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APPENDIX
Tuesday, April 14, 2009
GAMING INDUSTRY OVERVIEW
Demographic
• Male 14-38 (globally)
• Growing female demographic
Political
• Rating standards for games with violence/sexual content
• Federal laws(in progress)-requiring ID’s for game purchase
Socio-cultural
• Web 2.0 (video sharing, blogs, wikis,web communities)
• Online Game tournaments
• Interactive experiences have growing demand
Global
• Online gaming
• Piracy in China/India
• Strict censorship laws in other countries
• Currency exchange rates
Technological
• 7 Generations of gaming consoles
• Developments in wireless telecommunications market
• Anti-piracy technology
Economic
• Recession-surge in gaming
• Video games provide more of an ROI than alternative forms
of entertainment
Source: Datamonitor, Games Software in the United States
Exhibit 1
Tuesday, April 14, 2009
Porter’s 5 Forces (Exhibit 2)
Threat of New Entrants:
LOW
Substantial startup costs
reduces the threat of new
entrants into the gaming
market
Threat of substitutes: HIGH
Music, movies, digital media, and all
other leisure activities that serve as a
form of entertainment are substitutes
Bargaining power of
suppliers: HIGH
Need for computer programming
talent,Intellectual property rights, and
challenge to produce highly
differentiated games
COMPETITIVE RIVALRY:
HIGH
High development costs and
dependency on blockbuster
titles creates a highly
competitive environment
Bargaining power of buyers:
Retailers: buying power is diminished by the
need to provide titles from all publishers
Consumers: Have access to multiple titles on
multiple consoles, which results in limited brand
loyalty, and low switching costs
Console Manufacturers: They own one of the
major distribution channels so they have high
bargaining power
Tuesday, April 14, 2009
SWOT ANALYSIS (EXHIBIT 3)
STRENGTHS
• Guitar Hero Franchise
• 2nd largest publisher in the industry
• Strong distribution channel (all consoles, multiple
retailers)
• Exclusive relationships with movie studios
WEAKNESSES
• Brand awareness not high outside of target audience
• Shelf life of games is short
• Dependency on console industry
OPPORTUNITIES
• Console Development
• International Expansion
• Growing Female Market
• Partnerships with Cable/Broadcasters
THREATS
• Console manufacturers also act as publishers (i.e.
Microsoft, Nintendo)
• Digital piracy
Tuesday, April 14, 2009
Concept
Review
Assessment Prototype
First Playable
Alpha
• Is the game concept valid
and marketable?
• Game concept/treatment
• Team Identification
• Budget and Schedule
Product P&L
• Does the game’s design
prove the concept’s
validity, marketability and
technical feasibility
• Game Design Overview
• First on screen overview
• Recommended marketing
positioning
• Updated Budget
• Product P&L
• Based on the
development of the
prototype, should the
game be approved for
production
• working prototype
• preliminary marketing
plan and strategy
• Final: game design,
production p&L , budget
and schedule
• Is production progressing
according to budget, schedule,
and quality
• First playable version of the
game
• Final marketing plan
• Package/Advertising concept
• Revised: production budget,
product P&L
• Is the game being completed in a
timely manner consistent with
creative and technical goals?
• Alpha version of the game
• Trade marketing summary
• Final packaging/Rough TV boards
• Revised product P&L
• Consumer play test results
purpose
deliverables
Activision Greenlight Process
Pre-Production
Post-Production
Harvard Business School Press: Kelly Slater Pro-Surfer
Exhibit 4
Tuesday, April 14, 2009
Gaming Industry Value Chain
Capital/Publishing
Involved in paying for
development of new titles and
seeking returns through
licensing of the titles.
Production/Talent
Includes developers, designers
and artists, who may be
working under individual
contracts or as part of in-
house development teams.
Distribution layer
Or the "publishing" industry,
involved in generating and
marketing catalogs of games
for retail and online
distribution.
