Marketing of Video Games - The Video Game Industry: Formation, Present State, and Future - page 48

There were implications, however, that the responsibilities went beyond
classical product management—carryover from other industries did not
appear strong. He talked about individuals coming in from food , where
a lot of product management practices have been established. Instead, our
source saw a need to be a gamer in order to do an adequate job. That is a
comment that we heard in development also. The fi rm that was featured
in an earlier development paper (Zackariasson, Walfi sz and Wilson 2006)
preferentially hired self-acclaimed gamers as opposed to technically com-
petent persons without the experience of being a gamer. Evidently, at this
point in time, an appreciation for games and gaming is still a major factor
in success. One important factor for marketers in this area is the impor-
tance of working with the development group in the product management
function. If they are all gamers, then being a gamer would seem to be a
defi nite asset.
Decisions about what platform (PC, mobile, handheld, console, etc.) to
develop games for are also important aspects of game development and
game marketing. These platforms all have dif erent characteristics and,
in part, reach dif erent segments of gamers. Platforms like smartphones,
where software is provided through the Apple store and Android mar-
ket, are increasing in importance with low development cost and high
reach. The console sector is where the major titles (also called AAA) aim.
The console part of the game industry has the character of a “razor and
blade” market. These types of markets provide a relatively cheap, but
unique, platform where products later have to be purchased in order to
gain any value from the platform; the customer is “locked into” buying
games made for one console only. This is best exemplifi ed with the anal-
ogy of the name—where razors are sold cheaply and blades are expensive
and fi t only one type of razor. Piers Harding-Rolls at Screen Digest sug-
gests in the U.S. approximately fi fty-seven million consoles are in use;
they generate US$7.5 billion in revenue each year (Cross 2011). 9 Over the
console cycle, upwards of two thousand dollars worth of games will thus
go through the average console.
The console market is today dominated by Microsoft (Xbox), Sony
(PlayStation) and Nintendo (Wii). Each of these companies develops and
publishes their own games—Nintendo more so than the other two. There
is a mutual relationship between these console owners and other actors in
this industry because console manufacturers depend upon publishers for
input. That is, console manufacturers, on the one hand, are dependent on
publishers/developers for content for their consoles; publishers/developers,
on the other hand, are dependent on console owners for distribution and
promotion of their games. 10
This relationship leads to rather complex fi nancial interactions among
actors in this network. Console manufacturers have monopolized the man-
ufacture of each game made for their console and require publishers to pay
a fee for each game manufactured. Publishers thus take on substantial risk