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Revenue models for digital games

Revenue models for digital games. BSc thesis seminar 23.4.2013 Ville Majander. Overview. Subject definition, scope and motivation Digital games business Revenue models in the digital marketplace Revenue models for games Findings and conclusions.

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Revenue models for digital games

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  1. Revenuemodels for digitalgames BScthesisseminar23.4.2013 Ville Majander

  2. Overview • Subject definition, scope and motivation • Digital games business • Revenuemodels in the digitalmarketplace • Revenuemodels for games • Findings and conclusions

  3. Scope, motivation, methods • Revenuegenerationmethods • ”Revenuemodel,” ”revenuelogic,” etc… • Digital games • Gamesplayed for entertainment on digitaldevices • PC games • Consolegames • Mobile games • Researchmethod: literaturereview • High-qualityacademicsources for theory • Media and industrypublications for figures and business examples

  4. Researchquestions • How have revenue models for digital games changed since their inception? • How can digital games most effectively be monetized and what methods are available?

  5. Digital games • ”Entertainment software” • Large and pervasiveindustry • Estimated $78 billion (2012) • 72% of US householdsreport playing (2011) • The business of digitalgamingrelativelyunstudied

  6. The revenuemodel • A component of the broader business model • Termsoftenconfused • The logicwithwhichrevenue is generated • Directsaleswithtransfer of ownership • Subscriptions and limitedrights-to-use • Advertising • Value-addedcontent and additionaltransactions

  7. Revenuemodels for games • Directsalesstill common • Notnecessarily the mosteffective • Subscription and diversifiedrevenuestreamsperformwell • E.g. World of Warcraft – the highestgrossing video gameever • Addedincomefromvalue-addedproducts • Downloadablecontent (DLC) • Premium features

  8. Revenuemodels for games, ctd. • Sale of virtualgoods and othervalue-addedcontent • Primaryrevenuemodels for >50% of games in Japan • $2.9 Billion in the USA (2012) • Free-to-play a growingparadigm • Game is offered for free • Revenuegeneratedfromin-gamepurchases • Supercellexpected to generate $400 million in revenues in 2013

  9. Findings • Digital distribution is king • Valve’sSteam-platformhas an estimated 50-70% of the market • New modes of distributionenablerevenuemodelinnovation • A broadrange of tools for monetizationexist • Parallels to the broadermarket for digitalproductsmaybedrawn • Changedrivenbyperformance • Limited rights-to-usegeneratemoreincomethantransfer of ownership

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