JE1 Task 1 - The Value Chain

Task 1

Developers

Developers are people who create and come up with innovative ideas for target audiences, in the games design world developers are companies (and rarely can be independent people) who innovate new ideas and create games. They are software developers who (obviously) specialise in games development. In development there are different areas that people must tackle including sound development, art, and programming and more, these groups will involve people who specialise in the certain roles. The more people there are during the development the better chance the game will be created faster and of higher quality (however, this can vary and even if there is a high amount of people in each group the game can still come out of low quality or get rushed depending on multiple factors.)

There are two main types of developers, big company developers and independent/indie developers. Big company developers usually have their own publishers such as EA, Ubisoft, Rockstar and many more. Big companies who use other publishers are Treyarch and infinity ward (they use activision to publish their games). This is because activision owns the rights to Call of Duty and has to use developers such as Treyarch to develop their games. Independent companies or indie developers will usually have to find publishers for their games as they are small companies. Some examples of indie developers are the Behemoth, Nicalis, moon studios, mojang and many more.

However, in the games industry they usually refer and describe to the publishers owning the developers instead of vice versa. This is due to publishing being the primary activity. An example of this is from a publisher mentioned before, Activision; they get contracts with developers known as Treyach and Infinity Ward to develop their games so that they have a secured developer for a certain amount of years.

Publishers

Publishers are the people who promote the game that is being developed. They have a high influence over how the game will get made and will deal with getting the game published successfully to make profit. They will publish games that have been developed by an internal development team (if they have one) or will publish a game developed by a game developer. When it comes to getting the game published they must deal with all the marketing including doing research into the market and all aspects of advertising including trailers, billboards etc. They will also have a responsibility over the products manufacturing making sure that the development team has the correct tools to make the game.

Bigger publisher companies will distribute their own video game while smaller companies will hire a distribution team to get their game out for the public to play, they may also hire publishers t distribute their games but it will be high end publishers who distribute their own video games or who have had experience in distribution. Publishers may attempt to boost productivity and efficiency by offering equipment such as providing sound design and code packages for common use. Since the publishers often finance the development team they will hire teams of projects managers to keep an eye on the development of the game and to assist where help is needed. If the game is being made by an external developer instead of an internal one then the game developer will receive a payment every time a milestone is achieved on schedule.

Video game publishing comes with high risk as there is competition everywhere with other publishers trying to get their games to sell more than other publishers, if they do not finance correctly or hire the correct teams for the job and the game comes out with poor quality then the publishers could lose out on money and a fan base that will be sceptical about the next released game. There is also something known as a false launch, this is where the development team reports to the publishers that the game will be ready by a certain date, since the developers have an idea of the release date then they will begin working on advertisements showcasing this date. Once the advertisement is in place and ready the development team could come out and say that the game will not be ready until a further date throwing away the advertisement that the publishers have just planned for and giving them a false launch.

The advertisement and marketing of the game has become bigger during recent years as people are more likely to buy games that are marketed better than what the actually quality is, this has meant that development budgets have been increased so games become number 1 in its categories of reviews. It has also caused some publishers to force developers into making sequels instead of newer original ideas. This can mean that a franchise could churn out several games that feel the same over a number of years because one of games in the franchise sold well. An example of this is ubisoft's assassin’s creed, the second game was a big hit and very successful but in recent games the quality of production has decreased and the games have come out feeling repetitive and bug filled. This has decreased sales over the years and has cost ubisoft some money especially with assassin’s creed unity which plummeted with sales due to the massively unplayable mess that was made.

These are a few risks that publishers have to look out for but more could include factors like the Christmas sales (this has a huge impact on the games industry as people want to buy more games during this time for presents), the expensiveness of the games themselves (there are few factors when it comes to money because people are living attempting to look after families, attempting to achieve a high quality life style and more ruling gaming to being a low priority as they need to concentrate on real life matters) and many more.

Console Manufacturers/First Party Publishers

Console manufacturers are companies that create consoles and distribute them, they are also known as first party publishers because they will have video games which are exclusive to their own consoles, one example is halo for the Xbox. The company Microsoft manufactured the Xbox and had a contract with a company who is known as bungie, with this contract Microsoft holds the rights to halo and bungie would create and develop the game itself. This would make the halo series an Xbox exclusive and would make it a first party published game. Even though bungie worked on the game as well they do not own any rights to the halo franchise and they now no longer develop the game as they wished to split from Microsofts Company and become an independent company. Microsoft then hired 343 industries to develop the halo series after halo 3 was released.

There is a high amount of rivalry when it comes to console manufacturers as companies will attempt to make the better console and beat the other companies with sales. The most recent known rivalry is between Microsoft and sony. Microsoft (as mentioned before) makes the Xbox, their most recent submission was the Xbox one in 2013. Sony is a company who creates the PlayStation; their most recent submission was the PlayStation 4 in 2013 as well. When it was being marketed both companies would attempt to make their console look better by showing off exclusive games and talking about the hardware involved. They would also make the other company look bad if they could, an example of this was that Microsoft announced you would not be able to share games with your friends on the Xbox one, after this a lot of people back lashed against this idea and sony created an advert which made a remark about this choice (you can find the advert below.) Microsoft decided against this idea when the Xbox was released but it made them lose some consumers.

PS4 sharing advert:

Along with these rivalries it can cause benefits towards the consumer as they will attempt to drop the price of each other’s console to keep the sales increasing on their side. If one console drops in price then the other console will too or else consumers will prefer to buy one console over the other. There are more factors which influence the sales such as the cost of productivity, if it's cheap to make then they won't have to place the sale of the console high which would allow more people to buy it. They can also add elements into the console such as backwards compatibility, due to the Xbox one getting backwards compatibility (being able to play old generation games on a new generation console) then more people will want to pay for an Xbox due to the fact they will be able to play their old games and they will have a wider selection of games to play with.

