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SECO/BM Evolution Business Model Evolution in the Game Software Ecosystem Towards a method for modelling business model evolution Graph: Game publishers and game platforms in the game software ecosystem Master Thesis MBI Thesis Candidate Niels van den Berg [email protected] Utrecht University Institute of Information and Computing Sciences Princetonplein 5, 3584 CC Utrecht, The Netherlands Date June 2015 Business Model Evolution in the Game Software Ecosystem 2 Supervisors dr. F.J. Bex Assistant Professor Utrecht University [email protected] dr. S. Jansen Assistant Professor Utrecht University [email protected] Business Model Evolution in the Game Software Ecosystem 3 Summary More than ever, video game software companies operate within networks that share markets and services on common platforms. The Game Software Ecosystem (G-SECO) encompasses many different types of organizations, each maintaining a business model (BM) that enables them to effectively fulfill their role in the SECO. These BMs are not static. To assure a strategic advantage, organizations find themselves continually evaluating and adapting their BM. New technologies and changes in demand open up ways to conduct business and entice organizations to adapt their business models in order to secure or reposition their presence in the SECOs that they are part of. It remains what this evolution looks like and how software organizations influence one another by adapting their business model. Furthermore, we know little about what the G-SECO looks like and how it influences BM-evolution for its members. This exploratory research provides insight on the effects of BM-changes within the G-SECO by investigating the evolution of business models within the video game industry. Business Model Evolution in the Game Software Ecosystem 4 Contents 1 Introduction ................................................................................................................................................ 6 1.1 Research Scope and definitions ................................................................................................. 7 2 Research Objectives ................................................................................................................................. 9 2.1 Research goals ............................................................................................................................... 10 2.2 Research questions ...................................................................................................................... 10 2.3 Relevance and contribution ..................................................................................................... 11 3 Research Method .................................................................................................................................... 12 3.1 Activities .......................................................................................................................................... 12 3.2 Deliverables .................................................................................................................................... 13 4 A model for BM-SECO interaction ................................................................................................... 15 5 Theoretical Background ...................................................................................................................... 18 5.1 Software Ecosystems .................................................................................................................. 18 5.1.1 Software Ecosystem Definitions ................................................................................... 18 5.1.2 Software Ecosystem actors and common configurations .................................. 19 5.1.3 Capturing Software Ecosystems ................................................................................... 20 5.1.4 Software Ecosystem Characteristics ........................................................................... 21 5.2 Business Models ........................................................................................................................... 22 5.2.1 Capturing business models with the business model canvas .......................... 23 5.2.2 Business model innovation ............................................................................................ 27 5.2.3 Competitive advantage through business models ................................................ 27 5.3 Game Industry ............................................................................................................................... 27 5.3.1 The game industry, scope and definitions ................................................................ 27 5.3.2 History of the video game industry ............................................................................. 28 6 Results ........................................................................................................................................................ 31 6.1 Video Game SECO overview ..................................................................................................... 31 6.2 Identifying node types in the G-SECO .................................................................................. 33 6.3 Software Supply Network (SSN) Diagrams ....................................................................... 36 6.3.1 Game Middleware Developer SSN ............................................................................... 36 6.3.2 Game Engine Developer SSN .......................................................................................... 38 6.3.3 Game Developer SSN ......................................................................................................... 39 6.3.4 Game Publisher SSN .......................................................................................................... 40 6.3.5 Game Retailer SSN .............................................................................................................. 42 6.3.6 Game Platform Owner SSN ............................................................................................. 43 Business Model Evolution in the Game Software Ecosystem 5 6.4 Business models and evolution .............................................................................................. 44 6.4.1 Applying the business model canvas .......................................................................... 45 6.4.2 Trends as markers for Business Model change ...................................................... 47 6.4.3 Identifying trends in the game industry ................................................................... 48 6.4.4 Constructing a timeline-diagram ................................................................................. 49 6.4.5 Timeline-diagrams of business model segment evolution ................................ 49 7 Analysis ...................................................................................................................................................... 64 7.1 Evaluating the SECO-BM evolution model ......................................................................... 64 7.1.1 Evaluation of entities in the SECO-BM evolution model .................................... 64 7.1.2 Evaluation of processes in the SECO-BM evolution model ................................ 65 8 Discussion & Conclusion ..................................................................................................................... 70 9 Appendices ............................................................................................................................................... 74 9.1 G-SECO publisher relations graph ......................................................................................... 74 9.2 Business model observations .................................................................................................. 76 9.2.1 Game Middleware Business Models ........................................................................... 76 9.2.2 Game Engine Business Models ...................................................................................... 80 9.2.3 Game Developer Business Models ............................................................................... 84 9.2.4 Game Publisher Business Models ................................................................................ 89 9.2.5 Game Retailer Business Models .................................................................................... 92 9.2.6 Game Platform Owner Business Models ................................................................... 95 9.3 Business model segment per node type ............................................................................. 99 10 References .......................................................................................................................................... 104 Business Model Evolution in the Game Software Ecosystem 6 1 Introduction Software companies have become increasingly dependent on other agents for software components and infrastructures (Jansen et al, 2013). Thus, a growing number of software companies are part of one or more Software Ecosystems (SECOs) (van den Berk et al, 2010). A SECO is a network of organizations and individuals that share a market for software and software-related services. SECOs are usually characterized by a technological platform that functions as a common exchange for information, resources
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