ICT industry players vs. the new disrupters
From 17 to 19 November 2015, the 37th annual DigiWorld Summit will bring together 140 top-tier speakers from around the world to Montpellier, to share their views with the more than 1,200 participants from over 25 countries. French Tech will also be in the spotlight during the 2nd annual DigiWorld Week and at the inaugural DigiWorld Awards.
For IDATE Chairman, François Barrault, the theme of “Digital-First” – which was chosen in concert with DigiWorld Institute members – “refers to the tremendous rise of digital technologies in the business world, and huge changes in consumer behaviours. This astonishing acceleration is upsetting the status quo and shaking up the traditional economy, paving the way for new business models ushered in by the digital economy”.
Supervising the programme is IDATE CEO, Yves Gassot, drawing on IDATE consultants’ knowledge and expertise. “Once again this year,” says Mr Gassot, “the participants coming to Montpellier will get an invaluable, detailed snapshot of all of the latest digital industry events, thanks to the plenary sessions and the many forums, and to a large and prestigious panel of speakers from Europe, the United States and China who will be on hand to debate the multifarious questions raised by the ongoing digital revolution”:
• What are the promises of this new age of knowledge? with Jimmy WALES, Founder, Wikipedia
• How is the Internet changing the travel industry? with Peter VERHOEVEN, Managing Director EMEA, Booking.com and Alex SCHLEIFER, Head of Design, Airbnb
• How are veteran toy companies reacting to the video game invasion? with Dan JUDKINS, Head of Global Design and Development, Hasbro Inc.
• How are the Internet giants adjusting to the changes at work? with Carlo d'ASARO BIONDO, President EMEA strategic relationships, Google
• In with the new for a telco going global, with Michel COMBES, COO, Altice
• Is everything about to change for telcos? with Santiago Fernández VALBUENA, Group CSO, Telefónica
• What services will be attached to smart devices? with Bruno BARLET, Executive VP France, LEGRAND, Vincent CHAMPAIN, Operations Director, General Electric and Xavier BOIDEVEZI, VP Development & Digital, SEB
• Just how far can telcos go in helping their customers’ digital transformation? with Thierry BONHOMME, Senior Executive Vice President, Orange Business Services
• Do we really need new dedicated networks for the Internet of Things? with Geoff MULLIGAN, Chairman, LoRa Alliance and Ludovic LE MOAN, CEO, Sigfox
• Will the next Netflix come from China? with WEN Rui, Director of national Business Development, Youku Tudou
• Will new gen mobile TV be the new killer app for video? with Richard LUCQUET, Director, Business Development Technology Partnerships & Licensing, Oncue (Verizon)
• What does the future hold for a top, integrated telecom equipment supplier? Vincent PENG, President Western Europe, Huawei
• Does regulation need to adapt to Internet rules? with Fatima BARROS, Chair 2015, BEREC, Sébastien SORIANO, Chairman, ARCEP and Bruno LASSERRE, Chairman, French competition authority
• Can we count on digital markets to deliver a new period of growth? with Georg GRAETZ, Associate-Labour Markets, London Economics School and Jean-Hervé LORENZI, President, Cercle des Économistes
• As well as: Accenture, BBC, Bouygues Telecom, Deutsche Telekom, Ericsson, France Télévisions, edX, IBM,
• JC Decaux, NEST, Nokia, Qualcom Life, SEB, SNCF, Studio Bagel, Wilseed Studio…
The DigiWorld Summit programme has grown in 2015, to give us a chance to explore the ins and outs of the tremendous and wide-reaching effervescence at work in digital industries today: “This is why we are hosting the second annual DigiWorld Week, which was designed as a collaborative space for partner events. We will also be hosting the first ever DigiWorld Awards, which were created to identify and reward French talent abroad, with special guest, Axelle Lemaire, French Minister of State for the Digital Sector,” explains IDATE’ deputy CEO, Jean-Dominique Séval.
