THE NEW VIDEO GAME WARS: WHY SMART OS PHONES AND TABLETS IS SHIFTING GAME DEVELOPERS AND THE VIDEO GAMING INDUSTRY

Presented by : Hazim Banjar

1/22/2012

Student ID

P D 0 9 0 1 0 2

FACTS ABOUT THE VIDEO GAME INDUSTRY Video gaming becoming mainstream Average age of video gamers in the US:

37 Gender breakdown: 58 percent men; 42

percent women Percentage of US households that play

video games: 72 global video game industry in 2010

pulled in $56 billion. number is expected to reach $82 billion a year by 2015,

WHERE’S THE PROBLEM? The traditional (retailed and boxed games)

gaming industry is losing its charm:

1. Large numbers of layoffs and studio closing2. shrinking (Japan) and non targeted markets

(China – South Korea) 3. Video game Retail sales dropped 8%4. Middle budget publishers struggles (SEGA,

THQ)5. Cost of game development is extremely high

DILEMMAS FOR GAME DEVELOPERS PART 1

Lack of innovation Majority trapped as work for hire Losing IP rights Spending too many years on making a game the Shigeru Miyamoto’s (worker) mentality is no longer acceptable

DILEMMAS FOR GAME DEVELOPERS PART 2 : VIDEO GAME VALUE CHAIN.

Example:

$10 Million video game title budget

Selling 1 Million units for $60

$60 Brake down -:

-$12 for retail

-$12 for hardware console royalties (SONY – Nintendo – Microsoft)

-$10 for recapture recoupment of reinvestment in R&D

-$9 15% of marketing add spending

= $17 profit for publishers . Development royalties $ ??

Low

High

High

CAPITAL

PROBABILITY

High Risk

low Risk

High Risk

Medium Risk

GOING INDI : WHERE TO GO?

• Console gaming • MMO gaming

• OS smart phone and tablets Gaming

• Browser social gaming

WHY SMART MOBILE AND TABLET ? 1- IT IS THE NEXT MOVE

WHY SMART MOBILE AND TABLET ? 2- TRY THE UNEXPECTED

BENEFITS OF SMART OS GAMES

For Consumers1. Cultural issues

2. Engaged at very small age

3. Digital purchase one time only

4. Free to play or less than $10 to buy

5. Easy recovery

For developers1. Low cost budget, less

time

2. 70% profit from the value chain

3. No need for publishers

4. Keeping the IP

5. High volume

6. It’s ok to fail

7. Opportunities to JV with non gaming related industry

8. Low piracy rate

INDI DEVELOPERS SOWAT ANALYSIS FOR THE OS MARKET

Strength Owning the IP Creativity No due date pressure Self-publishing ability Game development experience Fast adaption to industry

changing conditions

 

Weakness Lack of business mentality lack of staff or outsource

dependent

Opportunities M&A. Work for higher

opportunities Low entry barrier level and Cost

development Funding access Lower risk Expanded adaption rate of smart

phones in developed countries Rise of social games and new

genres  

Threats Significant competitor presence corporate publishers. free-price

cut strategy Fragmentation High Freemuim rate Patent lawsuit wars between

smartphone companies Uncertainty

OS PLATFORMS: FOR NOW WHY IOS OR ANDROID ?

The iOS and Android alone are getting 58% share of the US portable game software market

MARKETING STRATEGIES: A.I.I

Adapt: developers have to adapt using OS SDK’s to make games. They can start by using programs that are similar and familiar to the developer.

Improve: unlike traditional games. Smart OS platforms games (if not imported from a traditional platform) have to be improved and updated on a constant basis

Implement: the final phase after a successful production .

MARKETING STRATEGIES: THE 4C’S MARKETING MIX

• facebook, twiter etc

• app store, E-portal

• price stisfy• Needs, games on

the go

Customer Cost

CommunicationConvince

RECOMMENDATIONS Experiment for future opportunities

Think beyond video games

Cross platforms

Make HTML5 games

The feedback of your games is always true

REFERENCES www.digi-capital.com theesa.co customfitfocus.com Capcom