New console hardware systems are likely to contribute to the growth in future. In addition technology as MMORPGs will exploit the creativity of the user as gamers can develop, manipulate and create characters using creative tools to strengthen the relationship between the console, developers and the consumers. Second Life, 3 is said to be one of such user created games developed for interaction with the user. (Beinisch. Paunov, 2005).
Such a conclusion has also been reached with an analysis of the case studies covered in the research. While the three prime console producers may not be wholly dependent on external developers or gamers per se as they have adequate in house capabilities for research and develop appropriate games for the market, the tight margins in which they have to operate and the restricted competition results in their having to establish a more powerful relationship with the other arms of the industry including the consumer.
Technological advances have increased the complexity of games, their development time and costs. (Spectrum Strategy Consultants, 2002). The developer industry is said to be quite inefficient as the developers are not coordinating between the available technologies and are restricting themselves to reinvention of solutions. (Hyman, 2004). This would be evident from a survey by the IGDA which states that for every video game which is based on acquired middle ware, 10 games are said to be built from the scratch.
There is also an inherent resistance in game developers to base their solutions on externally produced software solutions which is hampering development of economies of scale. The problem also lies in up gradation, developers perhaps feel more comfortable with in house software as it is easy and more economical to upgrade. (Beinisch. Paunov, 2005). There is a scope for refining the middle ware – developer model to enable greater economies of scale. The middle ware market development is said to be a crucial factor in development of the gaming industry in the future.
(Beinisch. Paunov, 2005). The second aspect which is likely to influence this relationship is the cost factor. The technological developments seem to have increased the cost of developing games as there is a need to create a better impact for which advanced software development and distribution will be essential. Over the years cost of development of games are said to have increased almost three fold. (Kerr. Flynn, 2003). The console will perforce have to develop a closer relationship with the developer to keep the costs under control.
More over in order to build consumer loyalty, the console producer will have to have more interaction with gamers in the development stage to seek their inputs and also develop in them a reasonable addiction towards the game. At the same time it is evident that small developers may be driven out of the market due to high costs of investment in technology upgrades. These could be directed at maintenance and customer support tasks which will emerge as new fields within the overall gaming industry.
Strategy of the video game industry in the global market Innovative strategies will have to be adopted for growth. The symbiosis between the console, the developer and the gamer will have to be exploited through the internet for it to act as a growth driver for the industry. Innovative strategies as attempted by Cadillac to promote its cars through a tie up with Xbox gaming consoles and relevant game interjections will have to be promoted through co branding to achieve high levels of growth.
Permeation of the power and influence of industry associations is an important aspect of the expansion. Such associations can provide a holistic perspective and representation to the growth of the industry leading to effective intervention on behalf of the industry to gain legal and contractual benefits as also to combat the political and social forces which may limit its development.
The key to augmentation is also limiting piracy which has led to a loss of $ 3. 2 billion a year world wide and which is likely to grow once gaming goes increasingly online. Thus effective measures are required to control piracy. This will improve the bargaining power of the supplier as well as buyers and eliminate the threat of substitute products, which are not only economically damaging but also impact on the credibility and the brand name of the company.