UNITED ONLINE GAMING NETWORK
Leanne McLean and Nicolas Lamoureux
MKGT 2315
Margret O’Brien
Due: April 6, 2010
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Introduction
The purpose of this document is to provide the reader with an in-depth analysis of the
external factors (opportunities and threats) of our centralized online gaming server. This
product will allow users of PC and any gaming consoles, whether it be the PC, X-
Box360, Playstation 3, or Wii (to name a few), to compete against each other through a
common online server, providing they are playing the same game. We believe this
product will be the beginning of a new era in online gaming. We will be looking to
examine 5 macro-environmental external factors comprising of: competitive, regulatory,
economic, social, and technological (C.R.E.S.T). The following points give a quick
overview of each factor:
• Competitive: What competitive forces are acting on our product?
(i.e. – competitors)
• Regulatory: What major laws may impact our product?
(i.e. – political/legal forces)
• Economic: What is the predicted economic cycle and its effect on our product?
(i.e. – Effect on purchasing power)
• Social: What lifestyle trends matter to this product? What potential demographic
trends exist and what is their predicted impact on our product?
(i.e. – Who will be attracted to purchase our product?)
• Technological: What has the world’s technology offered this product?
(i.e. – How is our product better?)
With the analysis of these factors, we will be able to determine our product’s
potential success level in the rapidly growing online-gaming market.
Competitive Factors
With a growing market; come an increased number of competitors. Sony, Nintendo, and
Microsoft would be the largest competitors for our products because they hold the
largest percentage of the world’s online gamers and would pose a threat to our product.
Also, the online gaming community is split between 2 mediums: the PC and consoles.
PC
• The PC (Microsoft) is the most-used system for online play, accounting for 85%
of online gaming (Graft, 2010). This is a major external competitive threat
because such a large portion of the online gaming community is loyal to 1 of our
competitors.
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Consoles
• The Xbox 360 (Microsoft) is the first choice for households, with 48% (Kris Graft,
March 2010). The Playstation 3 (Sony) and the Wii (Nintendo) are tied at30%
(Graft, 2010). Since implementing the network will require having the three major
companies as clients, this would be a great opportunity for symbiotic relationship,
where all parties benefit (because their consoles are necessary for our product to
be used).
• Of these platforms, only the Xbox 360 requires a paid subscription to partake in
online multiplayer games, where gamers have to purchase a Gold membership
to Xbox Live (Qualls). Playstation 3 and the Wii however, do not require paid
subscriptions. Our product, being a centralized gaming server, would be drawing
players from all of these platforms. The Playstation and Wii players may be more
skeptical in upgrading their respective networks. This is a threat because there
would be a lower demand for our product in that market.
Conclusion
Seeing as we would be working with the leading organizations of the video gaming
industry, the above analysis seems to point towards a major opportunity, but does not
over look the threats either.
Regulatory Factors
Since our product can only be used for online gaming, our market is limited by which
games released for the consoles actually have online capability incorporated into them.
Since our product is so intertwined with video games, it is also influenced by the same
forces that the console games are, including content rating boards and the government.
Government
• The government holds an arbitrary power to potentially hinder our market, some
of which are already taking action. Brazilian Senator Valdir Raupp has drafted a
bill that would make it illegal to manufacture, import, or distribute "offensive"
video games (source 3). With government imposing legislations that restrict
which games are available; this is a threat because it has the potential to
decrease the market size significantly.
Content Rating Boards
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• Publishers of games carrying an ESRB (Entertainment Software Rating Board)
rating are legally bound to follow the industry-adopted Principles and Guidelines
for Responsible Advertising Practices along with numerous requirements
addressing how ratings information must be displayed on game packaging and in
advertising, as well as restrictions on where ads for M-rated games may appear
("Frequently asked questions," ). This is a regulatory threat because it restricts
what markets are available to us.
• The ESRB typically assigns over 1,000 ratings per year. In 2009, ESRB
completed 1,791 rating assignments ("Frequently asked questions," ). For a
breakdown of ratings by category, refer to appendix A. This is an opportunity
because an approval from the ESRB signifies high quality software, benefiting
our brand image.
Conclusion
As we can see from the analysis of regulatory factors, both threats and opportunities
arise when dealing with our specific product. We have to consider the possibility of
government intervention, along with the influence of the ESRB.
Economic Factors
Online gaming communities are growing every day, which in turn increases the number
of cross-platform potential competitors.
• Final Fantasy XI was the most successful game that used cross-platform servers
and had a monthly subscription base of 500,000 users paying $13 a month
(Berger, 2008). Having such an abundant amount of users is an opportunity for
our product to expand on. For example, looking at Blizzard’s World of Warcraft
(exclusively for the PC), has over 7 million subscribed users at a monthly fee of
$14.99 (interview 2010). Our product will not only include these 7 million PC
users, but also the PlayStation 3, Nintendo Wii, and X-Box 360 players.
• Revenues from U.S. online gaming services will increase from $1.1 billion in
2005 to more than $3.5 billion in 2009, according to Networked Gaming: Driving
the Future, a new report from Parks Associates. Networked gaming services,
including online console gaming, massively multiplayer online gaming (MMOG),
multiplayer Internet gaming, and mobile multiplayer gaming, will account for
almost 50% of online gaming revenues in 2009, followed by digital downloads at
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23% (Parks Associates, 2005).See [Appendix B]. The popularity of online gaming
through different consoles represents an opportunity for our product.
• Globally, the Massive Multiplayer Online Role-Playing Games market is expected
to reach $3.2 billion dollars in the next two years. Forecasters expect that baby-
boomers, early retirees, new parents, and women will greatly expand the
population of online gamers (online game architecture: back-end strategies,
2005, March 10). This will be a mix of both opportunity and threat; the baby
boomers fast approaching their retirement are prioritizing their spending
considering the recent economic recession, and women’s increasing participation
due to them controlling the majority of household purchases is an opportunity.
