Strategy Plan One
April 3, 2012
Video Game Industry
Social media, online, streaming, and new platforms are all factors that play into the rapidly changing video game industry. Many video game industry strategies are continuing to build on trends around social media sites, development of new tablet, mobile, handheld and console devices, and faster streamlining internet connections.
Posed to be a $65-80 Billion industry per year in 2012 and 2013, the emphasis in the video game industry continues on developing apps and games for mobile devices, while still not losing focus on console gaming with PS4 and Xbox 720 slated to début late 2013 or early in 2014.
Building off the social gaming successes of companies like Zynga and Playfish, developers will continue to tie into the building user base of social media sites, now well over 1 Billion users. However, users and developers are aligning for a far richer, deeper social gaming experience.
Last December, Zynga approached a $1 Billion valuation based on valuation tied to the hundreds of millions of social media users who flocked to their “free” games. Zynga is one of those companies that speculated around revenue generation of a massive base of users. Solid revenue generating models are developed once companies reach this stage to give assurances to investors. In most social gaming sites, significant revenues are generated from advertising, rather than pay per use for gaming, and those models will be changing.
Offering More Free Access / Micro Payment Models
The movement is not away from free access, but more towards more free. The objective of many online entertainment gaming companies is to accumulate as many users as possible, and thus, valuation of these sites increase.
Revenue models from gaming companies now include “pay by extra-feature”, or added features by subscription. These tactics, sometimes referred to as “micro-payment” models tap into a user market willing to pay a very low monthly fee for gaming access.
Valuation of website inclines with the number of unpaid or paid subscribers. The economic and business value of high volumes of potential consumers is prized by investors.
Mobile Gaming Will Dominate
The mobile and tablet gaming industry is increasing at a good pace, with reference to Nielsen’s annual U.S. Gaming: A 360° View survey (March 2012). Marketing research firm M2 Research is predicting that the mobile gaming market will blow past the $6 Billion mark in 2012.
The use of mobile platforms will continue to grow at alarming rates. 2012 will see the app and game market develop around the new iPad 3, Sony’s PS Vita, and many mobile devices utilizing the Android operating system.
Android Operating System (OS) gaming is dominated by users in the 25-34 age brackets. Android is gaining massive strides as the dominate operating system for mobile smart phone and tablet devices. By February 2012, 450,000 apps were available for Android. iPhone gaming has appeared to be penetrating evenly across all age segments.
Cloud gaming, which is essentially “Gaming on Demand”, will continue to build in 2012, as it makes it easier and faster for all gamers to connect from any type of mobile to console device. Cloud streaming gaming is considering similar along the lines of streaming movies. Here is a YouTube video on Cloud Gaming and its appealing direct, instant streaming features to video game enthusiasts.
The gaming industry will generate much interest over the next few years. Entrepreneurs, developers, and businesses in the industry should keep a frequent eye on the rapidly changing gaming landscape.
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