It is becoming increasingly difficult for gaming companies to survive in the present day industry. With the supply side of the gaming industry growing massively, game companies must offer players an immersive experience which offers a pull strong enough to draw them to their games, and away from competition. Because of that, companies are using new technologies to bring about industry disruption, in order to set themselves apart from competitors.
There are four key changes going on the gaming industry which are causing major disruption:
1. More diverse customers
With the introduction of smartphones, game developers have gained a new and substantial platform for games. Smartphones games tend to ask for a smaller investment of the player comparing to traditional games, which has caused a new demographic to try out gaming. Currently 27% of mobile gamers are in between the ages of 35 to 50, and 10% is even 50 years or older. (Vungle, 2015) This diversification of game consumers offers new possibilities for game companies. This means a crucial step for game developers currently is to find the right platform for the right game in order to have success.
2. The defenition of games is changing
New technologies and platforms are changing what is possible for game developers. Smartphones provide low entry barriers for consumers and thus attracts are large consumer base. This has caused mobile game developers such as King and Supercell to equal, or in some cases even high, profit that game giant Nintendo. (Newzoo, 2014) Whereas big-budget game companies are developing new games with new technologies, such as virtual reality and cross-platform applications, allowing a more immersive game experience for consumers.
3. Digital delivery
An important change in the gaming industry has been the ongoing shift from physical distribution of games to digital delivery. Being able to distribute content via internet reduces distribution costs significantly. Moreover, it allows game companies to continually update their games, improving the content they can offer and implement changes consumers would like to see. Lastly, it allows for downloadable content, which means companies can offer consumers the possibility to add and purchase elements to their games to make the gaming experience more personal and tailored to what the consumer wants.
4. Innovative business models
New technologies are leading companies to innovative business models. Whereas traditionally companies would gain revenue by simply selling the game, other ways of earning revenue have been emerging throughout the years. Examples are subscription based gaming or free-to-play games where consumers can purchase extra elements to the game via an in-game store.
In conclusion, technological developments are giving game companies more options, yet also make it more crucial for those companies to make the right decisions. Failing to match the right target audience, with the right game, the right platform, and failing to choose the right business model will lead companies to quickly be outperformed by competitors. The margin for error in the gaming industry has thus never been so small.
References:
Accenture, 2016, https://www.accenture.com/us-en/insight-pulse-gaming-disruption
Vungle, 2015 https://vungle.com/blog/2015/06/03/how-mobile-is-disrupting-the-games-industry-in-a-good-way/
New zoo, 2014 https://newzoo.com/insights/articles/games-industry-disrupted-10-key-moments-towards-2017/
