International Marketing of Online Games

Electronic network game market has emerged as the chief segment in the entertainment industry. Essentially, the industry is grouped into two sub-markets, including the physical and digital market (Marfels 2011, p. 175). Nevertheless, the retail market has been gradually losing popularity because many customers are switching to electronic games. The rapid change in demand among the users is associated with the tremendous development of technology hence increasing internet penetration. The most popular electronic gaming include pay to play, mobile, and free to play games. In 2015, the global online game’s market was valued at $28.5 billion where this is projected to reach $ 46.61 billion in 2020. Further prospects for industry growth is evidenced a significant increased adoption of the approach in both powerful and developing economies as well (Williams and Seteroff 2009, p. 42). China’s craze for electronic sporting is compelled by the booming video game market, the largest across the globe, and expected to register nearly $27.5 billion sales at the end of 2018. Additionally, most states have been seeking to develop more specialized industries that can stimulate economic growth and development where e-sports are more targeted (Marfels 2011, p. 176). China’s progress towards developing electronic network industry is also evidenced through influencing some universities to start offering e-sports courses, and has positively promoted e-sports commentating and graphic designing (Rand and Light 2011, p. 618).

Additionally, the two largest gaming regions in the world are North and Asia Pacific which accounted for roughly 78% of global revenues in 2017. Over, past decades, this industry has evolved significantly, in particular, electronic gaming, making it an integral and the ever-developing segment across the globe (Rarick 2009, p. 4). The entire gaming global market was expected to hit $108.9 billion in 2017, representing 2.2 billion gamers with 42% of the mobile talking. For instance, mobile talking is the most lucrative segment, with a tablet and smartphone gaming recording a growth of 19% every year. Besides, North America is the second largest market in the world with estimated sales of $27.0 and is expected to record consistent increase of 4.0% annually. The growth is spurred by a combination of a higher share of spenders and average spend per paying gamer “see figure 1.1”.

With the fact that electronic gaming is constantly growing, it is important for gaming industries to develop superb marketing models to suit the market (Lee 2010, p. 60). Some of the gaming companies presently operating in the sector include Activision Blizzard, Zynga, Wargaming, GungHo Online, Electronic Arts, NCSOFT, and more. Having many players in the sector depict the existence of stiff competition which indeed requires the development of effective and global marketing approaches to continually improve global presence (Rand and Light 2011, p. 643). Therefore, this study basically aims at evaluating international marketing strategy for online games, bearing in mind that there is fierce competition and maintaining the market share require the application of efficient models that can probably influence purchasing behaviour among users.

Figure 1.1

Research Objectives

ü To explore the advantages and disadvantages of different profit models in the online game industry.

ü To analyse operation methods in the online gaming industry to help in understanding its structures and processes.

ü To examine the international marketing strategy of online games to solve the contradiction between online product developments in the industry and reverse selling approach.

Research Questions

ü What are the various merits and demerits of profit models used in the online gaming industry?

ü What are the operation methods applied by electronic gaming companies?

ü How can online gaming companies promote their products to maintain a consistent growth or attain significant market share?

ü What are the new profit models that can promote the development of the electronic gaming industry?

Literature Review

Overview of the Chapter

The section will evaluate and criticise existing knowledge of electronic gaming and marketing models which is applied by different companies. Electronic games, sometimes “video game” is defined as an interactive sport operated by computer circuitry and is further facilitated by a tremendous growth in technology (Goltz, Franks and Goltz 2015, p. 23). The platforms on which online games are played include personal computers, video consoles connected to home television sets, arcade consoles, server-based networks, and mobile devices such as mobile phones. Many online games grew in industrial laboratories and out of the university, where important games functioned originally as technology demonstrations, after development (Goltz et al. 2015, p. 25). Therefore, this section will deeply examine various concepts to enhance the understanding of the marketing models, trends in the online industry, and further enhance the simulation of appropriate answers to the research questions and objectives as well.

