Game Production: business models

Transcription

1 Game Production: business models Fabiano Dalpiaz 1

2 Outline Lecture contents 1. Revenue models for videogames 2. Business model canvas 3. Business model canvas: Rovio 2

3 1. Revenue models for videogames Definition of a revenue model A revenue model is a framework for generating revenues. It identifies which revenue source to pursue, what value to offer, how to price the value, and who pays for the value Part of a business model Several models exist that can be combined (see next slides) Definition of revenues model based on Afuah, A Business Models: A Strategic Management Approach. New York: McGraw-Hill/Irwin, pp

4 1. Revenue models for videogames i. Physical game Revenue is obtained by delivering the game by selling a physical copy Distributed via CD/DVD/Blue Ray Sub-models Box sales: value from the physical copy that is staked on the shelves of a shop Special editions Merchandising (e.g., T-shirts but much more!) Peripheral enticement Preselling 4

5 1. Revenue models for videogames ii. One-time fee The game is distributed digitally and is sold through the payment of a one-time fee No physical product is delivered License / key / serial code to activate the game Sometimes the game can be downloaded for free, but cannot be played until activated 5

6 1. Revenue models for videogames iii. Subscription A subscription fee is required to enable playing the game for a limited duration Pay-per-play: payment per experience (number of times the game is played) Pay-per-time: specific time period (e.g., 12 months) Subscriptions can be made to a publisher or a platform too Indirect subscription to a game Premium subscription (the game is free but advanced functions cannot be used without a premium account) 6

7 1. Revenue models for videogames iv. Game demos A demonstrative version of the game can be played Payment required to unlock the full game What/how to lock? Functionalities Content (e.g., only a few levels are available) Time-based (full game only for X days) 7

8 1. Revenue models for videogames v. Game marketing Conduct marketing campaigns that concern the videogame When? In-game marketing (company logos, virtual buildings, branded products in the game) Before-game marketing: ads are shown before playing the game Around-game marketing, which connects to the number of page views, clicks, and acquisition of players 8

9 1. Revenue models for videogames vi. Free Even free games can potentially generate revenues Two sub-models Freeware: no payment, but used in conjunction with another business model Freemium: similar a paid subscription but players can still play with some limitations 9

10 1. Revenue models for videogames vii. Game content Revenue is generated by introducing extras into a videogame Mechanics In-game currency Big chunks of extras are often referred to as downloadable content (DLC) Micro-transactions can be used to buy inexpensive add-ons Pay-to-win to buy game mechanics that let the player easily win Content can also be generated by users (usergenerated content) 10

11 1. Revenue models for videogames viii. Game economics Creating an economic system within the game for people to interact with Virtual currency: pay real money to obtain game cash Virtual marketplace: obtain items from that market either with real money or game cash In the end, either boils down to real money 11

12 1. Revenue models for videogames viii. Selling/licensing core game assets Developed assets can be reused by selling them to others, or licensing their use Examples Game content Game mechanics Game engines (think of Unreal!) 12

13 1. Revenue models for videogames ix. Voluntary basis No-one is forced to pay; money is made on a voluntary basis Donationware: people can decide to make donations, but that is not mandatory Crowdfunding: obtain initial funding to sustain the development of a game 13

14 1. Revenue models for videogames x-xii. Further models Player data Publishers can get consent to use players data Player data can be sold to marketing companies Foreign distribution Distribution rights sold to a different publisher in a different country Game renting Renting the game for a few days obsolete right now 14

15 Definition of a business model A model of the business of a company, aggregating the value a company offers to one or several segments of customers the architecture of the firm and its network of partners for creating, marketing and delivering this value and relationship capital in order to generate profitable and sustainable revenue streams 15

16 Nine fundamental questions What do we offer to our customers? Who are our customers? How do we reach them? How do we get and keep them? WHAT? Value proposition HOW? Value configuration Partnership Core capability Revenue Cost HOW MUCH? WHO? Customer segment Distribution channel Relationship How do we operate and deliver? How do we collaborate? What are our key competencies? What are our revenues? Our pricing? What are our costs? 16

