when increasingly more digital platforms emerge and improved technology in portable gadgets, mainly in social video games(Facebook, Myspace) and mobile video games. 27% of United States online population play at least one game on social network, and Facebook video gaming income hit $1. 32 billion in U. S market in 20111. Also, as more than more individuals have wise phone particularly apple’s iOS gadgets, video gaming application ends up being increasingly more popular in mobile market(72% game applications on iTune)2.
There are standard console video game gamers such as EA, Activision, Nintendo and Ubisoft in this market, also there are leading business in the social video game area such as Zynga in the market. Traditionally, console games are sold in stores with $39. 99 to $59. 99 market price for the entire disc content. Hard-core video games such as Call of Duty(Activision), Assassin’s Creed(Ubisoft) and etc. normally price at $59. 99 while casual titles such as Nintendo wii video games cost around 30$.
Usually the pricing method for these console game business is the industry requirement– indicates every gamer in this market follows the exact same rule as the exact same price. It can be thought about as based on expense structure due to the fact that of the very long time of development (18 to 36 months), money-consuming game development cost and all sort of add-on expense (packaging, marketing and third-party licensing and so on )3 They likewise just have two months’ rack time as the video game lunch.
Since of the high entry barrier in the console game industry and high brand name understanding among consumers, a number of main rivals control the market.
The console video game rate does not separate too much amongst these players. Nevertheless, as facebook’s extreme success causes people’s behavior modification to be more “social” associated, a plenty of little companies start to participate in social gaming market and undergo blast growth speed such as Zynga. Zynga’s prices technique is “Free-to-Play” and charging in-game micro-transaction items such as virtual gift or structures.
The free-to-play concept is not new in this industry because plenty of Korean online game companies such as Nexon, NcSoft already using this business model while traditional online games use subscription model ($15. 99 per month) such as World of WarCraft(Blizzard) and EVE Online(CCP Games). As the internet bandwidth improvement and more internet users in US(250 million)4, online games and social games represent strong growth trend comparing to traditional console games.
And as users have more options in “free” games rather than premium games, more and more companies enter into this industry by offering products for free with micro-transaction options. Zynga’s most popular title “CityVille” has over 70 million monthly active users while best selling single console game Call of Duty(Activision) has 14 million copies sold in US market.
Facing the competition of Facebook games with free to play concept and high growth potential of online game market, some of the traditional package-good game companies start to offer cross-platform Facebook game titles to increase their competency in the market such as EA, Sony and Ubisoft.
Their main strategy is to develop Facebook companion games(Free to Play) to featured console game title. Those companions games not only offer free-to-play game content but also allow users to unlock items in the main console game such as Dragon Age Legend(EA). They intend to leverage their brand awareness in the gaming industry, acquire more users to play main games and increase monetization channel to increase revenue. EA responded very quickly in this digital trend by doing aggressive acquisitions for popular facebook or mobile game studios.
However, a lot of other traditional console game companies react very slow (Ubisoft, Sony) or refuse to change (Nintendo). Most of console game companies conduct a conservative strategy and will develop several social games(much shorter develop time) to make trial because overall the console retail sales revenue is much higher than that in social and mobile market. Others are not capable of following this fast-paced digital step and suffered loss (THQ laid off 200 employees in 2011 because of decreasing sales in retail products).
Most customers that play hard-core video console games generally are not satisfied with the “free-to-play” social companion games because of lower quality of overall game content and totally different game play with main games. A low quality companion product of Facebook platform will damage the company’s reputation in this industry for new users. However, since the users profile between hardcore players (average 29 years old male) and social players (average 35 years old female) are so different with very few overlap, it makes these console game companies indifferent to the failure of Facebook product.
Online game market, on the other hand, the free to play options have a big impact to customers’ options. For example, World of Warcraft ( Most popular Massive Multiplayer Role Playing game, 12million users with $15. 99 monthly subscription fee) lost 600,000 users since 2008 while RuneScape(Jagex) (free-to-play game with subscription options at $5) has 150 million registered users and over 10 million active users. Blizzard responded to the competition since 2011 on “free to Play” options until level 20 in the game.
Another game Lord of the Rings switched from subscription model to free to play model and saw double revenue and 400% user growth immediately. I would suggest the pricing decision maker in video game industry to look at customer, company capability, product feature, customer and competitors’ issues. Company – Analyze company’s positioning in terms of digital trend in the industry and focus on the products with higher profit margins – Analyze company’s cost structure and allocate reasonable resources on other platform product development based on financial forecast Product.
– Since console game products have fixed price in the retail stores, figure out other possible channels for monetization such as digital add-on contents, special side-product package etc. – Decide possible virtual buying items based on the game mechanics and gamers motivation (self-expression, social status and social network) Distributor – Corporate and form good relationship with retail distributors for more resources on shelf presence and brand promotion Customer.
– Deliver social companion games with high-quality contents to enhance main game – Deliver social games that directly target Facebook users – Promote company brand and establish community to highly engage with users Competitor – Learn from competitors on the digital content development – Expand to other country that competitors did not focus.
Resources: 1. www. bizreport. com/2011/07/2011-social-gaming-revenues-to-exceed-1billion. html 2. http://mashable. com/2011/07/13/mobile-gaming-trends/ .
Remember! This is just a sample.
You can get a custom paper by one of our expert writers.
Get your custom essay
Helping students since 2015
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download