International Marketing methods

With the rapid growth in technology, there is a leap in communication, financial flows, and transportation hence making the world to feel smaller (Mellahi et al. 2010, p. 5). Robust development has made it possible for international organizations to reach different types of customers and compete favourably (Gbadamosi 2012, p. 234). Through intensive marketing, brands and products produced by companies are accepted in both local and international market. According to Al-zoubi 2017, p. 78, internationalization creates both challenges and opportunities, through allowing access to a substantial market share and increased competition respectively. Gbadamosi, A., 2012, p. 238 define international marketing as the application of selling principles across national borders. International marketing can also be defined as a multinational process of planning and implementing the concept of pricing, distribution, and promotion of goods and services with the aim creating an exchange to satisfy the customer’s needs and business objectives (Lee 2010, p. 61). However, most of the research provides a general definition of selling; hence, the study chiefly intends to offer a deeper explanation on the application of the role of marketing in the online gaming industry.

In order for a business to sustain its competitive edge, it is paramount to embrace effective selling strategies that can promote reach to the target market (Yang 2018, p. 4). Depending on the structure, products or services offered, global companies can adopt corporate or product branding to increase competitiveness (Lee 2010, p. 58). For an organization to succeed in the contemporary environment, it is crucial for the business to determine effective and appropriate channel structures and strategies that paints a positive picture in the mind of customers (Casson and Park 2014, p. 623). Many gamers are usually influenced by branding when determining types of games to participate (Yang 2018, p. 6). Moreover, satisfaction is another parameter that has a great impact on the usability of online gaming; hence, various studies suggest that information global should match the services being promoted (Tasoluk et al. 2011, p. 45).

The degree of Involvement in International Marketing

Generally, there are primarily 6 ways through which international organizations utilize to reach customers from different diversities. These methods include causal involvement, multinational operations, indirect export, direct export, foreign involvement with, and without investment (Schellenberg et al. 2017, p. 12). To begin with, an international organization can embrace causal involvement where it engages in global activities with the intents of not responding to the needs of the entire market (Boso et al. 2018, p. 207). Secondly, the firm can employ indirect export by selling products and services to international markets using resellers such as exporters and brokers (Mellahi, Demirbag, Tamer Cavusgil and Danis 2010, p. 2). Moreover, direct export can be utilized, whereby the organization can create export department who takes the product and service to the international market and further offer them to clients (Lee 2010, p. 59). Foreign involvement without investment is implemented through negotiating and licensing its production technology to a local company to produce and sell its products in that country (Al-zoubi 2017, p. 78). On the other side, foreign involvement with investment is executed through establishing production facilities in the foreign land (Schellenberg, Harker and Jafari 2017, p. 3). Lastly, but not least, the business can explore foreign market through multinational operations. According to Clapper 2017, p. 175, this is the primary marketing form used by global firms because they view the world as a small village thus the entire selling strategies intend to influence the users in every region. Hence, the research will improve the current knowledge by evaluating appropriate marketing model to employ in promoting online gaming products and services (Kim, Mun, Kim and Ahn 2017, p. 165). Having a profound understanding of the existing marketing methods employed international companies, this literature will provide a basis for developing a selling plan that aligns with consumer's needs and organizations goals.

Profit Models used in Online Gaming Industry

Business models usually offer a rationale of how a company creates, delivers, and captures value for its customers (Malmström, Johansson and Wincent 2014, p. 1083). Hence, revenue streams are propositions that help the firm to generate income for a long term in a sustainable manner (Westney 2011, p. 380). Online gaming businesses apply different strategies to generate sales, produce new products, and find new customers. According to Boso, Debrah and Amankwah-Amoah 2018, p. 203, an appropriate revenue or profit model depends on the nature of products and services offered, industry, and methods used by clients in the search for the product. First and foremost, subscription model allows customers to sign up and pay irrespective of whether products and services are used or cancelled (Rand and Light 2011, p. 687). Secondly, there is an option of ad-supported model which enables users to access products and content for free and this can allow the company to earn revenues through the ads that are placed on the company site (Malmstrom et al. 2014, p. 1097). Freemium model allows the organisation to offer free, scaled down version of its services and charge a premium for the user's that access a full range of the content. Finally, affiliate marketing model enables the company to build connections with groups who promote its products and services to receive a percentage of each sale they deliver (Clapper 2017, p. 176). However, this literature provides general information which will be improved by specifying the most effective model that should utilise by online gaming companies to increase revenue prospects.

