Digital Gaming Industry in Global-Local Crossings: Comparative Study of UK, China and Brazil
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Digital Gaming Industry in Global-Local Crossings: Comparative Study of UK, China and Brazil Abstract Clustering is a common phenomenon in digital gaming industry where businesses can benefit from local concentration of talents, spill-over events, resources recycling activities, formal or informal networks formed (Pilon and Tremblay 2013; Ruggill et al. 2016). In addition, digital gaming industry also possess a born-global nature (Gomez and Gonzalez-Perez 2015). Reflecting on the global-local structure, a conceptual framework on digital gaming industry ecosystem is proposed in this paper. A comparative analysis is performed against the digital gaming industry in UK, China and Brazil. As the initial stage of the project, the analysis focuses on the similarities and differences of the digital gaming industry from perspectives such as policy, culture, funding, talents, market, infrastructure and other supports. Keywords: Entrepreneurial Ecosystem, Digital Gaming, Business Growth, UK, Brazil, China 1. Introduction When video game Grand Theft Auto V came out in September 2013, it quickly broke six Guinness world records including the highest revenue generated within 24 hours ($815.7 million) and the fastest entertainment property to reach $1 billion in sales (within three days of releasing) which were previously held by blockbuster movies like The Avengers and Avatar (Lynch 2013). This achievement is a manifestation of the growth in the digital gaming industry: since mid-1980s, the industry has grown annually by between 10% and 15% (Zackariasson and Wilson 2010; Marchand and Hennig-Thurau 2013; Newzoo 2018). In comparison, the estimated compound annual growth rate (CAGR) between 2018 and 2023 for global entertainment and media industry, which the digital gaming industry is part of, is at 4.3% (PwC 2019). The global games market is valued at approximately $135bn in 2018 which demonstrated a 10.9% increase from 2017 according to market analytics company Newzoo (Batchelor 2018). The global games revenue is seven times higher than the global music revenue ($19.1bn) and over three times higher than the global box office revenue for movies ($41.1bn)1. Moreover, the digital games and esports industry is forecasted to have higher CAGR than cinema and music for the next five years (PwC 2019). The digital gaming industry has become the fastest growing mass media in the recent years and for the next five years (Marchand and Hennig- Thurau 2013; Ahmad et al 2017; BOP Consulting 2017). The value of the digital gaming industry also lie on its active involvement in innovation, technology development, social, culture and creative space (Marchand and Hennig-Thurau 2013; Davidovici-Nora 2014; BOP Consulting 2017). For instance, besides its entertainment purpose, games can also help tackle social issues and facilitate training and education process (Steward et al 2011; ESA 2012). Technology pioneered in digital games have be transferred to other areas or industries such as military training programmes, molecular biology and products virtual showrooms (The Economist 2011). Gamification has also been used as a technique to motivate staff and engage customers by applying psychological game design 1Comparison data is drawn from following sources: IFPI report (IFPI 2019) for music and Statista data (Watson 2019) for movies and films principles (Zichermann and Cunningham 2011). In addition, the digital games have close ties with the trending topic on Artificial Intelligence (AI) for testing and demonstrating new algorithms in the last decade (Yannakakis and Togelius 2018). Moreover, games developers have been utilising AI in both the design process and analysing player data (Yannakakis and Togelius 2018). Other than being a technology intensive industry, games development is also part of the broader creative industry and carries characteristics that commonly exist in creative industry (Grershenfeld et al 2003; BOP Consulting 2017). Creative industry has also been recognised as a key economic contributor to the economy and a source of innovation and social-economic development in the UK (UK Trade and Investment 2014; British Council 2016). However, as the industry as a whole continues to grow, the individual games development companies are facing various challenges (Petrillo et al 2009; Aleem et al 2016; BOP Consulting 2017). The project-based nature of the industry is often associated with high degree of volatility where it is common for business to rapidly expand upon taking new projects and contract upon projects completion (BOP Consulting 2017). During the games development process, businesses are constantly facing difficulties in managing scope and expectations, controlling