The market can change easily when it comes to console manufacturing as well, it is uncertain whether a company will continue to do well with the consoles they have created even if they have created a fantastic console one year which has dominated the market place, another year they could plummet with sales. One example of this is that Nintendo’s console the NES dominated the market place in the 1980's but had a challenging time after the 16 bit era when a company known as Sega released the Sega genesis which became Nintendo’s rival console.

Distribution and retail

Distribution is what happens when the game is sold to the consumers. Before the game has been sold it must go through a process of getting to the retailer, this is done through the publisher and distributors. There are two types of distributors: the primary and secondary. Once the game has been manufactured it will be stored with the primary distributor, once the publisher has heard from the other distributors he will inform the primary that will then ship out to the secondary distributors. From the secondary distributors it goes to retailers such as game, HMV, Tesco etc. Sometimes publishers will have an executive distributor, this is a singular distributor who sells the game straight away without going through to any secondary distributors. If a retailer wishes to sell this game then they must have an account with this particular distributor to sell it.

In the past it used to just consist of going to the store and this being the only way to buy video games but within recent years technology has allowed easier and cheaper access to video games compared to shops. Digital distribution has seen a massive increase and will continue to increase in popularity and sales as technology increases. It hasn't wiped out regular retail as this is still the major source of sales but digital distribution will see a major change in the entire industry. The big companies: Sony, Microsoft and Nintendo each support digital distribution and own a distribution channel rendering some physical distribution companies useless. However, the prices of games on the digital distribution channel remain high when looking at the market place of each console, if you access the PlayStation market through the PS4 or the PlayStation website then you will notice that the prices of games are extremely high. This is because it stops physical retail from going bankrupt and allows for smart moves with sales since people will think video games are cheaper than there actual price.

Digital distribution also helps for smaller companies and independent developers to showcase their creations. Since it used to be marketing that would sell games it was quite hard for small companies to become big and sell their games as they wouldn't have enough money to develop and market their games. But because of how digital distribution is working, small companies get a chance at developing and selling their games. Some have even gone to become massive hits such as minecraft which was a indie developed game made for creativity and sold at a low price. It has gone on to sell millions of copies and has had its price raised since the demand for it was high.

Outsourcing companies

Outsourcing companies means that you pull in an external company to help you complete your game; this could involve delegating jobs to artists and developers. There are many advantages when it comes to outsourcing and these include: time saving, flexibility, it's very valuable and beneficial to tasks and provides stability. It is time saving because it can help to assemble a team of artists faster than the conventional methods. With this extra time gained the company could use it in several ways such as polishing up the game, creating more ideas ect. It is flexible because it allows for more recruiting of developers when they are needed and then you can release them once they aren't with no hassle, Companies will not have to worry about replacing or finding suitable developers when the project is too difficult for some people. This is all done by the outsourcing service provider. It is beneficial to tasks because more developers can begin working in certain areas such as the artists helping to create art assets, the more people involved then the higher the quality of work and the higher quantity of work will get done.

Outsourcing also allows for developers from independent studios to get a chance at showing what they can do. This can help more talented people get noticed improving the games industries quality on video games as a whole. It also helps to make games longer, if outsourcing was not around then they would be much more shorter, have less variety include, the quality would be worse and they might have to be more expensive due to the amount of the work that the studios and companies take time in developing it.

Press and media

The press and media are a big influence in the games industry; they help to make a game look good or bad. Depending on what you choose are your source of information about video games will give you a limited look at them. When video games began to get big the press and media strongly disagreed with them, they believed that video games were bad for children's health and that it did nothing but made them overweight and unhealthy. This put some parents off of video games as they also believed it was unhealthy. When controversial games began coming out it started a huge debate, one game known for this is GTA as the content involved is very controversial. When it was being developed the publishers didn't know how well it would sell, they were afraid the violence would make the games lose out on profits. However, rocksteady got advice and they went ahead with releasing the game but during development made it sound worse than it was. This sparked an uproar with the media as they was telling all parents to never get this game, but this caused children to want the game. They were drawn to how GTA looked and begged their parents to buy it for them. Even though the press had slandered the game, it backfired and in fact increased the games profits. This is because more people found out about the game and wanted to play it themselves, the way the news had portrayed it encouraged other people to buy it to see the controversy for themselves and even more elements helped boost their profits.

Nowadays, it isn't slandered as much and media has in fact influenced gaming massively. There are so many things you can find on social media about video games from reviews about the game, to critics who are completely against gaming to videos of people playing games. Reviewing websites help publishers sell their game as they will give early copies to reviewers hoping that the reviewer will help bring the judgement of the game to a positive look. Reviewers are a major factor in a consumer’s life because it helps the consumers buy games that will interest them. Without a reviewer they can't get a second opinion on judgement on the game so they don't know what they will be getting into. This would cause consumers to have less chance of buying the game compared to when a reviewer helps string along the decision.

YouTube has massively helped gaming along as people have gotten a career out of gaming and placing it on media. Videos show a consumer how good a game will be on a visual level, it gives them an idea of the graphics and how it will control. This is very influential as people get a primary view into the game for themselves and gives them a better judgement of whether it will be for them or not. As the same with reviewers, companies can give You tubers early access to video games. They can then upload videos a few days before release to give the consumer a look into the game again. Media is a massive influence into gaming and has helped the profits of many companies become higher than what they were before.

Sources:
https://www.youtube.com/watch?v=2_sK6v_zsqU