17 Answering the questions via the canvas, illustration 17

18 Answering the questions via the canvas, illustration 18

19 a. Value proposition What do we offer to our customers? Who are our customers? How do we reach them? How do we get and keep them? WHAT? VALUE proposition HOW? Value configuration Partnership Core capability Revenue Cost HOW MUCH? WHO? Customer segment Distribution channel Relationship How do we operate and deliver? How do we collaborate? What are our key competencies? What are our revenues? Our pricing? What are our costs? 19

20 a. Value proposition Def: An overall view of a firm s bundle of offerings, products and services, that together represent a benefit or a value for its customers [Kambill et al., 1996] Studying the value proposition is the starting point of the business model canvas! refined by Core capabilities requires Value proposition targets Customer segment 20

21 Running case study: the Montreux Jazz Festival The Montreux Jazz Festival (MJF) is an annual event that takes place in the little Swiss town of Montreux. The first edition dates back to 1967 Over the years, the MJF has grown in fame and went on to become a World event, attracting famous artists and visitors from the entire globe MJF is now led by the MJF Foundation, and has become an obvious favorite among sponsors thanks to the unique visibility it provides, a great opportunity for Montreux Municipality s tourism and economy Many off-stage activities The case study involves a new company, TicketCorner, that sells tickets on-line and off-line 21

22 a. Value proposition Business to consumer (B2C) Event tickets (and access) Business to business (B2B) Distribution channel reach Advertise products Integrated B2B solutions Sell products Point-of-sale affiliation Have POS outlets at the festival 22

23 a. Value proposition for the MJF 23

24 b. Customer segments What do we offer to our customers? Who are our customers? How do we reach them? How do we get and keep them? WHAT? VALUE proposition HOW? Value configuration Partnership Core capability Revenue Cost HOW MUCH? WHO? Customer segment Distribution channel Cust. Relationship How do we operate and deliver? How do we collaborate? What are our key competencies? What are our revenues? Our pricing? What are our costs? 24

25 b. Customer segments Def: Categorizations of the population into social class or psychologically defined groups refined by Value proposition targeted by Customer segment 25

26 b. Customer segments Value Proposition Target Customer Event tickets (& access) Individual event visitors Distribution channel reach Events & Organizers Integrated B2B solutions Venues POS affiliation POS Partners 26

27 b. Customer segments for the MJF 27

28 c. Distribution channel What do we offer to our customers? Who are our customers? How do we reach them? How do we get and keep them? WHAT? VALUE proposition HOW? Value configuration Partnership Core capability Revenue Cost HOW MUCH? WHO? Customer segment Distribution channel Cust. Relationship How do we operate and deliver? How do we collaborate? What are our key competencies? What are our revenues? Our pricing? What are our costs? 28

29 c. Distribution channel Def: a set of links or a network via which a firm goes to market and delivers its value proposition precedes Distribution link is a refined by Value proposition delivers Distribution channel serves Customer segment Actor by 29

30 c. Distribution channel Value Proposition Distribution Channel Target Customer Ticketcorner POS network Event tickets (& access) Affiliate POS network Individual event visitors Distribution channel reach ATMs Events & Organizers Integrated B2B solutions Call Center Venues POS affiliation Ticketcorner Website POS Partners B2B salesforce 30

31 c. Distribution channels for the MJF 31

32 d. Customer relationship What do we offer to our customers? Who are our customers? How do we reach them? How do we get and keep them? WHAT? VALUE proposition HOW? Value configuration Partnership Core capability Revenue Cost HOW MUCH? WHO? Customer segment Distribution channel Cust. Relationship How do we operate and deliver? How do we collaborate? What are our key competencies? What are our revenues? Our pricing? What are our costs? 32

33 d. Customer relationship Def: customer equity: acquisition, retention, add-on selling trust and personalization mechanisms, Value proposition refined by Distribution link concerns Relationship mechanism Customer segment 33

34 d. Customer relationships for the MJF Note: customer relationships about the festival will be coordinated by the MJF, not by TicketCorner 34

35 e. Core capability (key resource) What do we offer to our customers? Who are our customers? How do we reach them? How do we get and keep them? WHAT? VALUE proposition HOW? Value configuration Partnership Core capability Revenue Cost HOW MUCH? WHO? Customer segment Distribution channel Cust. Relationship How do we operate and deliver? How do we collaborate? What are our key competencies? What are our revenues? Our pricing? What are our costs? 35