> View the complete programme at:http://digiworldsummit.com
DigiWorld Week 14 – 22 November 2015
IDATE expands on the two days of the DigiWorld Summit, and plays host to an exciting event-filled week. Delving deeper into the issues and shaking up ideas through symposiums, workshops, hackathons, exhibitions, festivals, master classes, digital café… Exploring a host of topics, including the cloud, IoT, eHealth, FX, digital arts, smart agriculture, management, …
> Get the latest news at: www.digiworldweek.com
DigiWorld Awards 19 November 2015
In partnership with Business France and French Tech, IDATE will be hosting the first annual DigiWorld Awards, recognising French digital start-ups (Equipment and devices, Networks and telecoms, Internet services and application, M2M and IoT…), created abroad. Awards will be in four categories: Africa and the Middle East – The Americas – Asia – Europe. The winning start-ups will be added to the international innovation support programmes being run by Accenture, Capgemini, Ericsson and Orange.
> For more details: http://www.digiworldsummit.com/awards
Follow us on Twitter: @DigiWorldIDATE
Head of Consumer Electronics & Digital Entertainment Practice
"In 2015, more than 70% of video software revenues were generated by digital sales and distribution, compared with 22% in 2008."
Dematerialisation, a driver for disintermediation and growth in the video games sector
The global video game software market rose in value from 35.3 billion EUR in 2008 to 47.7 billion EUR in 2014, driven by dematerialisation, the emergence of new segments and the continued success of relatively new segments. Dematerialisation has meant an increasing number of consumers can be reached, on any platform equipped with a screen, fixed or mobile, and with increasingly varied content. In 2014, 69% of video game software revenues were generated by digital sales and distribution, compared with 22% in 2008. Revenues from dematerialisation have experienced an average annual growth of 26.8% over the period, compared with 9.7% for revenues from physical sales.
The video games sector, which is digital by nature, has a long history of dematerialising distribution and in-game content. Use of dematerialisation now seems to be accelerating and expanding into all segments of the sector. The success of browser games, massively multiplayer games, online gaming on consoles and personal computers, and smartphone gaming (since the end of the 2000s), has meant that 2012 was a defining year when the majority of revenues were generated from the digital side of this economy, switching over from the physical.
Breakdown of the video game software market by type of revenue, 2008 and 2014
Source: IDATE, Video Games in the Cloud, June 2015
Role redistribution along the value chain
Dematerialisation affects all segments of the video game industry. It has led to disintermediation in the value chain and raises questions over the role of certain stakeholders downstream. It has afforded new power to developers, who now have the opportunity to speak directly to their gaming customers. 'Online' has ultimately eroded a silo-based industry structure and allowed practices and cross-platform services to emerge that both benefit gamers and boost creativity within the sector.
Industry repositioning and revaluation up the chain
On an industry-wide scale, dematerialisation of video game market segments has moved value along the value chain. Value creation is now closer to players with a direct link to their customers. Disintermediation of the sector is moving in this direction.
In the PC gaming segment, value creation seems to centre around digital retailers (Steam, GOG), aggregators (Big Fish Games) and publishers (EA Origin, NCSoft). In the mobile gaming segment, value creation seems to have moved towards app store owners (Apple, Android, Amazon), and to the console manufacturers themselves in the case of console games.
On Smart TVs, anything is still possible between TV channels, the Internet giants and the proponents of a cross-platform ecosystem (e.g. Apple, Samsung, LG, Sony). Gaming platform operators, the major beneficiaries of these developments, have also had to rethink their revenue sharing models to the benefit of game development studios.
Dematerialisation has also allowed the sector to continue generating additional revenue, converting new customers to new types of game, especially ubiquitous games, which are playable simultaneously on multiple platforms, both fixed and mobile.
In this context where dematerialisation is continuing to gain ground on the physical market, the sector will continue its dynamic growth in the coming years. However, not all links in the chain will fully benefit from this growth, such as distributors, who are seeing their share captured by others.
Revenues earned by the various links in the video game market value chain (million EUR)
Source: IDATE, Video Games in the Cloud, June 2015
The impact of dematerialisation
The impact of dematerialisation varies depending on the market segment, but disintermediation is a common theme.
The PC gaming segment, which is easily accessible for independent (indie) developers, has diversified and opened up to casual and social games while retaining a special place for massively multiplayer (World of Worldcraft) or multiplayer (League of Legends) games.
The mobile gaming segment (on smartphones and tablets) has built itself around app stores, and the viral and rapid nature of these stores. With these devices now almost permanently connected, games are also being viewed as a potentially continuous entertainment experience. This implies a new approach is needed, based more on encouraging users to buy, rather than selling a product.
The console gaming segment has evolved and now allows all users to download indie and casual games, but also AAA titles. In addition, many features that use the cloud have emerged. These features may relate to the game, other content, consumption, user account management or access to broadcasting services. In this context, console manufacturers remain the cornerstone of this segment's economy with their e-stores.
