Marketing of Video Games - The Video Game Industry: Formation, Present State, and Future - page 50

presents opportunities for developers to use the forum as a base for ideas
and reactions on changes in a game, and also for future games. For instance,
a developer might ask, “What do you think about this new weapon?” Or
“what do you think about this interface?” Answers to questions like these
can help the developer to create a game that has greater gamer appeal. This
channel provides developers (and publishers) with information about gam-
ers' preferences, both in asking questions but also from gamers taking it
upon themselves to make corrections and suggestions.

PROMOTING GAMES

To an extent, the size of an organization's promotion budget represents its
ability to af ect consumer expenditures. By the same token, it also indi-
cates the importance that the organization places upon af ecting these deci-
sions. Two items in the income statement of game developers are relevant in
expressing these expenditures. They are marketing expenditures, of course,
but also R&D expenditures because so much of interest in games is associ-
ated with the quality of the individual games. These data are also impor-
tant, according to Drucker (1973, 61), “Because its purpose is to create
a customer, the business enterprise has two—and only these two—basic
functions: marketing and innovation. Marketing and innovation produce
results; all the rest are 'costs.'” Consequently, the funds allocated to mar-
keting and R&D by these organizations represents the emphasis they place
on these basic functions as defi ned by Drucker.
Promotional budgets within the industry are carried by publishers and
the console owners. At the time of this writing, Activision, Electronic Arts
and Ubisoft are the largest publishers in the industry. Clearly this portion
of the industry is heavily promotionally oriented where typically 50 per
cent of revenues are ploughed back into promoting business in one aspect
or another. Among the console producers, Nintendo's business tends to

Table 3.1 Comparison Marketing and R&D Expenditures for Market Leaders 13

Activision
Blizzard

Electronic
Arts Item Ubisoft Nintendo Microsoft Sony

Total Revenue
for period
indicated
(000s)

11,752,000
(3 years)

17,573,000
(5 years)

1,909,780
(2 years)

29,502,530
(2 years)

181,341,000
(3 years)

151,775,976
(2 years)

Per cent
Marketing

21.8 16.5 21.5 8.0 14 21.7 - 15

Per cent R&D 15.8 31.5 35.7 4.0 14.3 6.8

Total 37.6 47.0 57.2 12.0 36.0 NA