budget and ensuring timely delivery, addressing communication and technological issues effectively (Petrillo et al 2009; Aleem et al 2016). In addition, market saturation has become a frequently brought up topic in the industry which influences on games development businesses’ survival and growth (e.g. Dreunen 2015; Palumbo 2017; Cohen 2018; Wright 2018). Despite the value and contribution that digital games industry has in social, cultural and economic context, there is a lack of research in analysing the challenges that digital gaming businesses currently facing (Cabras et al 2017). Existing literature on digital gaming industry from business perspective has been mainly focusing on segments of the industry such as marketing (e.g. Wesley and Barczak 2016), development process (e.g. Aleem et al 2016), social networks (e.g. Kim et al 2014; Claussen et al 2012), business models with emphasizes on monetization strategies (e.g. Zackariasson and Wilson 2010; Davidovici-Nora 2014) or the launching of a particular game (e.g. Ahmad et al 2017). However, the survival and growth of a business is influenced by a whole range of factors. Therefore, there is a need to study the survival and growth of individual business with a holistic view. Having realised the significance of business growth, both practitioners and researchers have started to pay much more attention to how such growth can be facilitated (Greiner 1998; Mason and Brown 2014; Isenberg and Onyemah 2016) and the entrepreneurial ecosystem concept has emerged as a part of that response (Isenberg 2010; Mason and Brown 2014). The entrepreneurial ecosystem is discussed as a favourable environment that supports business and other entrepreneurial activities that take place within it (Zacharakis et al 2003; Malecki 2011; Mason and Brown 2014). The current discussions on entrepreneurial ecosystems have a strong regional emphasis with a critical mass of key actors involved (Mason and Brown 2014; Mack and Mayer 2015). However, the continuous development of digitalisation has freed the interactions among actors and flows of resources (Bruns et al. 2017; Colombo et al. 2019) from being geographically bounded to potentially operate unfetteredly on a global scale (Autio et al. 2018). Nevertheless, there is still lack of academic literature on entrepreneurial ecosystems that incorporates the concept of digitalisation (Li, Du, and Yin 2017; Sussan and Acs 2017) which can potentially continue to reinforce the perception of geographical restrictions on the ecosystem concept. As a born-global industry, digitalisation plays an importance part in the development of the digital gaming industry. To address this research gap, this project conducted a comparative study in relation to digital gaming industry in global-local crossings in three countries: UK, China and Brazil for their social cultural and economic significance as well as differences. 2. Literature Review The entrepreneurial ecosystem concept has gained growing attraction from governments, industries and academics particularly in the past decade (Stam and Spigel 2016; Acs et al. 2017; Spigel 2017; O’Connor et al. 2018; Malecki 2018). The concept is believed by many as an optimal solution to foster entrepreneurship, innovation and in particular, high-growth firms and thereby drives economic development (Isenberg 2010; Mason and Brown 2014; Stam 2015; Acs et al. 2017). Scholars have argued the development of entrepreneurial ecosystems studies have roots in and shared similarities with concepts like clusters, networks and innovation ecosystem but still possess distinctive characteristics (Pitelis 2012; Brown and Mason 2017; Spigel 2017; O’Connor et al. 2018; Daniel 2018). Critics on the concept have also drawn from areas such as theoretical ambiguity (Stam 2015; Spigel 2017; Alvedalen and Boschma 2017; Li, Du and Yin 2017). Nevertheless, current literature on entrepreneurial ecosystems have mainly studied the concept by focusing on appropriate actors, institutions, resources and governance required at a local region and the supportive networks formed as a result (e.g. Acs et al. 2017; Malecki 2018; Espinoza 2019) and others focused on perspectives like evolutionary nature (Feldman et al. 2005; Mack and Mayer 2016) and the measurement framework (Stangler and Bell-Masterson 2015; Liguori 2019). The emphasis on resources and actors can be reflected in various definitions and models of the entrepreneurial ecosystems. Cohen (2006) was among the first to define the concept as ‘an interconnected group of actors in a local geographic community committed to sustainable development through the support and facilitation of new sustainable ventures’ (3). The concept has since been explored further and resulted in a number of variations in definitions (Alvedalen and Boschma 2017). Through synthesising previous