Business models and strategies in the video game industry : an analysis of Activision-Blizzard and Electronic Arts

Abstract

In recent years the video game industry has been of great importance in the business world beyond the role of a cultural medium. With its huge size and potential for more growth, the industry has attracted many newcomers. The target customers are expanding to females and elders who have not been known to be game players. Moreover, the introduction of new platforms, personal computers and mobile devices, broadens the application of the video games. Because of its diversified mechanisms and platforms, the business models of the gaming industry have evolved. In this thesis, the traditional and newly invented business models are introduced with an analysis of pros and cons through real cases of gaming companies. The analysis of Activision-Blizzard and Electronic Arts shows the current business strategies of two giants in the industry, "diversification" and "casual games". Moreover, the huge difference of financial performances of two companies indicates the risk of an overbroad portfolio and investment in an unfamiliar genre.