PC Gaming Production Monetization

Project: Business Management and Leadership Roskilde University PC gaming production monetization 1st Semester - Master in Economics and Business administration - Autumn 2018 Rudolf Olexa [57927] Number of Characters: 94177 Supervisor: Kirsten Mogensen Rudolf Olexa [57927] Abstract The purpose of this project is to understand complex interactions of PC gaming companies with consumers, through different strategies of monetization or business model. It unveils a different issues business models contain, like pay-to-win content and loot boxes, as a controversial aspects to their PC game. Business model for single player and multiplayer PC games where project longevity and revenue stream stream is sketched. It depicts different variations to the business models, where does the value come from as well as what could be monetized. Gaming communities are then questioned about their preferences for PC games and the importance of business model on the fate of the PC game as a product. Their consciousness about the business model are explored as well as their values and ethics. Consequently, this research depicts the gaming community preferences for a game so that company, tries to match them ethically and ultimately economically both from community’s perspective and company’s. Keywords: Business model, PC games, loot boxes, pay-to-win, cash shops, business ethics, revenue stream framework, single player, multiplayer, gambling 1 Rudolf Olexa [57927] Table of contents Abstract 1 Table of contents 2 Glossary 4 1.INTRODUCTION 5 1.2. Problem area 7 1.3. Problem formulation 8 2. Literature review 9 3.Theoretical framework 12 3.1. Business ethics 12 3.2. Revenue streams framework 14 3.2.1 Model tailoring 15 3.2.1.1. Single player or Multiplayer 15 3.2.1.2.Building Framework 16 3.2.1.2.1. Single Player Revenue Stream Life 16 3.2.1.2.2. Multiplayer Revenue Stream Life 18 3.2.1.2.2.1. Cash Shops 20 4.Methodology 21 4.1. Research strategy 21 4.2. Philosophy of Social science 22 4.2.1. Pragmatism 22 4.3. Abductive research methods 23 4.4. Data collection 23 4.4.1. Survey Creation 24 4.4.1.1. Questions creation 24 4.4.1.2. Sample 27 4.5. Project Design 28 4.6. Self-criticism , Limitations and delimitations 28 5. Analysis 29 5.1. Statistics (quantitative reception) 30 5.1.1. Single player stats 30 5.1.2. Multiplayer stats 31 5.2. Qualitative output 33 5.3. Survey reception of respondents 36 5.4. Analysis conclusion 36 2 Rudolf Olexa [57927] 6. Discussion 37 7. Conclusion 40 8. Bibliography 42 3 Rudolf Olexa [57927] Glossary DLC - Short for Downloadable content, it usually is an addition to the original content, can be something minor and can be almost a new game with the basis of the product Mods - Represents modifications, which can be applied to set game. These modification cna range from visual enhancement, to new mechanics and other of the game Coop - Cooperative, usually refers to the game, which are able to be played together with multiple people (online or next to each other). Single player - Games, which are played only by one person at the time. Multiplayer - Games, which are played together with more people. Cash shop - In game shop, which offers variety of cosmetics, pay to win content, boosters, etc. for real money. Cosmetics - Term referring to items, which purely serve for the visual perspective (Example: Buying nice clothes in game). These are bought in cash shop and bought by real money. Pay-to-Win - This refers to a model, which offers items/services within cash shop, which should give more advantage against regular players for real money. Loot Boxes - Are in game boxes, containing random cosmetics/pay to win content/boosters, which drop upon opening. These can be bought and opened for real money (gambling) or just opened and received for the in game playtime. Loot boxes, shall be explained more in depth further. 4 Rudolf Olexa [57927] 1.INTRODUCTION Gaming entertainment industry has gone a long way. From basic word games, cards and board games to virtual and augmented realities. It has become a booming industry recently, with improvements within the technology, from regular games qw have gone to the video games, by playing a game using video technology (Wolf, 2008, p.3). Evidence to the increase in popularity of video games is the increasing number of platforms video games can be played on, esports (electronic sports), YouTube “Let’s Plays”, streaming services such as Twitch as well as the record of US video game industry in 2006 which made around 12.5 billion dollars (Ibid.:1). Video games have started off around 1962, most well known video game being Spacewar! working on PDP!