Question

The Business of Video Games Recently, the Global Games Market Report was released to explore the market trends shaping and driving the landscape of the game, and further zoom in on the latest developments per segment and region for the upcoming year and beyond. The report indicates that the way consumers engage with and through games is constantly changing that leads to entirely new segments of game enthusiasts. There are now more than 2.5 billion gamers across the world. Combined, they would spend $152.1 billion on games in 2019, representing an increase of +9.6% year on year. According to the newest report, the U.S. has overtaken China as the world’s largest gaming market by revenues. Overall, the U.S. games market would generate $36.9 billion in 2019, predominantly driven by its +13.9% growth in console game revenues. Among top 10 video game publishers by game revenues, major US companies are Sony, Apple, Microsoft, Nintendo, Google, Activision Publishing (AP), and Electronic Arts (EA). Video games are played on various platforms of smartphone, console, boxed, tablet and browser. Console will be the fastest-growing segment this year, growing +13.4% year on year to $47.9 billion in 2019. If we break that prediction down by platform, the largest segment, 36%, will be generated by smartphone games, while the smallest segment of the market, 2%, will go to Browser PC Games. The prediction is that browser-based games will continue to lose market share over the next few years. The total market share has console games accounting for 32% of the revenue and will actually grow faster than smartphone games in the coming years. Regardless of this increased growth console games will not overtake smartphone games any time soon. So, what does this all mean for the future of gaming publishers in the US market? Smartphone game development will continue to be explosive. With this much potential behind it, every game developer will be looking for an investment in the next big game. Also, you can probably look forward to critical improvements of gaming platforms that can blow your minds in the next year or two. In addition, you can expect a new generation of gamers from millennials to Z fairly soon and that might be for a big change. As the CEO of a gaming publisher, you are supposed to perform a five forces analysis of the online video game industry. Use search engine or other information sources to answer the following questions.

2. Explain the competition among your major rivalry, bargaining power of buyers, bargaining power of suppliers, threat of new entrants, and threat of substitutes. Hint: you can use SWOT to get insight of these forces if necessary.

4. How has your company used information systems to compete more effectively and/or efficiently? Hint: break down the information systems into its four components and then explain how the company utilize the four components. Alternatively, apply the value chain to explain how information systems help primary and support activities to add values.

Answer 1

Mojor rivalry plan includes :

If the rivalry among the existing players in an industry is intense then it will drive down prices and decrease the overall profitability of the industry. Firstly Digital Gaming operates in a very competitive Retail industry. This competition does take toll on the overall long term profitability of the organization.

Plan to tackle intense rivalry:

• By building a sustainable differentiation
• By building scale so that it can compete better
• Collaborating with competitors to increase the market size rather than just competing for small market.

Bargaining power of buyers:

Buyers are often a demanding lot. They want to buy the best offerings available by paying the minimum price as possible. This put pressure on Digital Gaming plan profitability in the long run. The smaller and more powerful the customer base is of digital gaming the higher the bargaining power of the customers and higher their ability to seek increasing discounts and offers.

Plan to tackle Bargaining power of buyers :

• By building a large base of customers. This will be helpful in two ways. It will reduce the bargaining power of the buyers plus it will provide an opportunity to the firm to streamline its sales and production process.
• By rapidly innovating new products. Customers often seek discounts and offerings on established products so if Digital gaming keep on coming up with new products then it can limit the bargaining power of buyers.
• New products will also reduce the defection of existing customers of Digital gaming to its competitors.

Bargaining power of suppliers:

All most all the companies in the Retail industry buy their raw material from numerous suppliers. Suppliers in dominant position can decrease the margins Digital Gaming can earn in the market. Powerful suppliers in Consumer Services sector use their negotiating power to extract higher prices from the firms in Retail field. The overall impact of higher supplier bargaining power is that it lowers the overall profitability of Retail.

Plan to tackle Bargaining power of suppliers:

• By building efficient supply chain with multiple suppliers.
• By experimenting with product designs using different materials so that if the prices go up of one raw material then company can shift to another.
• Developing dedicated suppliers whose business depends upon the firm. One of the lessons Digital gaming can learn from other brands is how these companies developed third party manufacturers whose business solely depends on them thus creating a scenario where these third party manufacturers have significantly less bargaining power compare to other brands.

Threats of new entrants :

New entrants in Retail brings innovation, new ways of doing things and put pressure on our digital gaming low pricing strategy, reducing costs, and providing new value propositions to the customers. Our plan has to manage all these challenges and build effective barriers to safeguard its competitive edge.

Plan to tackle threats of new entrants :

• By innovating new products and services. New products not only brings new customers to the fold but also give old customer a reason to buy our digital gamingproducts.
• By building economies of scale so that it can lower the fixed cost per unit.
• Building capacities and spending money on research and development. New entrants are less likely to enter a dynamic industry where the established players keep defining the standards regularly. It significantly reduces the window of extraordinary profits for the new firms thus discourage new players in the industry.

Threats of substitute :

When a new product or service meets a similar customer needs in different ways, industry profitability suffers. The threat of a substitute product or service is high if it offers a value proposition that is uniquely different from present offerings of the industry.

Plan to tackle threats of substitute :

• By being service oriented rather than just product oriented.
• By understanding the core need of the customer rather than what the customer is buying.
• By increasing the switching cost for the customers.

Use of information systems :

Big plans for big data :

Using data to create targeted in-game advertisements purely has the aim of generating more revenue for the industry.

A more practical use of big data is to directly improve the games themselves. Companies can now use data analytics to interpret the key facts and habits of gamers, with the aim of being able to create a gaming experience that is ultimately more gratifying for players.

Software for digital Gaming :

With the rapid advancement of computer technology, the significance of software engineering in our daily lives is increasing. It affects every aspect of our lives today, including working, living, learning, and education. A new and popular mode of entertainment and an important application of technology are software games, which have become increasingly accepted by people of all ages.

Artificial intelligence and Internal Control :

The multidisciplinary nature of the processes that combine sound, art, control systems, artificial intelligence (AI), and human factors, also makes the software game development practice different from traditional software development. However, despite the high complexity of the software engineering development process, the game industry is making billions of dollars in profit .

S​​​pecial effects :

Some topics in special effects embrace computer program style, faerie graphics, rendering, pure mathematics process, PC animation, vector graphics, 3D modeling, shaders, GPU design, implicit surface mental image with ray tracing, image process, process photography, scientific mental image, and PC vision, among others. the general methodology depends heavily on the underlying sciences of pure mathematics, optics, physics, and perception.

special effects development has had a major impact on many varieties of media and has revolutionized animation, movies, advertising, video games, and graphic style generally.