Finally, on Smart or connected TVs, video games take the form of streamed content, known as cloud gaming or Games on Demand. This young segment, which first emerged around 2010, is strengthening and seems to be garnering interest within the industry.
Find out more about dematerialisation in video game industry, new strategies and organisation as well as forecasts and shifts in the value chain in our dedicated market report
The place to be in Europe, to understand upcoming disruptions and their impact on telecom, IT, Internet and media markets
From 17 to 19 November 2015, the 37th annual DigiWorld Summit will bring together 150 top-tier speakers to Montpellier to share their views with the more than 1,200 participants from over 30 countries. French Tech will also be in the spotlight during the 2nd annual DigiWorld Week and at the inaugural DigiWorld Awards.
Under the banner of “Digital First” IDATE will host debates on the core trends shaping telecom, IT, Internet and media markets, with the knowledge that digital technology is entering a new stage in its ubiquity, becoming the vehicle of a major overhaul in many sectors: energy, insurance, finance, health, automotive, travel and tourism… “But,” says IDATE CEO, Yves Gassot, “this digital verticalisation also represents a new challenge for IT, telecoms, Internet and media industry stakeholders. They may see new growth opportunities, but also challenges as innovation cycles are accelerating, as they consider the shifting outlines of their business and contend with new digital intermediaries.”
This new stage in the digital transformation is being spurred by ubiquitous wireline and wireless connectivity, the economies of scale of cloud computing, and the power of real time data processing algorithms. But it is being amplified by the rise of connected objects, and the promises of 3D printing, of artificial intelligence and the collaborative economy. A profound transformation of the economy that is already materialising in changes to production and distribution infrastructures, in the accelerated shift from product to service and the profusion of channels for interaction with end users.
• What do vertical companies (media groups and TV networks, insurance, automotive, travel, retail, etc.) want from digital industry players (telcos, OTT, IT)?
• How should digital industry players position themselves with respect to the digital transformation in vertical markets?
• How can the Web’s top destination platforms cohabitate with the vertical markets’ new digital champions?
• This year’s Guest Country: China. Can China combine the power of its recently acquired positions in Internet and telecom markets with its manufacturing ambitions?
2015 DigiWorld Summit Programme
Analysis and debates between veteran industry players and disruptive start-ups, with insights from IDATE’s finest economists and analysts:
Digital Europe, Digital World
In-depth seminars with the industry’s top expertsConnected Things Forum
Smart City Forum
TV & Video Distribution Forum
Future Digital Economy Forum
DigiWorld Week (14 – 22 November 2015): IDATE expands on the two days of the DigiWorld Summit, and plays host to an exciting event-filled week. Delving deeper into the issues and shaking up ideas: symposiums, workshops, hackathons, exhibitions, festivals, master classes, …
DigiWorld Awards: in partnership with Business France and French Tech, IDATE will be hosting the first annual DigiWorld Awards, recognising French digital start-ups (Equipment and devices, Networks and telecoms, Internet services and application, M2M and IoT…), created abroad. Awards will be in four categories: Africa and the Middle East – The Americas – Asia – Europe
The DigiWorld Summit, is organised under the patronage of the French Ministry of the Economy, Industry and Digital Affairs, the Région Languedoc Roussillon and Montpellier Métropole, with the support of DigiWorld Institute member companies.
More informations about IDATE's expertise and events :
Il décolle ! Le marché du Serious Gaming en forte progression pour atteindre les 12 milliards d’Euros d’ici 2018.
L’innovation est au coeur des préoccupations des entreprises qui développent des Serious Games. Elle porte sur des aspects technologiques (accessoires, terminaux, interfaces, réseaux, logiciel et cloud), sur les contenus (gameplay, graphisme, stratégie éditoriale), et également sur les services d’accès aux SG (conditions d’accès, add-on, modularité de la plateforme, fonctionnalité sociales).
Cette progression du marché offre donc des perspectives très prometteuses aux développeurs de Serious Gaming (SG) sur le territoire français, comme le confirment les cinq sociétés que l'IDATE a invitées à collaborer à ce rapport : Daesign ; KTM Advance ; Groupe Interaction ; Manzalab et Dassault Systèmes.
