Game Production: business models · 2015-10-02 · 2. Business model canvas Def: An overall view of...

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Game Production:

business models

Fabiano Dalpiaz

[email protected]

mailto:[email protected]

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Outline

1. Revenue models for videogames

2. Business model canvas

3. Business model canvas: Rovio

Lecture contents

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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. 2004. Business Models: A Strategic Management Approach. New York: McGraw-Hill/Irwin, pp. 67-69”

Definition of a revenue model

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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

i. Physical game

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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

ii. One-time fee

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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)

iii. Subscription

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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)

iv. Game demos

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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

v. Game marketing

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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

vi. Free

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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 (user-generated content)

vii. Game content

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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

viii. Game economics

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Developed assets can be reused by selling them to others, or licensing their use

Examples

Game content

Game mechanics

Game engines (think of Unreal!)

viii. Selling/licensing core game assets

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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

ix. Voluntary basis

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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

x-xii. Further models

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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

Definition of a business model

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Nine fundamental questions

Core capability

Value configuration

Partnership

Customer segment

Relationship

Distribution channel

Value proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?

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?

Who are our customers?

How do we reach them?

How do we get and keep them?

WHO?

What do we offer to our

customers?

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Answering the questions via the canvas, illustration

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Answering the questions via the canvas, illustration

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a. Value proposition

Core capability

Value configuration

Partnership

Customer segment

Relationship


VALUE proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?




What are our costs?




WHO?

What do we offer to

our customers?

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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

Value

propositionCustomer segmentCore capabilities

requires targets

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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

Running case study: the Montreux Jazz Festival

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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


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a. Value proposition for the MJF

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b. Customer segments

Core capability

Value configuration

Partnership

Customer segment

Cust. Relationship


VALUE proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?




What are our costs?




WHO?


customers?

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Def: Categorizations of the population into social class or psychologically defined groups


refined by

Customer

segmentValue proposition

targeted by

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Value Proposition Target Customer

Individual event visitors

Events & Organizers

Venues

Event tickets (& access)



POS affiliation POS Partners

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b. Customer segments for the MJF

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c. Distribution channel

Core capability

Value configuration

Partnership

Customer segment

Cust. Relationship


VALUE proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?




What are our costs?




WHO?


customers?

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Def: a set of links or a network via which a firm “goes to market” and delivers its value proposition


precedes

Distribution

link

Distribution

channelCustomer segmentValue proposition

by

delivers serves

Actor

refined byis a

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Value Proposition Distribution Channel Target Customer

Ticketcorner POS network

Affiliate POS network

Ticketcorner Website

ATMs

B2B salesforce


Events & Organizers

Venues




POS affiliation POS Partners

Call Center

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c. Distribution channels for the MJF

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d. Customer relationship

Core capability

Value configuration

Partnership

Customer segment

Cust. Relationship


VALUE proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?




What are our costs?




WHO?


customers?

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Def: customer equity: acquisition, retention, add-on selling trust and personalization mechanisms, …

d. Customer relationship

refined by

Relationship

mechanism

Customer segment

Value proposition

concernsDistribution link

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d. Customer relationships for the MJF

Note: customer relationships about the festival will be coordinated by

the MJF, not by TicketCorner

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e. Core capability (key resource)

Core capability

Value configuration

Partnership

Customer segment

Cust. Relationship


VALUE proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?




What are our costs?




WHO?


customers?

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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

e. Core capability (key resource)

refined by

Resource Value proposition

Actor by

required by

Core capability

is a

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e. Core capabilities (key resources) for the MJF

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f. Value configuration (key activity)

Core capability

Value configuration

Partnership

Customer segment

Cust. Relationship


VALUE proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?




What are our costs?




WHO?


customers?

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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

Value

configuration

Actor by

needs (in)implements

Resource Value proposition

refined byis a

creates (out)

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f. Value configuration (key activities) for the MJF

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g. Partnership

Core capability

Value configuration

Partnership

Customer segment

Cust. Relationship


VALUE proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?




What are our costs?




WHO?


customers?

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g. Partnership

Def: contract/agreements with partners for the provision of goods or delivery of services

refined by

Partnership

agreement

Actor with

concerns

Core capability


Value configuration

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g. Partnerships for the MJF

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h. Revenue

Core capability

Value configuration

Partnership

Customer segment

Cust. Relationship


VALUE proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?



What are our key competencies?What are our revenues? Pricing?

What are our costs?




WHO?


customers?

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h. Revenue, examples

REVENUE

one time

recurrent

sale

registration

subscription

advertisement

use

transaction

commission

See earlier slides for

further details in the

context of games!

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h. Revenues for the MJF

Revenue ModelValue Proposition Target Customer


Events & Organizers

Venues




POS affiliation

Revenue cut on tickets sold

Fee B2B platform usage

Fee general contractor service

Advertising online & print

POS Partners

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h. Revenues for the MJF

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i. Cost

Core capability

Value configuration

Partnership

Customer segment

Cust. Relationship


VALUE proposition

Revenue

Cost

HOW?

WHAT?

HOW MUCH?



What are our key competencies?What are our revenues? Pricing?

What are our costs?




WHO?


customers?

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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

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MJF, altogether (still partial)

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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

What is Rovio Entertainment?

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Multiple value propositions

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Key activities, partnerships, resources

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Rovio’s goals: 1. Brand Awareness

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Rovio’s goals: 2. Importance of the story

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Rovio’s goals: 3. Quality and sales volume

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Rovio’s goals: 4. Growth capability

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References

1. Osterwalder, Alexander, and Yves Pigneur. "An ontology for e-business models." Value creation from e-business models (2004): 65-97.

Mandatory

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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: http://www.slideshare.net/JukkaAM/entertainment-company-business-model-canvas-case-rovio-entertainment

Game Production: business models · 2015-10-02 · 2. Business model canvas Def: An overall view of...

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