36 e. Core capability (key resource) Resource (assets): available & useful in responding to market opportunities or threats Capability (know-how, key resource): aptitude to exploit and coordinate resources to create, produce, and/or offer products and services to a market Core capability is a refined by Resource required by Value proposition Actor by 36

37 e. Core capabilities (key resources) for the MJF 37

38 f. Value configuration (key activity) What do we offer to our customers? Who are our customers? How do we reach them? How do we get and keep them? WHAT? VALUE proposition HOW? Value configuration Partnership Core capability Revenue Cost HOW MUCH? WHO? Customer segment Distribution channel Cust. Relationship How do we operate and deliver? How do we collaborate? What are our key competencies? What are our revenues? Our pricing? What are our costs? 38

39 f. Value configuration (key activity) Def: set of interdependent activities that add value for the customers to the company products or services Some of the business processes But not all of them!! (do they deliver value?) Value activity is a refined by Resource needs (in) creates (out) Value configuration implements Value proposition Actor by 39

40 f. Value configuration (key activities) for the MJF 40

41 g. Partnership What do we offer to our customers? Who are our customers? How do we reach them? How do we get and keep them? WHAT? VALUE proposition HOW? Value configuration Partnership Core capability Revenue Cost HOW MUCH? WHO? Customer segment Distribution channel Cust. Relationship How do we operate and deliver? How do we collaborate? What are our key competencies? What are our revenues? Our pricing? What are our costs? 41

42 g. Partnership Def: contract/agreements with partners for the provision of goods or delivery of services Distribution channel refined by Value configuration concerns Partnership agreement Core capability Actor with 42

43 g. Partnerships for the MJF 43

44 h. Revenue What do we offer to our customers? Who are our customers? How do we reach them? How do we get and keep them? WHAT? VALUE proposition HOW? Value configuration Partnership Core capability Revenue Cost HOW MUCH? WHO? Customer segment Distribution channel Cust. Relationship How do we operate and deliver? How do we collaborate? What are our key competencies? What are our revenues? Pricing? What are our costs? 44

45 h. Revenue, examples REVENUE one time sale recurrent registration subscription advertisement use See earlier slides for further details in the context of games! transaction commission 45

46 h. Revenues for the MJF Value Proposition Revenue Model Target Customer Event tickets (& access) Revenue cut on tickets sold Individual event visitors Distribution channel reach Advertising online & print Events & Organizers POS affiliation Fee B2B platform usage POS Partners Integrated B2B solutions Fee general contractor service Venues 46

47 h. Revenues for the MJF 47

48 i. Cost What do we offer to our customers? Who are our customers? How do we reach them? How do we get and keep them? WHAT? VALUE proposition HOW? Value configuration Partnership Core capability Revenue Cost HOW MUCH? WHO? Customer segment Distribution channel Cust. Relationship How do we operate and deliver? How do we collaborate? What are our key competencies? What are our revenues? Pricing? What are our costs? 48

49 i. Costs for the MJF Cost positions Percentage of total Point of sales network development and maintenance TicketSoft platform development and maintenance Ticketcorner marketing Point of sales & event acquisition and maintenance Website Call center R&D 49

50 MJF, altogether (still partial) 50

51 3. Business model canvas: Rovio What is Rovio Entertainment? Global entertainment media company from Finland Creator of Angry Birds The game triggered a business empire Rovio did 50+ games before the big success Five groups of customers 51

52 3. Business model canvas: Rovio Multiple value propositions 52

53 3. Business model canvas: Rovio Key activities, partnerships, resources 53

54 3. Business model canvas: Rovio Rovio s goals: 1. Brand Awareness 54

55 3. Business model canvas: Rovio Rovio s goals: 2. Importance of the story 55

56 3. Business model canvas: Rovio Rovio s goals: 3. Quality and sales volume 56

57 3. Business model canvas: Rovio Rovio s goals: 4. Growth capability 57

58 References Mandatory 1. Osterwalder, Alexander, and Yves Pigneur. "An ontology for e-business models." Value creation from e-business models (2004):

59 Acknowledgements The slides on the Business Model Canvas are adapted from a presentation by Professor Yves Pigneur at the SIKS meeting in Amsterdam May 30, 2006 Material on the business models was assembled starting from the work of Game Production 2014 students Thijs Prins, Koen Smit The case study on Rovio is adapted from an online presentation by Jukka Ala-Mutka: 59