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Multi-Homing in the Gaming Industry

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Multi-Homing in the Gaming Industry UTRECHT UNIVERSITY Multi-homing in the Gaming Industry Master's Thesis Jeroen Eissens [email protected] Content Content .................................................................................................................................................... 1 1 Introduction ..................................................................................................................................... 3 1.2 Research questions........................................................................................................................ 4 2 Research approach .......................................................................................................................... 5 2.1 Literature Review .................................................................................................................... 5 2.2 Quantitative research .............................................................................................................. 5 2.2.1 Database selection .......................................................................................................... 7 2.2.2 Data gathering ................................................................................................................. 8 2.3 Data verification ...................................................................................................................... 9 2.3.1 Automatic verification ..................................................................................................... 9 2.3.2 Manual verification ....................................................................................................... 10 2.4 Scope ..................................................................................................................................... 11 3 Theoretical background ................................................................................................................. 13 3.1 Video game (console) history ................................................................................................ 13 3.1.1 Development Budgets ................................................................................................... 17 3.2 Single- and multi-homed ....................................................................................................... 19 3.3 Two-sided Market ................................................................................................................. 20 3.3.1 Network Effect ............................................................................................................... 22 3.4 The Video game Market ........................................................................................................ 22 3.4.1 Developer and publisher relationships ......................................................................... 25 3.4.2 Three major platform companies .................................................................................. 26 3.5 Impact of reviews .................................................................................................................. 27 3.6 The video game ecosystem ................................................................................................... 28 3.6.1 Actors and relationships ................................................................................................ 29 3.6.2 Network graph ............................................................................................................... 29 3.7 Reflection............................................................................................................................... 31 4 Results ........................................................................................................................................... 32 4.1 Development of multi-homing .............................................................................................. 33 4.2 Single-homing versus Multi-homing ..................................................................................... 42 4.3 Influences on Multi-homing .................................................................................................. 44 4.4 Findings for the industry ....................................................................................................... 50 4.5 Research questions: summarized results. ............................................................................. 52 5 Discussion ...................................................................................................................................... 55 1 5.1 Limitations ............................................................................................................................. 56 5.1.1 VGChartz ........................................................................................................................ 56 5.1.2 Data scope ..................................................................................................................... 56 5.1.3 Validity of the strategy model ....................................................................................... 56 5.2 Future research ..................................................................................................................... 57 5.2.1 Expanding the data set .................................................................................................. 57 5.2.2 Business models ............................................................................................................ 57 6 Conclusion ..................................................................................................................................... 58 References ............................................................................................................................................. 60 Appendix A – Literature review search phrases .................................................................................... 64 Appendix B – Full database list from which three were selected ......................................................... 65 Appendix C – Sales figures ..................................................................................................................... 67 Appendix D – Statistical analysis of the data......................................................................................... 73 Appendix E – Network graphs ............................................................................................................... 88 Appendix F – Strategy Model .............................................................................................................. 100 2 1 Introduction The video game industry has grown to a multi-billion dollar industry (Rishe, 2011), now one of the largest entertainment industries in the world. The increase in popularity and technological advances creates opportunities for new developers, publishers and consumers. Changes in the mobility and connectivity of platforms allow games to be entrenched in our daily lives (Terry & Babb, 2013). These technological changes and popularity of games allow for different adaptation of gaming aspects in our daily lives, entertainment, education, healthcare, et cetera. The video game industry contain multiple platforms that have a (major) focus on video games. A solution to cover multiple platforms is multi-homing. Multi-homing is the practice of releasing your product to multiple platforms, also known as multiplatform (Techterms, 2014). This paper also mentions Single-homing, which is the practice of releasing your product to one platform, this is also known as an exclusive. Multi-homing ensures that customers (that have less purchasing power) are not required to buy multiple platforms to play a video game interesting for them. The popularity and accessibility of multi-homing, does not indicate that all newly developed games are multi-homed. Single-homing is still widely used and is important for new platforms to offer value and resist competitor attacks (Landsman & Stremersch, 2011). The use of single-homed games can have greater differentiation than many multi-homed games (Mantena, Sankaranarayanan & Viswanathan, 2007). Both single- and multi-homing have strong arguments that support each strategy. Landsman and Stremersch (2011) state that single-homing is more effect with a new platform, which decreases as the platform matures. The major benefit from multiple platforms is the increase in potential customers, however the initial risk increases as developing for multiple platforms increases the development cost. The purpose of this research is to analyze the video game industry with a focus on platform single- and multi-homing and the comparison of multiple factors between the two. The comparison is done using publicly available sales data to determine significant differences between multiple aspects of single- and multi-homing. With almost no similar scientific research available, we analyze a multiple aspects multi-homing in our theoretical background, to provide a foundation for this research. With the lack of previous scientific research between single- and multi-homing regarding significant differences, we have created a formal problem statement for this research: Which factors can provide early on insight for developers and publishers, when creating a game development strategy? The remainder of this thesis is structured as follows. Firstly, the research approach is described in Chapter 2.
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