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Video Games in the Digital Age

The global video games industry: ownership, synergy and economics

  • 3 things to know
  • A2 Unit 3

Overview

Vertical integration in the games industry, why publishers acquire successful independent studios and diversification in this industry.

What you need to know

Answer each one before you reveal it.

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Key term

Distinguish a developer from a publisher.

Key term

What is meant by vertical integration in the games industry?

Key term

Define synergy and give a games example.

Questions from this subtopic

Each one with the model answer underneath.

  1. 1

    Distinguish a developer from a publisher.

    Model answer

    A developer designs and builds the game, whereas a publisher funds it, manages marketing, secures platform deals and handles distribution, and usually owns the intellectual property.

  2. 2

    What is meant by vertical integration in the games industry?

    Model answer

    Vertical integration is one company controlling more than one stage of the chain, as when a platform holder owns the studios that make its exclusive games, the console they run on and the store that sells them.

  3. 3

    Explain why publishers acquire successful independent studios.

    Model answer

    Buying a studio secures its talent, its franchise and its future output for one catalogue or platform, which is cheaper and far less risky than trying to build a hit from nothing.

  4. 4

    What is diversification in this industry?

    Model answer

    Diversification is spreading into related activities such as film and television adaptation, merchandising, esports, mobile versions and subscription services, so that revenue does not depend on a single release.

  5. 5

    Define synergy and give a games example.

    Model answer

    Synergy is the mutual promotion of products owned by the same company, as when a film adaptation, a merchandise range and a new instalment of the game are released close together so that each advertises the others.

  6. 6

    How has digital distribution changed the industry?

    Model answer

    Selling directly to players over the internet removes manufacturing, shipping and retail margins, allows a game to be patched after release, and lets very small developers reach a global market without a publisher.

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