End users
The users/players of the
games
Primary Activities
FINANCE
HUMAN RESOURCES
PROCUREMENT
Supporting Activities
Activision’s
Competitive
Advantage
Exhibit 5
Tuesday, April 14, 2009
Tuesday, April 14, 2009
GAMING INDUSTRY OVERVIEW
Demographic
• Male 14-38 (globally)
• Growing female demographic
Political
• Rating standards for games with violence/sexual content
• Federal laws(in progress)-requiring ID’s for game purchase
Socio-cultural
• Web 2.0 (video sharing, blogs, wikis,web communities)
• Online Game tournaments
• Interactive experiences have growing demand
Global
• Online gaming
• Piracy in China/India
• Strict censorship laws in other countries
• Currency exchange rates
Technological
• 7 Generations of gaming consoles
• Developments in wireless telecommunications market
• Anti-piracy technology
Economic
• Recession-surge in gaming
• Video games provide more of an ROI than alternative forms
of entertainment
Source: Datamonitor, Games Software in the United States
Exhibit 1
Tuesday, April 14, 2009
Porter’s 5 Forces (Exhibit 2)
Threat of New Entrants:
LOW
Substantial startup costs
reduces the threat of new
entrants into the gaming
market
Threat of substitutes: HIGH
Music, movies, digital media, and all
other leisure activities that serve as a
form of entertainment are substitutes
Bargaining power of
suppliers: HIGH
Need for computer programming
talent,Intellectual property rights, and
challenge to produce highly
differentiated games
COMPETITIVE RIVALRY:
HIGH
High development costs and
dependency on blockbuster
titles creates a highly
competitive environment
Bargaining power of buyers:
Retailers: buying power is diminished by the
need to provide titles from all publishers
Consumers: Have access to multiple titles on
multiple consoles, which results in limited brand
loyalty, and low switching costs
Console Manufacturers: They own one of the
major distribution channels so they have high
bargaining power
Tuesday, April 14, 2009
SWOT ANALYSIS (EXHIBIT 3)
STRENGTHS
• Guitar Hero Franchise
• 2nd largest publisher in the industry
• Strong distribution channel (all consoles, multiple
retailers)
• Exclusive relationships with movie studios
WEAKNESSES
• Brand awareness not high outside of target audience
• Shelf life of games is short
• Dependency on console industry
OPPORTUNITIES
• Console Development
• International Expansion
• Growing Female Market
• Partnerships with Cable/Broadcasters
THREATS
• Console manufacturers also act as publishers (i.e.
Microsoft, Nintendo)
• Digital piracy
Tuesday, April 14, 2009
Concept
Review
Assessment Prototype
First Playable
Alpha
• Is the game concept valid
and marketable?
• Game concept/treatment
• Team Identification
• Budget and Schedule
Product P&L
• Does the game’s design
prove the concept’s
validity, marketability and
technical feasibility
• Game Design Overview
• First on screen overview
• Recommended marketing
positioning
• Updated Budget
• Product P&L
• Based on the
development of the
prototype, should the
game be approved for
production
• working prototype
• preliminary marketing
plan and strategy
• Final: game design,
production p&L , budget
and schedule
• Is production progressing
according to budget, schedule,
and quality
• First playable version of the
game
• Final marketing plan
• Package/Advertising concept
• Revised: production budget,
product P&L
• Is the game being completed in a
timely manner consistent with
creative and technical goals?
• Alpha version of the game
• Trade marketing summary
• Final packaging/Rough TV boards
• Revised product P&L
• Consumer play test results
purpose
deliverables
Activision Greenlight Process
Pre-Production
Post-Production
Harvard Business School Press: Kelly Slater Pro-Surfer
Exhibit 4
Tuesday, April 14, 2009
Gaming Industry Value Chain
Capital/Publishing
Involved in paying for
development of new titles and
seeking returns through
licensing of the titles.
Production/Talent
Includes developers, designers
and artists, who may be
working under individual
contracts or as part of in-
house development teams.
Distribution layer
Or the "publishing" industry,
involved in generating and
marketing catalogs of games
for retail and online
distribution.
End users
The users/players of the
games
Primary Activities
FINANCE
HUMAN RESOURCES
PROCUREMENT
Supporting Activities
Activision’s
Competitive
Advantage
Exhibit 5
Tuesday, April 14, 2009