Prices strategy in video game industry essay

Video Gaming sector has gone remarkable changes when ever more and more digital platforms arise and increased technology in portable gadgets, mainly in social games(Facebook, Myspace) and mobile online games. 27% of US online populace play in least a single game in social network, and Facebook game playing revenue struck $1. 32 billion in U. H market in 20111. Likewise, as a lot more than more individuals have smart phone specifically apple’s iOS devices, game playing application turns into more and more well-liked in cellular market(72% game applications about iTune)2.

You will discover traditional system game players such as EA, Activision, Manufacturers and Ubisoft in this industry, also you will find leading organization in the cultural game area such as Myspace in the market.

Usually, console video games are sold in retail stores with $39. 99 to $59. 99 full price for the whole disc content material. Hard-core game titles such as Phone of Duty(Activision), Assassin’s Creed(Ubisoft) and etc. usually price by $59. 99 while casual titles such as Nintendo wii online games price about 30$.

Usually the costs approach for these console video game companies is the industry normal ” means every gamer in this market follows a similar rule while the same selling price.

It is usually considered as based on cost structure because of the number of years of expansion (18 to 36 months), money-consuming game development price and all varieties of add-on price (packaging, advertising third-party guard licensing and training etc . )3 They also have only two months’ shelf period as the sport lunch.

Due to high entry barrier in the console video game industry and high company perception among customers, a lot of main competitors dominate the industry. The console game selling price does not differentiate too much between these players. However , because facebook’s extreme success leads to people’s habit change to be more “social linked, a a good amount of small corporations start to get into social video gaming market and undergo great time growth velocity such as Zynga. Zynga’s costs strategy is “Free-to-Play and charging in-game micro-transaction products such as online gift or perhaps buildings.

The free-to-play principle is certainly not new through this industry since plenty of Korean online game firms such as Nexon, NcSoft already using this business structure while classic online games make use of subscription version ($15. 99 per month) such as Regarding WarCraft(Blizzard) and EVE Online(CCP Games). As the internet band width improvement plus more internet users in US(250 million)4, online games and social online games represent solid growth trend comparing to traditional gaming system games.

As users have an overabundance options in “free games rather than high grade games, a growing number of companies enter this market by offering items for free with micro-transaction options. Zynga’s most popular title “CityVille offers over seventy million regular monthly active users while best selling single console game Contact of Duty(Activision) has 14 million clones sold in US market.

Facing the competition of Facebook game titles with liberated to play idea and large growth potential of casino game market, a few of the traditional package-good game companies start to present cross-platform Fb game titles to improve their competency in the market just like EA, Sony and Ubisoft.

Their key strategy is usually to develop Facebook . com companion games(Free to Play) to showcased console game title. These companions video games not only provide free-to-play game content nevertheless also let users to unlock items in the main gaming system game including Dragon Grow older Legend(EA). That they intend to power their company awareness inside the gaming industry, acquire more users to play main games and boost monetization route to increase income. EA reacted very quickly in this digital trend by doing hostile acquisitions pertaining to popular facebook . com or cellular game galleries.

However , a lot of additional traditional gaming system game firms react slower (Ubisoft, Sony) or will not change (Nintendo). Most of gaming system game firms conduct a conservative strategy and will develop several social games(much short develop time) to make trial because general the system retail revenue revenue is much higher than that in cultural and mobile market. Others are not in a position of next fast-paced digital step and suffered damage (THQ laid off 200 employees in 2011 as a result of decreasing product sales in price tag products).

Generally that play hard-core video console game titles generally are generally not satisfied with the “free-to-play interpersonal companion game titles because of decrease quality of overall video game content and totally different game play with main games. A low quality companion product of Facebook platform is going to damage the company’s reputation from this industry for brand spanking new users. However , since the users profile between hardcore players (average up to 29 years old male) and interpersonal players (average 35 years older female) are incredibly different with very few overlap, it makes these gaming system game firms indifferent to the failure of Facebook merchandise.

Online game marketplace, on the other hand, the free to perform options possess a big impact to customers’ alternatives. For example , Wow ( Most popular Massive Multiplayer Position Playing game, 12million users with $15. 99 regular monthly subscription fee) lost 600, 000 users since 2008 while RuneScape(Jagex) (free-to-play video game with registration options by $5) provides 150 , 000, 000 registered users and over 10 mil active users. Blizzard responded to the competition since 2011 on “free to Play alternatives until level 20 hanging around.

Another game Lord in the Rings switched from registration model to free to perform model and saw dual revenue and 400% customer growth immediately. I would suggest the pricing decision maker in video game market to look at consumer, company capacity, product feature, customer and competitors’ issues. Company ” Analyze business positioning regarding digital pattern in the industry and focus on these products with bigger profit margins ” Analyze company’s cost composition and designate reasonable assets on different platform application based on economic forecast Product.

” As console game products have fixed selling price in the retail stores, figure out other possible channels for monetization such as digital add-on articles, special side-product package and so forth ” Determine possible digital buying things based on the overall game mechanics and gamers motivation (self-expression, cultural status and social network) Distributor ” Corporate and form good relationship with retail distributors for more assets on corner presence and brand promo Customer.

” Deliver social companion games with high-quality contents to enhance main game ” Deliver social video games that straight target Facebook or myspace users ” Promote business brand and establish community to highly engage with users Competitor ” Learn from competition on the digital content expansion ” Expand to different country that competitors did not focus.

Assets: 1 . www. bizreport. com/2011/07/2011-social-gaming-revenues-to-exceed-1billion. html 2 . http://mashable. com/2011/07/13/mobile-gaming-trends/.

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