By:
NARENDRASINGH D PATANKAR

INTRO
Whether you hate it or like it, the gaming
industry is a multi-billion dollar industry
which continues to grow every year.

Sales
 2003 U.S. sales of console games totaled $5.8 B
 Computer games $1.2 billion, consoles $4.6 billion
 Only entertainment industry to grow in 2003
 Movie and music industries reported losses

According to Exhibitor Relations and Nielsen SoundScan
 Console game players:
 Action (30%), sports (20%), racing (15%), RPG
(10%), fighting (5%), family entertainment (5%), and
shooters (5%)
 Computer gamer players:
 Strategy (30%), children's entertainment (15%), shooters
(15%), family entertainment titles (10%), RPG
(10%), sports (5%), racing (5%), adventure (5%), and
simulation (5%)
The Entertainment Software Association

Game Developers
 Can be independent, or subsidiaries of
publishers
 Many developers started on PC due to
accessibility of tools
 Console development requires
proprietary development kits and
preexisting relationship with publisher
4

#
COMPANY
MARKET SIZE
(in billion USD)
1
MICROSOFT
237.64
2
DISNEY
68.99
3
NINTENDO
19.47
4
SONY
17.19
5
ACTIVISION
14.01
6
ZYNGA
6.2
7
ELECTRONIC ARTS
5.98
8
KONAMI
3.79
9
SQUARE-ENIX
2.2
10
TAKE-TWO
1.26
11
UBISOFT
.54
12
THQ
.45

#
COMPANY
REVENUES
(million USD)
1
NINTENDO
6779
2
ACTIVISION BLIZZARD
4279
3
ELECTRONIC ARTS
3728
4
SONY
1914
5
MICROSOFT
1741
6
KONAMI
1594
7
UBISOFT
1249
8
TAKE-TWO INTERACTIVE
916
9
SQUARE ENIX
916
10
THQ
909

Video Game Industry
Value Chain
Development
Motion-capture provider
Data
Platform holder
Art/animation provider
Contract QA provider
Data
Game
code
Developer
Game
code
Bug list
(Sony, Microsoft,
Nintendo)
Publisher
Game
code
Game code
(master disk)
Finished
goods
Finished goods
Game samples & marketing materials
Distributor or rep group
PR firm & ad agency
Finished goods
Game info
Retailer (Wal-Mart, Target, Toys "R" Us, EB)
Media (TV, magazines, Internet)
Finished goods
Delivery media
manufacturer
Game info
Consumer
7

Revenue from $50 Console Game
Amount
Purpose
Paid By
Paid To
$3
Cost of goods
Publisher
Media manufacturer
$7
Publishing license royalty
Publisher
Platform holder
$13
Retailer profit
Consumer
Retailer
$3
Markdown reserve
Publisher
Retailer
$8
Development cost
Publisher
Developer
$10
Operating cost
Publisher
Internal
(overhead, freight, co-op, bad debt)
$6
Marketing
Publisher
Ad agencies and media
Items in bold can be converted to profit through careful publisher cost management.
8

Platform Holders
 Revenue comes from:
 Hardware sales
 Licensing fees from compatible
peripherals
 First-party games
 Licensing fees from third-party games
 Licensing fees from development tools
 Revenues from sales of proprietary
delivery media
9

PCs are an Open Platform
 Intersecting relationships among:
 CPU manufacturers, application software providers, graphics
chip manufacturers, and box assemblers
 CPU (Intel, AMD) and graphics chip (NVIDIA, ATI)
manufacturers provide developer support and market
their technology benefits directly to consumers
 Application software providers (Microsoft, Silicon
Graphics) give developers free tools to ensure
compatibility
 Box manufacturers (Dell, HP) may bundle hot software
titles to add value to their sale
 Low barrier to entry for developers, but high
competition for shelf space
10

Consoles are a Closed
Platform
 Console companies (Nintendo, Sony, Microsoft)
control nearly every aspect of games on their
platforms
 Proprietary development hardware and software
 Permission to become a licensed publisher
 License to use console company trademarks in marketing
materials
 May require permission to start a game
 Certification of a finished game
 Investment in hardware must be offset by
revenue from software (around $7/unit for
third-party games)
11

INDIAN GAMING INDUSTRY
• Indian PC and Online Gaming
Industry in India are poised to grow at
a healthy rate due to rising
penetration of PC and internet
connectivity. Young population in India
will further increase the demand for
gaming.

REASONS FOR RISE :
 Increase in internet penetration;
 Favorable Demography;
 Favored outsourcing destination for
many gaming companies;
 Social networking sites;
 Rise in the PC Sales.

PIRACY
Piracy has hit the gaming
industry very hard!!
The total revenue of gaming
by piracy is estimated to be
much higher than the legal
Gaming Industry.

Piracy in India
 Like with any content business, piracy is a key
problem area that affects the growth of the
Indian gaming industry. While it seriously
restricts the sales of many international game
franchises, it completely jeopardises the
possibility of the Indian game development
industry which may be interested in creating
Indian intellectual property (IP) content, with
dependence on a captive audience in India for
initial success

Factors
 High customs;
 Release of games in foreign markets
before releasing in India;
 Duplication from friends;
 High prices.

Measures
 Introducing games worldwide at one time;
 Reduction in taxes;
 Price reduction.

CONCLUSION
 The gaming industry has quickly
grown in the past, and we expect
it to keep growing faster than the
software industry average. As the
world
population
grows
richer, progressively more money
is
available
for
entertainment, which provides a
sound revenue driver for the
gaming industry.

ANY QUESTIONS????