Module 13 The Video Games Industryand Data Analytics January 2023 V 13
Module 13 The Video Games Industryand Data Analytics January 2023 V 13
Module 13 The Video Games Industryand Data Analytics January 2023 V 13
and
about play
CADGI (C) 2019-2023 6
Storgards (2006) Brand Equity of Digital Games.
Role of Play
(behaviours)
New generations
grow up with idea
of games type life experience
https://levvvel.com/biggest-video-game-companies/ (2021)
CADGI (C) 2019-2023 17
Throughout the history of video games business, games
studios have been established and sold.
family
1. Action
2. Role-playing games
3. Strategy games
4. Simulation games
5. Puzzle games
6. Sports games
Production
Ideation Publishing
Conceptualisation Business/ Marketing
Design Design and art Customer acquisition
Graphic design
Production
Sales and Revenues
Audio & Sound Data analytics
Design and graphic tools
Technology/
Engineering
Turing is widely considered to be the father of theoretical computer science and artificial intelligence.
CADGI (C) 2019-2023 39
Games are highly creative products. We
need creative thinking such as Fantasy, imagination - art
imagination, thinking of things that do
not exist yet using our skills, knowledge
and experience.
Middle-Earth
CADGI (C) 2019-2023 Connections to Kalevala (Finnish mythodology)
40
Oftentimes it takes decades to
an idea to become commercially
viable.
Technological change
1995 was the year when
Nintendo decided to publish first
1960’s 1995 2016
Virtual Reality platform/game
console, or ‘Stereorescopic 3D”
experience.
https://www.statista.com/outlook/dmo/digital-media/video-
games/mobile-games/worldwide#revenue CADGI (C) 2019-2023 44
Different cultures and countries tend to
spend differently money on mobile games. If you
compare this slide with the previous slide there is big
increase in spending.
Management perspective:
Long-lasting intangible value (e.g. IP) that results to
cash flow and higher share price
Developers’ perspective:
Long-lasting intangible value that results
better games in the future
Unique
characteristics
WOW! → WOM → £
Platform
Type of game Demographics and
(technology,
(genre) segmentation
mechanics)
https://vginsights.com/insights/article/what-are-the-highest-earning-developers-doing-on-steam-that-you-arent
CADGI (C) 2019-2023 54
Self-publishing has increased
significantly since past 20 years.
https://vginsights.com/insights/article/what-are-the-highest-earning-developers-doing-on-steam-that-you-arent
CADGI (C) 2019-2023 55
https://vginsights.com/insights/article/what-are-the-highest-earning-developers-doing-on-steam-that-you-arent
CADGI (C) 2019-2023 56
Here you see some statistics from IVGC
students.
Realistic physics
Of course, the list of features is a ‘mix’ Visual style
of different types of things. Also, we Fun gameplay
cannot generalize this to all population
Level design
except people similar to these 3000+
Flow experience
respondents.
Something different from other similar games
Bug free
During your game design process, you Great reviews
must make difficult choices about Cool bosses to beat
where you put your available resources
Popular platform
and what are the best way to use your
and your teams’ skills. Engaging
Earn real money by trading
https://vginsights.com/insights/article/what-are-the-highest-earning-developers-doing-on-steam-that-you-arent
CADGI (C) 2019-2023 59
MONETIZATION AND DATA ANALYTICS
Now you know the statistics of the industry and some of gamer behaviours.
Next, you need to think of your own game and how you will position it in the
marketplace.
References:
https://en.wikipedia.org/wiki/Game_of_War:_Fire_A
ge
It is commonly accepted (can be debated, but depends on the context) that the most important KPIs for games are
ARPU – Average Revenue Per User. This describes how much money the player is spending in the game. Check stats from
previous slides.
LTV – Lifetime Value. This describes how much money in total each player spends in the game. Can be during several years
of time!
CAC – Customer Acquisition Cost. This is the money that you need to spend to acquire a new paying user/download or any
other conversion target. Very important measure for the marketing department.
Retention Rate – The number of users that come back to play the game, in calendar time. This is about your customer
loyalty. A bad retention rate means the game has serious issues; a good retention rate means it is engaging.
