Value Co-Creation in the Gaming Industry
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VALUE CO-CREATION IN THE GAMING INDUSTRY A qualitative research on virtual discussion forums Master´s Thesis In International Business Author: Mohammad Moinuddin Chisty Supervisors: D.Sc. Birgitta Sandberg Ph.D. Peter Zettinig 26.05.2014 Turku Turun kauppakorkeakoulu • Turku School of Economics 2 Table of Contents 1 INTRODUCTION ............................................................................................... 7 1.1 The History of the Gaming Industry ........................................................... 8 1.2 Research Question .................................................................................... 10 1.3 Gaming Industry as a Research Topic ....................................................... 11 1.4 Thesis Scope and Limitations ................................................................... 13 2 CREATION OF VALUE ................................................................................... 14 2.1 The Notion of Value ................................................................................. 14 2.2 Conventional Understanding of Value Creation ........................................ 15 2.2.1 Concept of Value Chain ................................................................ 17 2.2.2 Conventional Value Chain of Video Game Industry ...................... 18 2.3 Shifting Dynamics of the Market .............................................................. 21 3 CO-CREATION OF VALUE ............................................................................ 24 3.1 Access of Co-Creation in Value Creation .................................................. 24 3.2 Value Co-creation Approach..................................................................... 28 3.3 Distinction between Conventional and New Value Creation Approach ..... 31 3.4 Co-production Approach .......................................................................... 32 3.5 Differentiating Co-creation and Co-production ......................................... 33 3.6 Identifying the Challenges within the Co-creation approach...................... 33 4 RESEARCH DESIGN ....................................................................................... 37 4.1 Research Approach and Method ............................................................... 37 4.2 Conducting the Case Studies ..................................................................... 41 4.2.1 Data Collection ............................................................................. 42 4.2.2 Data Analysis ............................................................................... 47 4.2.3 Operationalization ........................................................................ 48 4.2.4 Trustworthiness ............................................................................ 51 5 VALUE IN VIDEO GAME INDUSTRY .......................................................... 53 5.1 Console Manufacturer .............................................................................. 54 5.1.1 Console Market ............................................................................ 54 5.1.2 Platform Industry .......................................................................... 55 5.2 Game Developers/Publishers .................................................................... 57 5.2.1 Development ................................................................................ 57 4 5.2.2 Licensing ...................................................................................... 58 5.2.3 Marketing and Distribution ........................................................... 59 5.3 Consumers ................................................................................................ 60 6 VALUE CREATION STRUCTURE IN VIDEO GAME MARKET .................. 63 6.1 Xbox Discussion Forum............................................................................ 64 6.1.1 Inquiry for Knowledge Acquisition ............................................... 64 6.1.2 Sharing Personal Achievements .................................................... 65 6.1.3 Volunteer Criticism ....................................................................... 66 6.1.4 Growth of Xbox Gamers Network................................................. 68 6.1.5 Parental Controlling ...................................................................... 69 6.2 EA Sports Discussion Forum .................................................................... 70 6.2.1 Service Gap Inspires Idea Generation ............................................ 70 6.2.2 Asking for Customers’ Opinion and Creativity .............................. 71 6.2.3 Growth of EA Sports Gamers Network ......................................... 72 6.2.4 Trading Opportunities within the Community of Gamers .............. 73 6.2.5 Personal Achievement ................................................................... 73 6.3 Cross Case Analysis.................................................................................. 74 7 CONCLUSION ................................................................................................. 76 7.1 Theoretical Implications: .......................................................................... 76 7.2 Practical Implications: .............................................................................. 78 8 SUMMARY ...................................................................................................... 82 REFERENCES ........................................................................................................... 84 APPENDICES ............................................................................................................ 96 Coding of Data................................................................................................... 96 Example of Microsoft Xbox Community Forum ................................................ 97 Example of EA Sports Community Forum ......................................................... 99 List of figures Figure 1 Conventional perspective of value generation .......................................... 16 Figure 2 Firm’s value chain ................................................................................... 18 Figure 3 Conventional value chain of video gaming industry ................................. 19 Figure 4 Access of co-creation in value creation .................................................... 25 Figure 5 Combined value creation rendering to Service Dominant Logic ............... 26 Figure 6 Complexities of communication for a co-creation of value (DART) ......... 27 Figure 7 A theoretical framework for value co-creation procedures ........................ 29 Figure 8 Distinction between traditional and new value creation approach ............. 31 Figure 9 Relevant challenges in the co-creation approach in practice within B2C market .............................................................................................. 34 Figure 10 Focal points of qualitative research ........................................................ 38 Figure 11 Research methods applied in this study .................................................. 40 Figure 12 Video game market structure.................................................................. 53 Figure 13 Value creation structure in video game market ....................................... 63 Figure 14 Inquiry for knowledge acquisition co-creates value ................................ 65 Figure 15 Sharing personal achievements facilitate idea generation........................ 66 Figure 16 Volunteer criticism supports value co-creation ....................................... 67 Figure 17 Growth of Microsoft Xbox console user’s network co-creates value for focal and other gamers ..................................................................... 68 Figure 18 Parental controlling feature encourages value co-creation ...................... 69 Figure 19 Service gap inspires idea generation to co-create value .......................... 70 Figure 20 Asking for customers’ opinion and creativity encourage co-creating value71 6 Figure 21 Growth of EA Sports gamer’s network co-creates value for focal and other gamers ..................................................................................... 72 Figure 22 Trading opportunities within the community of gamers co-creates value 73 Figure 23 Personal achievement co-creates value ................................................... 74 Figure 24 Hierarchy of value co-creation processes in video gaming industry ........ 77 List of tables Table 1: Microsoft Xbox discussion forums ............................................................ 45 Table 2 : EA Sports discussion forums .................................................................... 45 Table 3 : Operationalization table ............................................................................ 49 7 1 INTRODUCTION Gaming is one of the largest global entertainment industries and it is progressing very rapidly, generating significant revenue every year and creating huge opportunities for employment across the globe (ESA 2008). The estimated sales revenue of gaming soft- ware was over $11 billion in 2008 according to PC gaming alliance (PC Gaming Alli- ance 2009). The PC game industry has developed various models to facilitate revenue income. It is assumed that the quantity of consumer in game industry will rise according to the growth of PC user (PC Gaming Alliance 2009). The game industry competes for a place