Aussi, sur la période, on observe une croissance à deux chiffres à partir de 2015 et un pic de croissance sur 2016-2017. Ce pic correspond à un phénomène d’accélération de l’adoption du SG comme outil de formation et d’information par des PME. Aujourd’hui, ces dernières commencent à vouloir adopter ces outils vendus sur étagère.
La formation initiale et continue représentera plus de deux tiers du marché en 2018
Le segment de marché de la formation initiale et professionnelle représente le premier segment de marché du SG. Ce segment offre l’avantage d’avoir des modèles économiques compris et acceptés des commanditaires, de la production à façon à l’acquisition de licences utilisateurs.
Pour rappel, en 2014, ce segment représentait plus de 60% du marché global. Il gagnera 10 point jusqu’en 2018.
À l’image du marché mondial, le pic de croissance concernera davantage les années 2016-2017.
Ainsi, Dans les trois années à venir, le défi des acteurs offrant leurs services dans le SG sera de convaincre les entreprises de plus de 500 salariés, soit près de 2 700 en France. Les experts de l’IDATE s’accordent à dire que ce défi pourra être relevé tant les preuves du concept ont été faites auprès des grands comptes nationaux. Il s’appuiera donc sur différents facteurs clés de succès :
Pour retrouver toutes les informations concernant l’étude Serious Gaming et les études associées, cliquez-ici
Plus d’informations sur l’expertises et les événements de l’IDATE sur :
Le digiworld summit 2014 a réuni autour des questions de la mobilité près de 1 200 participants et 140 speakers du monde numérique. Les vidéos des moments forts de ces deux journées.
- L'interview de Laurent Solly, DG de Facebook France
- L'interview de Carlos Moreno, "La ville nous parle"
Consultant de l'IDATE
The study on how the online shift is affecting content industries analyse four main segments: books, recorded music, vide0 games and video products. Presentation.
For each sector, it provides readers with detailed market figures, analyses the move to the internet, its impact on industry structure and revenue sharing, and delivers market forecasts up to 2018, both global and for seven key national markets.
Alexandre Jolin, the Project manager for the report remarks that, “the global content market topped €140 billion in 2014, or only just over 1% more than in 2012, which marked a record low since the onset of electronic distribution channels”. Keeping in mind that 37% of content industries’ revenue come from these online distribution channels, or double the amount in 2010, albeit with huge disparities between the segments: 13% for books versus 67% for video games.
Content dematerialisation produces certain common effects to these different segments, despite the characteristics of books, recorded music, video games and video:
• a rise in subscriptions, at the expense of per-unit sales
• lower prices, which, combined with piracy, has an impact on household spending
• simplification of the value chain, with technical costs and intermediaries having less of an influence, which benefits consumers as well as those involved in creating, publishing and producing content
• piracy has a significant effect, although it seems to be stabilising thanks to new unlimited offerings, at least in developed markets
• a trend towards concentration upstream (production/editing) and downstream (distribution)
The various segments of the content industry are expected to follow different trajectories in the next five years:
• Publishing, which has only just started the process of dematerialisation, is likely to see revenues stagnate.
• Music, video and video games are likely to continue to grow or return to growth.
• The overall dematerialisation rate will reach 63% in 2018.
IDATE has identified the following key factors in digital content market development:
• a tighter link between purchase of a physical copy and a dematerialised copy
• the rise of the 'service' function, which allows personalised content recommendations
• innovative pricing models, individualised for each type of content (yield management)
Household spending expected to be back on the up
Falling in recent years, household spending on cultural products and services should start to increase from 2014, reaching 84.20 EUR per year worldwide in 2018. We nevertheless expect to see huge regional disparities, as North American households will continue to be by far the heaviest spenders on cultural goods and services, totalling an average €375 per household in 2018.
Source: IDATE, Content Economics, September 2014
Would you like to discover ous study ? This way.
Yves Gassot Directeur Général, IDATE
‘‘Mobility reloaded” will be the central theme of the 36th annual DigiWorld Summit.
Following through on ‘‘Game Changers’’ (2012) and ‘‘Digital Gold Mines’’ (2013), this year’s theme will allow us to further our examination of current and future upheavals in the digital economy by exploring the issues from a specific angle: mobility and its impact on user behaviour and on the value chain for telecoms, TV, advertising, the Internet, gaming, smart cities, etc.
- What innovations can we expect from mobile Internet disruption?
- Are fixed and mobile superfast access interchangeable?