Conclusion
This economic analysis poses opportunities; the popularity for online gaming and the
increasing number of women participation. It does however; pose threats from the
increasing number of baby boomers about to retire. Our product being a 3rd wave
membership (cost above internet access, and X-Box’s live membership), would
represent a threat due the current economic recession.
Social Factors
Online gaming being highly competitive will push gamers towards the better, faster, and
more effective product. This in turn, would push our products primary purpose of
combining all four systems; PC, PlayStation 3, Nintendo Wii and X-Box 360 to only
systems with similar playing capabilities. Although, with our product a group of four
friends can participate in the same game online regardless if they all have different
gaming platforms.
• Social factors influence the products people buy, the prices paid for products, the
effectiveness of specific promotions, and how, where, and when people expect to
purchase products (MKTG Canadian edition. P.33). People are going to want to
buy the faster and more effective product which is PC. So, pricing in PlayStation
3, Wii, and Xbox 360 memberships will decrease dramatically, the price of
gaming PC memberships will increase.
• Plotting gender against age highlights is another very important gender
difference [see Appendix C]. Male players tend to be between 12 and 28, while
female players tend to be between 23 and 40. Rather than categorizing
Massively Multiplayer Online Role Playing Games (MMORPG) players as male
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and female players, it perhaps makes more sense to think of the two main
groups as younger male players and older female players (Yee. 2003, January
1). This is an opportunity as there are players of all ages and gender that play
MMORPG’s.
• Ihobo Audience Model (2000-2003) see [Appendix D]
Hardcore Gamer: primary concern is challenge and to provide a satisfying level
of difficulty.
Testosterone Gamer: interested in games that focus around cars and guns and
built around player versus player competition.
Lifestyle Gamer: want fun, enjoyable activities in their game and don’t in general
want to be prevented from progressing through the games.
Family Gamer: looking for entertainment with exceptionally simple control
mechanisms and represents mainly parents buying games for their children.
(Bateman and Boon, 2006, p.22)
Our Hardcore and Testosterone gamers are going to change to the PC’s because their
competitiveness and ability to win more games will push them towards the more
effective product.
Conclusion
This will ultimately cause a threat due to players moving away from certain aspects of
our product. It will increase the sales of our product in the PC gaming industry by giving
them the advantage over Xbox 360 and PlayStation 3 players in a large amount of
games.
Technological Factors
The world’s advancements in technology have directly impacted the video gaming
industry. Our product, wanting to merge the most popular consoles/pc games on one
inter console network, must take certain factors into account.
High Definition (HDTV)
• The high definition age has touched not just the television industry, but also the
video gamin industry. Both Sony's and Microsoft's console offerings upped the
ante by producing advanced and expensive hardware which took advantage of
the trend towards high-definition media (Lundy).
Interactive Controllers
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• The Nintendo Wii has forged a path forward into animated controllers realm, with
their Wiimote. Analog Devices develops an accelerometer chip that measures
movement for the Wii's remote (the Wiimote). The Wiimote is one of the biggest
differentiating factors compared to other video game consoles (Lundy).
Computer Operating Systems
• While there are many different options, there are essentially four operating
systems commonly used today: DOS, Linux, Windows and Mac OS X
("Operating system comparison," ). Windows is by far the most common OS
running on the millions of PCs in daily use (Spanbauer, 2008), however, Mac OS,
and Linux each have their respective advantages/disadvantages (See Appendix
E).
Conclusion
Compatibility poses equal threats and opportunities. If our product could run on all of the
operating systems above, including that of all the consoles, it would be the birth of the
largest online gaming network. Therein lies the biggest challenge facing our product.
Conclusion
By analyzing these factors, it is apparent that a lot of work would have to be done in
order to ensure the success of our product. We believe it is safe to say that
implementing it is more than possible, given today’s technology. The only set backs we
can see would have to be the very large startup costs, as well as the prototype
development costs. On a different note, there also lies the challenge of getting the
industry leaders to invest in our product. So, in conclusion, should all these conditions be
met, we feel this product would have a very high success rate.
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Appendix A
Rating category breakdown . (n.d.).
Retrieved from http://www.esrb.org/about/categories.jsp
Appendix B
Parks Associates. (2005, Dec 14). Online Gaming Revenues to Triple by 2009. Retrieved from
http://www.parksassociates.com/press/press_releases/2005/gaming-1.html
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Appendix C
Yee, Dr. Nick. (2003, January 1). Retrieved from http://www.nickyee.com/daedalus/archives/000194.php
Appendix D
st
Bateman C. and Boon R. (2006). 21 Century Game Design, p. 22
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Bibliography
Appleby, Hair, Kapoor, Klaise, Lamb and McDaniel. (2010). MKTG (Canadian Edition),
p. 33.
Bateman C. and Boon R. (2006). 21st Century Game Design, p. 22.
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http://www.gamasutra.com/gdc2005/features/20050310/esbensen_01.shtml
Frequently asked questions about the esrb. (n.d.).
Retrieved from http://www.esrb.org/ratings/faq.jsp#3
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s._Wii
Parks Associates. (2005, Dec 14). Online Gaming Revenues to Triple by 2009.
Retrieved from
http://www.parksassociates.com/press/press_releases/2005/gaming-1.html
Rating category breakdown . (n.d.).
Retrieved from http://www.esrb.org/about/categories.jsp
Qualls, E. (n.d.). Xbox 360 xbox live price info. Retrieved from
http://xbox.about.com/od/xbox2/a/xbl360info.htm
Yee, Dr. Nick. (2003, January 1). Retrieved from
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