Merits and Demerits of Profit Models

Casson and Park 2014, p. 617 observes that profit models play a fundamental role in enhancing the success of electronic game network providers. Its benefits outweigh demerits hence justifying the use in the online gaming industry (Rand and Light 2011, p. 685). To start with, they enable the firm to create a captive with the right users (Kim et al. 2017, p. 168). Secondly, they promote steady revenue stream. Also, some models assist in eliminating advertising costs and increases market reach (Westney 2011, p. 377). On the other side, the ad-supported model may make the business to incur costs with a guarantee for revenue (Kim et al. 2017, p. 167). Again, the use of affiliate marketing may results in an uncertain revenue stream, risk firm's reputation if customers are unhappy, and cannibalize products and services (Tasoluk, Dröge, and Calantone 2011, p. 35).

In general, this review provides in-depth information on international marketing and further gives insights of what online gaming companies ought to implement in order to enhance the consistent growth of the sector. Nevertheless, most of the data available has not responded to the question “operation methods that are applied by online gaming companies” which will be improved by the study.

Methodology

Overview of the Chapter

The section gives a description of the methods that will be employed to collect data from the target population. Essentially, this chapter provides the framework on how on the strategies to be utilized to answer research questions. The main areas include research design, philosophy, data collection, analysis, and ethical issues.

Research Strategy

To ensure appropriate data is effectively collected and analyzed, I will utilize both qualitative and quantitative approaches. The strategy is preferred because of various merits, including the ability to get a thorough understanding of the topic, events, and opinions. As a result, a more comprehensive information can be collected hence allowing the formulation of the appropriate answers to the research questions. The qualitative method is flexible and simple to use; therefore, these attributes will enhance an understanding of effective international marketing modes that enhance success in various companies in an electronic game industry (Belk 2013, p. 2). Through the approach, it will be possible to evaluate correspondents on different aspects that will ensure accurate information is collected. On the other side, a quantitative approach will be employed because it will enable the gathering of information on various trends that have been experienced in the electronic gaming industry, including marketing strategies, business models, and overall operations and processes (Belk 2013, p. 5). Additionally, the literature review forms the cornerstone of the study. Many scholars have explored international marketing models in different industries, hence such data will be crucial in developing questionnaires, sorting of information, and the presentation of the findings.

Research Philosophy

Importantly, I will adopt the assumption of interpretivism to enhance the collection of accurate data (Burnett and Lingam 2012, p. 221). The aim of the study is to assess the international marketing mode for electronic network game market. Through this philosophy, it will be simple to get apt responses from respondents regarding research questions (Goldkuhl 2012, p. 136). Besides, potential challenges associated with interpretivism will be handled by maintaining a proper record concerning collection and analysis of data to allow use by future scholars (Burnett and Lingam 2012, p. 230).

Research Design

The research will be based on case study design due to many benefits that are brought about by its use (Trafimow 2013, p. 16). First and foremost, a case study will provide the basis for examining whether various international marketing modes that has been explored in literature, including subscription, freemium, and affiliate models play a critical role in generating revenue streams in the online gaming market (Cuervo-Cazurra, Mudambi, Pedersen and Piscitello 2017, p. 235). With the increasing adoption of electronic games and growing competition, it is vital for businesses to embrace effective selling and promotion in order to withstand fierce competition, specifically from China where the government has provided an enabling environment to promote it (Simion 2016, p. 5). Moreover, case study design allows the application of both qualitative and quantitative methods in collection and analysis of data (Cuervo-Cazurra et al. 2017, p. 237). Hence, this will be a boost towards enhancing simplicity in the analysis and formulation of appropriate answers to the research questions. Also, this will facilitate a significant contribution to the existing knowledge regarding the research question (Kennedy-Clark 2015, p. 8). However, case study design pose some limitations, including the inability to facilitate assessment of cause and effect. Such challenges will, therefore, overcome by engaging managers and specialists with adequate knowledge in international marketing.

Methods of Data Collection

I will use online questionnaires to collect information from individuals with adequate knowledge concerning international marketing mode, particularly in the electronic game market (Kennedy-Clark 2015, p. 6). Both structured and semi-structured questionnaires will be sent to nearly 90 individuals such as sales managers, and specialists through Facebook or emails (Muehlenhaus 2011, p. 25). As a result, these individuals will provide accurate information about marketing strategies, operation processes, and profit models currently employed in the online gaming market.

