Assignment:
Topic: Expose on Online Gaming Industry
• Two business models
o One that is continuously improving on one game (Riot Games)
o One that is expansive (Blizzard)
• Different Finance Models
o Microtransactions (Riot Games/EpicGames)
More in-depth
o Monthly Subscriptions/Mandatory Microtransactions (Blizzard)
• Competitive Advantage
o Riot Games, Esports Sector High Market Share, Franchising
Houston Rockets, Rick Fox
Security/Funding for Players
• Challenges
o Innovation
o Finances; Free-to-play/Pay-to-win
o Balancing
• Pokemon Go Failure Example
ONE PER PERSON, TAKE YOUR PICK
Main Topics
I highly suggest you include the following at the very least
• Inventory Analysis and Strategies --
• Finance Models
o Subscription
o One Time Basis
o Microtransactions
"Unfair" Microtransactions
• Process Improvements Concepts-
• Waiting Line Concepts-
• Market Target/Segment Analysis-
o Different Consoles
o Singleplayer/Multiplayer, Games that have both
o "Fortnite" - Younger Audience, Cartoony Graphics, Free-to-Play, Easy to handle for the computer
o "Counter-Strike" - Mature Audience, Loyal Fanbase Not much advertising Word of Mouth, Realistic Graphics, Harder for the Casual Player
• Waste/Lean MGT-
o Unnecessary features
o Bugs
o R&D (Research and Development)
o Hackers
• Product Development
o Transparency
o Trying to get something out by the deadline but not "finished"
o DLCs (Downloadable Content)
• Supply Chain Management -
Gaming has been a fundamental and ever-developing industry in the entertainment market, with online gaming being one of the subdivisions that has expansively evolved within the last several years. It began in the early 1970's when video games were introduced in just computer and arcade versions, but several years later the industry saw a decline in sales and revenue. As time went on, international companies like Nintendo entered the market and introduced portable console systems, which led to a huge skyrocket in sales. In the late 1990's, with the help of compacted discs and programming, the first Sony Playstation was released, which in turn led to a growth in user interaction with software.
Since then, because of technological proliferation, progressive advancements in hardware and software systems, and an incline in consumer awareness, online gaming companies have become a multi-billion dollar industry that has not stopped growing since. Some of their new features include mobile gaming, social gaming, massive multiplayer gaming, and free-to-play games. According to Statista Report, it is expected that by the year 2021, the U.S gaming market will generate revenue of $2.2 trillion and the amount of online gaming consoles will expand to 57 million worldwide. It is no surprise that gaming, more specifically online/mobile gaming has become such a successful business that continues to generate impressive revenue.
For several of the top online gaming companies there are different business and finance models that these firms use to operate successfully. For a companies like Riot Games and Epic Games, owned by Tencent, they have a very unconventional and unique business regime. Riot Games is famous for the game League of Legends, which is huge in the e-sports category and has approximately 67 million online active players. For their company, they focus more on the gaming experience rather than collecting revenue, so the game itself costs nothing for a gamer to download and play. Similarly Epic Games, which recently released Fortnite, that blew up in the online video game world, also created a free-to-play game for users to easily access. These companies have a business model that focuses on continuously improving a game every few weeks instead of dropping a big release or new version once every year. These companies have finance models that involve creating games that are available on consoles, mobile apps, or PC's and run off optional microtransactions, which attract more users to their games because purchasing skins or items are mainly about preferences and doesn't give players an advantage in the game itself. The reason these companies implement this free-to-play business model is because they have noticed that consumers have more of a willingness to pay for avatar outfits to customize their characters in a free game than become involved in a game that involves paying for, so in other words customers prefer real money transactions. Another reason they implement this business model is because of the way their games are laid out. In social games like Fortnite and LoL, the game is dependent on the involvement of other players so they have to keep their games free or consumers will lose interest.
For other companies like Activision Blizzard Inc. they have a more generic business model. This company prefers to focus on creating multiple globally successful titles as opposed to having one. Blizzard Games charges for every game they have released, and with the exception of World of Warcraft, they usually require only one upfront cost. However, with their game World of Warcraft, players have to pay a retail price to purchase the game and a monthly subscription fee. Online gaming companies like Blizzard also focused on expansion packs, which are add on features to the already existing game, that require consumers to pay for. With companies using more of a free-to-play business method, companies like Blizzard have seen a decrease in the amount of subscribed users which has limited their growth.