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The Video Game Industry

This Prezi analyzes the role of independent game developers in the video game industry.

Joshua Catalano

on 15 November 2012

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Transcript of The Video Game Industry

Independent Developers in the Video Game Industry Joshua Catalano Why study the economics of the video game industry? The video game industry is the fastest growing multimedia
entertainment industry. It grew extremely quickly from 2005-2009
despite a faltering economy. The video game industry is a two-sided market. Okay, I get that,
but what are you
specifically? 4 main reasons Video games are a unique product with
a special array of inputs, a dedicated fan base, and complex consumer preferences Good Question!
My research will focus primarily on independent game developers and their role in the industry. Specifically, I want to see how low barriers to entry affect product diversity. Independent developers? Who are they? It's a-complicated! Independent Corporate -Small Firms - Small Profits -Not well established in the mainstream gamer community -More creative control -Large Firms -Large Profits -Has one, if not multiple, well established, popular games or franchises -Less creative control. The purpose of my study is three-fold First, I will analyze why independent developers are more numerous and more successful than they have been in the past Then, I want to see how this increased number of independent firms affects the diversity and quality of video games. What is a two-sided market?
A two sided market is any market where the consumer and the producer interact through an intermediary. Finally, I will analyze the correlation that the quality and diversity of video games have with demand and demographic for those games. Correlation is an important word to use in this context. Demand and demographic can influence
quality and diversity -Firms cater to the preferences of their consumers in order to increase profit

-Demographic and demand affect future product diversity and quality via consumer surveys, complaints, and purchase information. -New kinds of products and higher quality products can influence who buys a good and how much of a good is bought. Methodology/Reasoning Why are independent firms becoming more successful and more numerous? The successes of existing independent firms attract new firms into the market but that begs the question... What changes in the industry have made independent developing profitable? Technological Advancements Digital (Internet) Distribution Fringe Markets/Demographics With these lower costs, increased access to consumers, and larger specialized markets, independent developers can become successful without egregious funding. What is the best way to measure diversity and quality? Change in diversity over time can be measured by counting the emerging and disappearing genres of video games, but there are 2 considerations: -Currently, there are more games than there were in the past. -The concentration (or lack of concentration) of games in a genre affects diversity as well Solution: When analyzing the diversity of a year, looking at the frequency distribution of those genres would provide the best idea of diversity while also considering the total amount of genres. The complexities of measuring quality: So how do you measure it? Quality does not have a consistent definition between different people Not every possible factor can be accounted for PaRappa, the rapper -Lower graphic quality -Higher graphic quality Quality Estimated Quality Technological Quality Artistic Quality General Quality Artistic quality is difficult to measure

- Individual preferences affect the definition of quality

-There's no real standard unit of measurement So how do you measure creative quality? -Reviews from multiple reputable game critics and websites. - Money spent on artists, writers, and creativity oriented jobs -General sentiments towards specific aspects of the game via a large array of blogs Unlike artistic quality, technological quality can be easily quantified. Measurements of technology: Software: -Polygon Counts (Polygons/area) Hardware:

-Processing Power (Megahertz/time)

-RAM (Gigabytes)

-Information Storage/Retrieval System -Lines of code(#) -Number of textures(#) Final Statement on Quality and Diversity: -Technology and diversity measurements are more reliable -Indie developers, however, probably have a greater influence on artistic quality and diversity -What is the best way to measure demographic and demand? -How should I analyze the correlations that demographic and demand have with diversity and quality of the product? Measuring the demand and demographic for video game software Demographic Demand Demographic information from articles vs. raw data on demographics from a database Total GDP contributed from the video game industry vs. the GDP contributed from video game development only Do quality and diversity affect demand and demographic
or do demand and demographic affect quality and diversity? Quality and diversity can influence
demographic and demand Final Words: Interesting Extrapolations:
-Future market composition
-Mainstream games and companies

Economic Implications:
-Two-sided markets
-Low barriers to entry and product diversity
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