Data Analysis Techniques

The section provides a clear strategy that will be used to reduce the vast amount of information gathered through questionnaires and interviews (Staines and Barber 2015, p. 69). In this context, descriptive data will be examined and interpreted using thematic analysis, and this will enhance a better understanding of the research objectives. The prime reason for applying thematic technique is because it is simple and flexible (Staines and Barber 2015, p. 76). In contrary, thematic analysis lacks comprehensive literature, hence cohesion and consistency will be promoted through developing an epistemological position to underpin empirical assumptions.

Ethical Considerations

To enhance collection, interpretation, and the presentation of the collected information, ethical issues will be accorded the highest priority (Hydock 2017, p. 3). For instance, morality will foster an understanding between respondents and researchers and further eliminate various forms of biases in gathering, analysis, and the presentation of the findings (Moore 2007, p. 43). Some of the primary principles that will ensure research objectives are effectively realized includes; honesty, integrity, respect for intellectual rights, objectivity, and informed consent.

Validity and Reliability

Reliability refers to consistency in the measure whereas validity ensures the scores from a measure presents variable they were intended for (Hernon and Schwartz 2009, p. 73). To enhance reliability, the study will be executed according to the framework that is provided above. Above, adherence to moral imperatives will play a key role in ensuring only relevant is collected and accurately analysed. Also, this research will be grounded on content and criterion validity will be considered when collecting, analysing, and presenting the data.

Primary and Secondary Resources to include in the Study

In order to access the right and appropriate information, the study will capitalize on both primary and secondary sources (Muehlenhaus 2011, p. 8). To begin with, primary sources are those data that will be gathered through administering questionnaires. As earlier noted, the research basically targets marketing specialists and sales and promotion managers with an in-depth understanding of international marketing and online gaming market. Primary sources will enhance the collection of information that is based on the experience where this will facilitate access to current data concerning the topic (Hydock 2017, p. 4). Also, consent from the participants will be sought through sending letters explaining the intent of the research and further book an appointment on for an interview or when to send questionnaires.

Moreover, secondary resources are critical in deciding the information to include in the findings. The research will utilize peer-reviewed journals, books, website’s for companies that offer electronic games products and services, and government statistics about the industry. Relevancy of the resources will be achieved through including previous studies that were written in the past 8 years. Peer-reviewed journals will be accessed from the web and university library. Trends and performance of electronic game market will be accessed from company websites and this will significantly depend on the workability of the internet (Hydock 2017, p. 5). Importantly, high priority will be accorded to journals, books, and reports that have basically explored international marketing, profit models, internet operations, and online gaming market. Hence, incorporation of this aspect will indeed ensure only relevant information regarding the research question will be gathered.

Project Schedule

Steps

Description

Due date

1

Preparation Stage

15/01/2018

Week -1-2: selection of the topic of study

02/10/2017

Weeks 3-4: Topic selected/form submitted

16/10/2017

Weeks 4-5: Topic refined to develop dissertation proposal

23/10/2017

Weeks 5-8: Proposal written and submitted

15/01/2018

2

Chapters 1-3 completed

10/06/2018

Chapter 1 Draft Introduction completed

05/05/2018

Chapter 2 Draft Literature Review completed

10/05/2018

Chapter 3 Draft Research Methodology completed

25/06/2018

3

Collection of data and information

02/07/2018

Data analysis and Interpretation of data

20/07/2018

Chap 4 Draft Results, Analysis and Discussion completed

25/07/2018

Chapter 5 Draft Conclusions, Implications & recommendations

30/07/2018

4

Final Writing up

25/08/2018

Structure, presentation and proof reading

28/08/2018

5

Final Stage

30/08/2018

Final proof reading, printing and binding

05/09/2018

6

Submission of Project (WOLF and hard copy submission)

References

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Casson, M. and Park, Y., 2014. Government Intervention or Entrepreneurial Profit? Explaining Innovation in the Korean Online Gaming Industry. Industry and Innovation, Vol. 21, no. 8, pp.616-632.

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