0 UNIVERSITY OF VAASA FACULTY OF BUSINESS STUDIES Vincent Delvaux Video game editors and the choice of their business model Master’s Thesis in International Business VAASA 2017 1 2 TABLE OF CONTENTS LIST OF FIGURES AND TABLES ........................................................................................................................... 4 LIST OF FIGURES .................................................................................................................................................. 4 LIST OF TABLES .................................................................................................................................................... 4 ABSTRACT: ....................................................................................................................................................... 7 I- INTRODUCTION ............................................................................................................................................. 9 1.1 RESEARCH GAP ................................................................................................................................................ 12 1.2 STUDY’S LIMITS ................................................................................................................................................ 13 1.3 AIM AND RESEARCH QUESTION ........................................................................................................................... 14 1.4 STRUCTURE OF THE STUDY ................................................................................................................................. 15 II - CONCEPT AND THEORY ............................................................................................................................. 16 2.1 BUSINESS MODEL CONCEPT ................................................................................................................................ 16 2.1.1 Business model: definition and limits .................................................................................................. 16 2.1.2 Competitive advantage and value chain ............................................................................................. 17 2.1.2.1. The importance of competitive advantage ................................................................................................... 17 2.1.2.2. Optimization of the value chain .................................................................................................................... 19 2.1.2.3. Lasting competitive advantage ....................................................................................................... 20 2.1.3. Innovation as a value creation empower ........................................................................................... 21 2.1.3.1 Invention and innovation ............................................................................................................................... 21 2.1.3.2 Classifications of innovation .......................................................................................................................... 22 2.1.3.3. Business model innovation ........................................................................................................................... 24 2.2. THE PARTICULAR CASE OF VIDEO GAMES MARKET .................................................................................................. 25 2.2.1. Video games editors’ business ............................................................................................................ 25 2.2.1.1. Editors and manufacturers ........................................................................................................................... 25 2.2.1.2. Editors’ value chain ....................................................................................................................................... 26 2.2.2. Current business models ..................................................................................................................... 32 2.2.2.1. Classification based on remuneration model ............................................................................................... 32 2.2.2.2. Classification based on financial accessibility ............................................................................................... 39 3. METHODOLOGY ......................................................................................................................................... 48 3.1. METHODOLOGICAL APPROACH .......................................................................................................................... 48 3.2. ADMINISTRATION MOD AND METHOD ................................................................................................................. 51 3.3. CONSTITUTION OF COMBINATORIAL BUSINESS MODELS ........................................................................................... 52 4. DATA ANALYSIS .......................................................................................................................................... 54 4.1. DATA PRESENTATION ....................................................................................................................................... 54 4.1.1. Sociological aspect of observed population........................................................................................ 54 4.1.1.1. A young and qualified population ................................................................................................................. 54 4.1.1.2. A majority of student and employees ........................................................................................................... 55 4.1.2. Multiples consumption mods ............................................................................................................. 56 4.1.2.1. Preference to purchase new or second hand games .................................................................................... 56 4.1.2.2. Other more specific consumption mods ....................................................................................................... 57 4.1.3. Very different player profiles .............................................................................................................. 57 4.1.3.1. Heterogenic equipment rates. ...................................................................................................................... 57 4.1.3.2. An important and stable involvement rate ................................................................................................... 58 4.2. DATA ANALYSIS ............................................................................................................................................... 59 4.2.1. Pay-to-Play model: various remunerative offers ................................................................................ 60 4.2.1.1. The complete Pay-to-Play model .................................................................................................................. 61 4.2.1.2. No advertisement Pay-to-Play model ........................................................................................................... 67 3 4.2.1.3. No subscription Pay-to-Play model ............................................................................................................... 72 4.2.1.4. No added content Pay-to-Play model ........................................................................................................... 77 4.2.1.5. Advertised Pay-to-Play model ....................................................................................................................... 82 4.2.1.6. Customizable Pay-to-Play model. ................................................................................................................. 87 4.2.1.7. Subscription Pay-to-Play model .................................................................................................................... 91 4.2.1.8. Traditional Pay-to-Play model ....................................................................................................................... 96 4.2.2 Free of charges online Free-to-Play model: diverse premium offers ................................................. 100 4.2.2.1. Complete Free-to-Play model ..................................................................................................................... 100 4.2.2.2. No subscription Free-to-Play model ........................................................................................................... 105 4.2.2.3. No advertisement Free-to-Play model ........................................................................................................ 109 4.2.2.4. No added content Free-to-Play model ........................................................................................................ 113 4.2.2.5. Advertised Free-to-Play model ................................................................................................................... 117 4.2.2.6. Flexible Free-to-Play model ........................................................................................................................ 121 4.2.2.7. Community Free-to-Play model .................................................................................................................. 125 4.2.2.8. Open-Source Free-to-Play model ...............................................................................................................