Assignment 2: Financial trends in the games industry

Unit 13: Understanding the games industry

Financial Aspects
Business models
Development usually begins with a budgetary system or scheme ensuring that development is likely to break-even before they even begin developing. After this, milestones and outgoing payment are considered as workers must be paid effectively to help ensure prudent development with the help of milestones, set dates or accomplishments to allow tracking of resources. Next, in common business models is, budget maintenance controlling cash-flow during active development and completing break-even test to ensure a profitable project.

Funding groups
Funding is variable between triple-A and indie development studios, triple-A studios often obtain publishers that will fund them in exchange for commission on the profit attained. However, indie developer fund their own games with their own money. Both use crowdfunding from sites like kickstarter, some triple-A developers use it to show-off ideas that they are unsure will trend, whereas sites like indiegogo are used exclusively by indie groups to help fund their development process.
Milestones
Companies use milestones to track development, prevent delays and motivate workers. Pipeworks studios do beta Twitch streaming weekly and at major milestones they have done picnics and karaoke nights, shown left, other studios may do awards nights or even in house gaming tournaments.
Licensors
Licensing and commissions are a large factor in the games industry. Through an agreement companies, composers and customers. Provided or given, a license sets the rules of use (rights) to a product. Often composers ask commission in exchange for full rights to their music , which is required for the company otherwise the composer could take it down if they wanted their music removed from the game.
Franchises
Many Triple-A development studios have several franchises, Ubisoft has stations in San Francisco, Montreal and Paris as well as gaming franchises such as Rayman and the Rabbids. In addition, Disney as well as others will give licenses to developer to make games to promote their titles.
Marketing Trends
Over time the revenue of the industry has change to reflect developments in devices and access to games. As shown right, In 2017, mobile gaming was pulling more revenue than both console and PC gaming as mobile phones have become more popular and common place in society.

More specifically the 'battle royale' game mode portrayed in PlayerUnknown's Battlegrounds and Fortnite: Battle Royale, these have been selling incredibly well, Fornite reported to have over 40 million players, that developers team Hi-Rez Studios have 'copied' it with Paladins Battlegrounds, claiming it as the first hero battle royale, making it a variable risk competitor.
https://www.youtube.com/watch?v=esVvWctfTPg

Another large scale trend is 'loot boxes', paid boxes containing variable cosmetic items used in both full price and free to play games. This revolves around gambling motives, similar to playing slots or roulette, dispute the outspoken hatred for this. However, many companies are pushing this as an industry trend.
Industry Trends
Industry trends such as the previously suggested 'loot boxes' are new ideas pushed by a company or companies that does not necessarily sell well 'VR' is a prime example of this, virtual reality systems such as the PSVR and Oculus don't sell too well but seem to be pushing it to the populous. The nintendo switch could also be considered a industry trend movement with the ability to play console games mobile or just off-TV.

'Mergers and acquisitions (M&A) is the area of corporate finances, management and strategy dealing with purchasing and/or joining with other companies. In a merger, two organisations join forces to become a new business, usually with a new name. Because the companies involved are typically of similar size and stature, the term "merger of equals" is sometimes used.
In an acquisition, on the other hand, one business buys a second and generally smaller company which may be absorbed into the parent organisation or run as a subsidiary. A company under consideration by another organisation for a merger or acquisition is sometimes referred to as the target.' (http://whatis.techtarget.com/definition/mergers-and-acquisitions-MA)

Predicted Trends
Gaming collects most of it's revenue from PC and console platforms however it is predicted that by 2019, left, that monile gaming will overtake this becoming almost equivalent to PC in revenue at an overall.

Predicatively from current data, it is likely that PC and the nintendo switch will become the prime platforms for fledgling indie developers as nintendo has been supportive of 'Nindies' and supporting producers for game development for the Nintendo Switch.