Emerging Technologies and Video Game Industry Anticipation of Future Changes
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Emerging Technologies and Video Game Industry Anticipation of Future Changes Martina Semanová Bachelor’s Thesis May 2020 School of Business Degree Programme in International Business Description Author(s): Type of publication: Date: Semanová, Martina Bachelor’s thesis May 2020 Language of publication: English Number of pages: Permission for web 58 publication: x Title of publication Emerging Technologies and Video Game Industry: Anticipation of Future Changes Degree programme Degree Programme in International Business Supervisor(s) Saukkonen, Juha Assigned by Abstract The video game industry is a growing field by the number of players as well as the market value. Technologies are being developed at an exponential rate, creating different impacts on game development, user experience and the involved organizations. The phenomenon of possible impact of emerging technologies on the video game industry was studied. The objectives were firstly, to provide an overview of current emerging technologies and establish their current applications in the video game industry, and secondly, to gather experts’ and players’ predictions on the future of the industry with regard to the emerging technologies. Primary data were collected from narrative stories/scenarios of eight respondents and dissected using the multiple perspective method, which represented technical, organizational, and personal perspectives. This analysis was supplemented by secondary data in the form of desk study. The chosen methods, along with the context, established the research as qualitative with an exploratory purpose. The analysis revealed numerous similarities and a few divergencies between the views of the players and experts, as well as between desk study and narrative research. From the responses, likely scenarios of the future were drawn: technologies such as artificial intelligence, virtual reality, wearable gaming, virtual studio production, ray tracing and 5G technology, with the notable exception of cloud gaming, have a substantial potential to influence game development and user experience in many ways. Different business models were also identified to be continuously used in the market. Findings included herein contribute to the overall research domain of video games, a rather limited sphere at the present stage. Conclusions might influence and shape the decision-making process of executives within affected organizations and have an informative purpose for the consumers. Future research recommendations include in- depth studies on any of the aforementioned emerging technologies and their impacts on the video game industry. Keywords/tags (subjects) Emerging Technologies, Video Game Industry, Business Models, Futures Studies, Narratives, Multiple Perspective Method Miscellaneous (Confidential information) 1 Contents 1 Introduction ............................................................................................................ 3 1.1 Background and Relevance ............................................................................. 3 1.2 Research Objectives and Questions ................................................................ 4 1.3 Motivation and Structure ................................................................................ 4 2 Literature Review ................................................................................................... 5 2.1 Introduction to Video Game Industry ............................................................. 5 2.2 Emerging Technologies .................................................................................. 14 2.3 Business Models ............................................................................................ 22 3 Methodology ........................................................................................................ 27 3.1 Research Purpose .......................................................................................... 27 3.2 Research Design ............................................................................................. 28 3.3 Data Collection .............................................................................................. 32 3.4 Data Analysis .................................................................................................. 34 3.5 Research Ethics .............................................................................................. 35 4 Results ................................................................................................................... 36 4.1 Impacts on Game Development .................................................................... 38 4.2 Impacts on User Experience .......................................................................... 39 4.3 Impacts on Business Models ......................................................................... 41 5 Conclusions ........................................................................................................... 44 5.1 What are the emerging technologies and what are they being used for in the gaming industry? ................................................................................................ 44 5.2 How do experts and players think the emerging technologies will change the video game industry? ............................................................................................... 45 6 Discussion ............................................................................................................. 46 2 6.1 Research Reliability and Validity ................................................................... 46 6.2 Research Implications .................................................................................... 47 6.3 Ideas for Further Research ............................................................................ 48 References ................................................................................................................... 49 Appendices ................................................................................................................... 56 Figures Figure 1. Video Game Worldwide Market Value (adapted from Statista.com 2019) ... 5 Figure 2. Gartner Hype Cycle for Emerging Technologies 2019 (adapted from Gartner.com 2019) ....................................................................................................... 21 Figure 3. The research 'onion' (adapted from Saunders, Lewis, & Thornhill 2015, 124) ...................................................................................................................................... 29 Figure 4. Inductive approach route (adapted from Research-Methodology.net N.d.) 30 Figure 5. A schematic for interrelations between T-O-P aspects ................................ 43 Tables Table 1. Profiles of informants ..................................................................................... 33 Table 2. Scenario ideas classified to T-O-P perspectives ............................................. 37 3 1 Introduction 1.1 Background and Relevance Video games have been a part of people’s lives for many years to provide fun and entertainment. The evolution of video games has been significant since their early days through computer games to first consoles. The limitations of technology are a thing of the past as games strive to mimic real life to create outstanding gaming experiences. Thus, technology is the main driver for the development of video games since they are becoming more complex. (Beattie 2020.) The sector of video games is extremely large, provided that it is even bigger than the film and music industry together. Despite that, its audience is smaller, constituting over two billion players around the world, which is 26% of the whole population. Nonetheless, it has a growing tendency, and with analytical predictions, we can expect it to generate $196 billion in revenue by the year 2022. Hence, it comes as no surprise that more companies want to get involved in the creation of games and related services. Video games exceed other forms of entertainment because of their immersive nature and new emerging technologies can only enhance it. Experimentations with virtual reality or controls which make game mechanics more advanced are currently occurring among studios. Demographics of the market are also expanding with more people of different gender, age, or culture having an appeal for this kind of entertainment. Hence, the demand for immersion and easier access to games make the market grow on a large scale and create a bright future for anyone involved. After all, video games are influenced by innovation and shall strive to give the best experiences to their consumers. (ibid.) Similarly, video games give a different approach for people to consume entertainment media. The video game industry is a rather undiscovered area for researchers, hence not a lot of studies have been conducted in relation to the industry. However, the importance of research is significant for any stakeholder who is a part of the gaming community. Since the development of technologies is rather rapid, several changes are possible to occur across industries, including video games. Thus, the study aims 4 at gathering predictions for the year 2025 to present a probable way of industry’s development. 1.2 Research Objectives and Questions The aim of this study is to present the possible impacts of the current emerging technologies on the industry of video games. Hence, the objectives of the thesis are to: provide