There are many more statistics game studios/publishers follow of course, including the most important one which is the
actual sales and at large, profit.
Their strategy was very simple but extraordinary at the time of creation in year
2000. They gave a free access to anyone to get a ‘hotel room’ for room. However, the hotel
room was empty without any furniture. The magnificent idea was that users
must pay real money for credits to spent on virtual furniture to decorate their hotel room.
They also had other types of virtual currencies like Diamonds and seasonal currencies.
For instance, Habbo Hotel made revenue over $74 million in 2009 by selling virtual furniture.
The service is still open, even it went through some serious trouble about
Moderation of the discussions. Changes were made and it is a ‘safe environment’ for
teenagers to play.
https://techcrunch.com/2009/03/30/habbo-pulled-in-74-million-in-real-
revenues-last-year-from-virtual-goods-and-advertising/ CADGI (C) 2019-2023 68
Paying for what? Examples of where game players
spend real money
Loose definition is that Marginal Cost is the cost added by producing one additional unit of a
product or service which in software business like games approaches to zero cost (no cost at all
to add a unit in the market place).
So producing or publishing a new game is almost zero cost to the game publisher. However, this
is not completely true because high expenditure spent on marketing nowadays.
When the game player is in the game, and if the experience is good, the game owns the user
and there is NO competition in the game for the demand and supply of in game virtual goods.
Therefore game publisher can manage the internal economy alone and price the goods according
whatever the users are willing to pay.
When the game is ready to be published it is relatively easy make copies of it, that
means the cost of producing a new copy will come down quickly.
Simplified example:
For instance, if the cost of the game was 1.000.000$, producing one copy means a
cost of $1m/1 copy, 2 copies $0.5m and producing 1m copies would make the cost
$1/game. The more copies you sell the cheaper a copy gets (until to a certain
limit)!
Digital distribution has revolutionized the way games are made available to game
players. That is why there is practically no ‘waste’ product produced or sold (vs.
discs).
Obviously, there are other costs than production, specially; marketing (user
CADGI (C) 2019-2023 74
acquisition) and maintenance.
In-game economy is a ‘monopoly’ - NFTs
One of the most common, if not the most common way of making money with games is to include in-app purchases in them.
It means something sold in the game against real money such as power-ups, time reductions, skins, level-ups and enhanced other features.
Just to mention, there are other “payments” than just real money e.g., playing (spending time with the game to earn in-game currencies and
being loyal to a game).
In-game economy is basically in the hands of its developer. Developer (e.g. game studio) has full rights to design, develop and decide how
the in-game economy works. The reason why it is a in-game monopoly, is the reason that there is no external power, real competition
between developers’ items and services and external party’s supply.
It is an interesting phenomenon for many reason. Firstly, there is no usual market level supply-demand based pricing. The games do
compete for the gamers fiercely but when the gamer is in the game, gamer can only buy and use what is available in the game. E.g. you
cannot carry Pokemon XP/Items to World of Warcraft XP/Items. Each of these in-game elements has a value in money for the developer.
Such market opening and transparency would disturb the in-game economy and spoiling the in-game monopoly of items and sales. To
mention, there are currently discussion how such exchange would happen in a way that it would benefit all. However, game-play perspective
speaking all games are different in many ways and their items as such are not realistically transferred (as now) as they are but there should
be value-based exchange organised between them (conversion).
Pricing strategy is based on behaviors of the players and price points are designed to match gamers purchase power and traction.
Secondly, the scarcity of the products depend on the decision made by the developer. They can make decision such as there is only 100
certain items available which, for game players mean more prestige by owning them. This phenomena called NFT (Non-Fungible Tokens) is
now growing fast. In a market economy it means that rarity of an item makes it more desirable, wanted, valuable and if in demand, more
expensive to get. Good analogy is for instance Pokemon cards and The
CADGI (C) Bored Ape Yacht Club.
2019-2023 75
THE TRENDS
The ultimate purpose of video games, in my opinion, is to be social and learn how
be social, share fun experiences. During this course we are trying to inspire YOU,
rather than only play games to DEVELOP your games and learn new skills which will
support your career whatever you will do, even beyond games.