Video Gaming Industry Value Chain

The video gaming industry value chain comprises of a number of essential components apart from the console developer whose role has been adequately covered as above. This apart from the developer who is at the top end of the value stream to the customer includes a number of important contributors such as the publishers, middle ware managers and retailers. This has been indicated in the Figure 2 given below and the detailed nuances of each including their interrelationships have been highlighted in succeeding paragraphs.

Figure 2 (Beinisch.

Paunov, 2005) Middle Ware Software Developer. Middle ware is the software used to run the graphics for game development including high speed code compilers for optimization of games, software libraries, game engines and platforms. The role of the middleware software developer is significant in the value chain and thus needs consideration. (Beinisch. Paunov, 2005). The middle ware suppliers have been the key to technology development across multiple projects and developers can rely on them for provision of licensed software for smooth game development.

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This field has also seen a number of firms entering the fray including Microsoft and Electronics Arts. (Beinisch. Paunov, 2005). Some new companies as Kaydara are also important entrants in this segment. (Kaydara, 2004). Game development is a challenging field which is increasingly complex and time consuming. This also adds on to the costs. (Beinisch. Paunov, 2005). There is increased focus of developers to seek middle ware tools which can be applied across the board in an interchangeable and interoperable manner, allowing them to focus on the creative aspect of the game.

Developers The developer forms one of the key components of the gaming industry. He is the artist, the producer, the creative person who is developing new games using highly developed tools provided in the case of consoles by the console manufacturers such as Sony and Microsoft. (Evans et al. , 2004). Developers enjoy high growth in revenues but at the same time the business is risky as the success of new titles is an unknown factor.

Thus developers generally work for large console manufacturers or large scale developers. There are limited numbers of small scale developers which have team strength of a few to a hundred people. The developer is also intimately linked with the publisher. The publisher may have his own in house developers as other titles are developed by pure development companies and marketed in conjunction with other publishers. There are proper agreements drawn between the developer and the publisher.

The developer industry has passed through the normal cycle which has been seen the IT industry such as the initial revenue model being based on technology which enabled companies as id Software to gain large market share with the help of high quality 3 D technology. (KPMG, 2002). As technology diffusion took place it was creativity and content which gained importance. This would imply more emphasis on creative skills than on technology. (Beinisch. Paunov, 2005). Some of the selected large developers in the World in alphabetical order are as per Table 2 given below. (Beinisch. Paunov, 2005).