Anatomy of Videogame Market Segments

       Since the appearance of the debatable first “mass market” digital game PONG the population of digital players has been constantly increasing, with a remarkable growth in the last decade. The current population of individuals that have played video games is estimated to be around 1.77 billions, this means that almost 23.91% of the world population has played a digital game in some way or another. This ratio comes to a 49% when we focus only on the U.S. market, having then an almost 50-50 chance to find someone with video game experience in a random crowd (Statista Dossier – VG Market). But facing such a huge audience the pertinent questions arise: how much do these people play? what do they play, when and how? Clearly the answers are still vague. Although it is somewhat evident that these players are not the stereotypical intense mono-thematic video game enthusiast. With a crowd so diverse as it could be the video game industry adopters show that people are finding some way or another to try and have fun in the digital realms of play. The usual way to understand how these ways have unraveled through history is looking at specific qualities of products being either hardware or software. Thus a general understanding of key segments has turned into a product-related framework. The limitations of such an approach arise when we try to understand the demand of digital play in a more integrated fashion and adopting the inherent complexity of our gamer habits. Understanding how a gamer spends thousands of dollars on console games while she or he still spends a lot of time in casual games may be addressed by playtime polls discriminating between hardware, but the underlying explanation of why they adopt new platforms, leave old ones or maintain an habit of multiple platforms is still missing. The following post displays some ideas of how we could integrate not only an explanation of how the market behaves in terms of sales but also giving lights about how digital players address the issue of digital entertainment.

 

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AVOID MISSING BALL FOR HIGH SCORE           “…something so simple that any drunk in any bar could play…” N. Bushnell

 

Industry segments: defining game evolution by product.

       Digital entertainment has taken several forms through the years from the coin operated arcades to smartphone’s mobile gaming. The different ways to play them have been divided by what we call platforms. Among them we find arcade machines, home consoles, personal computers, dedicated handheld consoles, tablets and phones. With an increasing population of gamers or digital players our capability to understand who is playing what or basically how we describe the ‘average’ player becomes and evasive subject. Not only is difficult to asses consumers’ habits but its also difficult to understand major drives and social behaviors behind the evolution of hardware.

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82′ Video game arcades persist although home consoles are at their peak.

 

         A traditional overview about games and platforms would consider the aforementioned categories. Among these categories consoles, handhelds, PC and mobile have turned out to be the most relevant nowadays. These four represent the hardware in which almost all published games are played. As presented in the chart below (Platform market share) the industry has moved from an arcade based industry to a home-console during the 70’s. The 80’s where the consolidation of home-console and the rise of the home computer. Around the mid 90’s the industry had a huge shift mostly caused by the CD revolution; not only PC games were more common but PlayStation entered with an unprecedented swift impact that continued with the PS2. A new space was generated around the mid 2000’s when the ‘casual gaming’ approach was revealed by web browsers; the Wii console and non-dedicated technology such as tablets and smartphones. The general approach of platforms gives a clear definition of what is mostly played but it doesn’t allow to provide a theory that explains why or how does these trends emerge.

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Platform market share proxy (Source based on VGG Database)

Using Accessibility as a continuous integrating mechanism.

         A general framework or theory to understand players demand may be addressed following simple traits in our current categorization of platforms. A common property that behaves differently could allow a new categorization of industry segments. As a basic property for any technological device we can refer to accessibility, meaning the degree of ease of access to any given individual. From inputs and outputs to the physical and virtual domains, the way we access and experience games defines how we play, shapes our consuming habits and modifies the markets incentives for production. The accessibility distinction comes evident between all the mentioned platforms. Looking at Pong as a game for drunks, DOS games for computer enthusiasts, Wii for families, Browser games for bored office workers and professional competitions on PC games we are not attempting to generate stereotypes but staring into specific ‘barriers of entry’ that determines the general crowd that any given platform may receive. How we access the game varies significantly among these devices and thus it sets the broad demarcation of who would consume.

          As an initial approach I refer to four main characteristics that would define the accessibility categorization:

  1. Device Proximity:      although spatial proximity is usually a neglected issue it comes an important aspect of how favorable we are to engage on gaming. Having a phone game that play just pulling out of your pocket makes a huge difference compared with a commute to the local arcades. Among all devices we could easily separate among those played on public spaces, household common areas, private rooms and those who usually are carried on every day life.
  2. Digital Connectivity:       access to the physical device is an important issue, but access to the actual digital content is also a remarkably relevant aspect. This characteristic includes the device access (convergence in technology allowing multiple non-dedicated devices to perform as gaming platforms), game distribution (social networks, digital distribution platforms), and social inter-play.
  3. Relative Cost:    monetary cost is an important restriction to video game access, although its relative cost to other types of entertainment as near substitutes (e.g. PS4 and Wii U) or far substitutes (e.g. XBOX One and Netflix) is even more relevant for an industry analysis. Some important segments have -in part- thrived for this property: PC games, Arcades, Mobile gaming.
  4. Relative Simplicity:      how much inputs does the game require or how many implied mechanics does the gameplay has are issues that shut down the entry possibilities for many individuals without digital game or digital technology experience. Bushnell’s intuition about drunk players was a great insight that current console controllers don’t respond to. Even the consideration of that many inputs scares most non-familiarized consumers away.
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AVOID MISSING PIGS FOR HIGH SCORE   –   Popular game Angry Birds as an example of  high proximity, connectivity, simplicity and low relative cost.

The value of this categorization is not addressed only to understand usability from a consumers point of view. Such a categorization also enables a framework to understand video game industry history and its several shifts. The breakthrough of Atari as a home digital play enabler (proximity, simplicity), the shift of consoles and PC gaming through CD technologies (monetary cost) or the massive impact of mobile gaming (relative simplicity) are just some elements that could be addressed with such a framework. The most relevant aspect of this categorization is the possibility to build proxies with continuous time series that may explain the industry’s behavior, instead of an abrupt delimitation of ‘generations’. Parameters such as internet connectivity (digital connectivity, relative cost) or non-dedicated device ownership (device proximity, relative simplicity and cost) could address these aspects. A last remark about an accessibility framework is its advantage to assess the ‘barriers of entry’ of new consumers and the general potential markets that new adopters could pursue.

       I’ll work on this idea and try to develop a quantitative model about these characteristics and their impact on game use. Maybe a general understanding of accessibility crossed with players motivations could provide enough to have a general theory or framework of video game industry evolution and its respective emergent segments.

 

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