-1 mainframe computer (Ibid.:13). The design of Spacewar! was later taken and enhanced and even implemented in 1972 to atari 2600, which is one of the most well known video game system as being one of the first consoles (Ibid.). The prices of these systems were high as well as televisions, however companies found a way how to capitalize on it too, by creating arcade game cabinets, which could be started by inserting coins (Ibid.:14) making it more affordable to play video games. Different gaming systems were made, from console based ones, to handheld and cartridge systems (Ibid.). That being said, it was still at it's basic state as the memories of these cartridges and other storing systems were low, not allowing the games to be more advanced. Magnetic disks, and later CDs, DVDs (Ibid.:15) and now HDDs, SSDs and USBs have made a bigger difference (being million times larger and faster), and has become standardized as more advanced technology allowed video games to be more graphic and therefore bigger. The technology has moved so much that even the older games are now able to be emulated through video games emulator (Ibid.:16) like gameboy advance games by nintendo such as Pokemon Red and other. Some exclusives (video games for certain platforms), have also been ported to PC and being huge success (Ibid.) milking even more money, however satisfying more audience. For example, Bayonetta being a successful port, firstly releasing on Xbox360 and PS3, making its way until recently released PC version with stunning 93 positive reviews on Steam. With the creation of Web 2.0 these entertainment services can be practiced online, with people from all over the world. Due to such a large market, there are a lot of opportunities for 5 Rudolf Olexa [57927] big and small companies to explore new horizons and exploit them. For example, starting a kickstarter, or perhaps expand region locked game to the rest of the world to reach new audience. Naturally, there are various strategies how expansion, and kickstarting a product may be executed, however that is different project. History wise, prices of gaming services have undergone several changes and it's price is being questioned if it's justifiable. However, this is mainly due to the prices of the internet, have been high for domestic use due to inflation. Internet providers have been charging monthly fee, which has provided only certain amount of hours of available internet (Odlyzko, 2001, p.31). If the limit has been crossed, there was additional fee for using extra time on the internet (Ibid.). There were also also premium services such as sending an email, which were also monetized (Ibid.). There is essentially also other costs, such as the cost of a computer, in the past different computerized devices such as atari, which were also very expensive for it's time. Consequently, the use of gaming systems was definitely not the most popular. As of now, there are multiple platforms, where gamers can enjoy themselves online and offline, however platform does also have an effect on how companies structure their business model. The expenses from having internet, have now become more game service related, meaning that some business model make more money from in-game content than for the game itself. Currently, the prices of entertainment services for PC gaming industry depend mainly on the business model production company practices since most of the PC games require standard computer which is common to have right now in every home. These business models have different properties and ways on how to monetize their products and therefore have distinctive effect on the company as well as on the consumers. The prices of technology, software and other means to access video games have been on a rollercoaster, changing drastically over the decades with the improvements and innovation of technology. This project will therefore take a better look on the relationship between the company and consumers and how does form of business model regulate one aspect of the customer satisfaction. 6 Rudolf Olexa [57927] 1.2. Problem area Gaming has evolved to become a huge part of many people’s life, especially the younger generation increasingly spend their free time playing various video games. There are however many different types of games that are contained under the umbrella term of gaming. Dictionary.com defines the term “gaming” as three things: “1. Gambling, 2. The playing of games developed to teach something or to help solve a problem, as in a military or business situation, 3. The playing of computer or video games”(Anon 2018). This paper’s interest is exclusively on the latter of the three definitions and such the term when used will refer to that. However, even with the term limited in that sense it is still quite complex. Gaming can as such commence on a number of different console platforms apart from simply PC, such as Xbox, PlayStation, Wii, Nintendo Switch, among others.

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