- What new players and business models will emerge from the Internet of Things and mobile advertising?
- Will mobile devices turn TV into a one-to-one business?
- How can Europe get back in the game?
IDATE Chairman François Barrault points out that, ‘If the cloud, big data and the Internet of things are clearly the major disruptions looming on the horizon, the momentum today lies in the mantra: mobility first!’
IDATE CEO, Yves Gassot, details the key points of this year’s programme: ‘What began with the swift commercial success of 4G is segueing into the spectacular technological leaps expected from LTE-advanced and, beyond that, the prospect of 5G, the widespread adoption of software-driven networking (SDN)… But questions also linger over the accelerated pace of the migration from the fixed to the mobile Internet, spurred by the massive popularity of smartphones and tablets, coupled with the surge of emerging economies. It goes without saying that a great many stakeholders are being affected by these massive changes in the landscape, which we have chosen to explore from three angles: How revenue is progressing for mobile operators and other players, from M2M to the Internet of things and beyond; How the massively mobile Internet will affect the advertising ecosystem; and how TV industry players are positioning themselves now that video accounts for an increasingly large share of mobile traffic’.
The 36th annual DigiWorld Summit will run from 18 to 20 November in Montpellier, France, and play host to a panel of international industry luminaries who will share their views with more than 1,300 participants from 30 countries. IDATE analysts will lend their expertise to the sessions that will be moderated by Digiworld Institute members.
DigiWorld Week: the DigiWorld Summit broadens its horizons
This year’s DigiWorld Summit will kick off DigiWorld Week: a new initiative from IDATE and its key partners to explore the many facets of the digital society’s core economic issues. A series of exciting events will be taking place from 16 to 21 November on either side of the core two-day Summit:
- The Connected Things Forum
- The Game Summit
- MIG (Montpellier In Game)
- Industry Oracles
- Economic Club on m-payment
> Find the latest programme updates at www.digiworldweek.com
More than 140 speakers on hand
This year, we are delighted to welcome speakers from the four corners of the globe, come to share their views on the future of mobility:
- Mikael BÄCK, Vice President Global Strategy & Portfolio Management of Ericsson will share some of the chief findings of the “Mobility report”.
- Jean-Michel FOURNIER, CEO & Co-Founder of BitGym, a San Francisco-based start-up and winner of the prestigious Auggie Award at AWE 2014, will talk about the “quantified self” phenomenon.
- Kayvan MIRZA, CEO & Co-Founder of Optinvent will unveil his approach to new generation smart glasses.
- Patrick PELATA, EVP & Chief Automotive Officer of Salesforce.com will speak with Thierry VIADIEU, New Mobility Program Director from Renault, about the future of connected cars.
- Christophe WILLEM, Senior VP of Strategy & Marketing at Thales Alenia Space, will tell us if drones, balloons and mini-satellites offer viable solutions for connecting huge swaths of the population to the Internet.
- Michel COMBES, CEO of Alcatel-Lucent will close the “Road to 5G” session, whose speakers include Selina LO, President & CEO of Ruckus Wireless, and Atsushi TAKESHITA, President & CEO of DOCOMO Communication Laboratories Europe.
- Pierre LOUETTE, Deputy CEO of Orange and Carlos LOPEZ-BLANCO, Global Head Public & Corporate Affairs for Telefonica, will discuss how telco business models will evolve in Europe, against the backdrop of market consolidation.
- Laurent SOLLY, Facebook’s Managing Director France, and Benny ARBEL, Founder & CEO of MyThings, a rising star in retargeting, will discuss the challenges that advertising faces as it makes the transition to mobile.
- Luc JULIA, VP & Innovation Fellow of Samsung and Co-authored Apple Siri's core patents, Erick TINICO, Director of Mobility at AT&T, one of the world’s most advanced telcos and Axel HANSMANN, Gemalto’s VP of M2M Strategy & Marketing, will share their analysis of new business models for M2M and the IoT.
- Fu SHENG, CEO of Cheetah Mobile, a growing mobile Internet powerhouse in China, with 340 million users.
- Abigail KHANNA, Head of Digital and Future Media Business Development at the BBC, Steve McCAFFERY, GM & SVP of sales for Europe Arris, Eric SCHERER, Director of Future Media, France Télévisions, and Valery GERFAUD, General Manager, M6 Web, will explore what the future holds for television, now that mobile devices are becoming users’ screen of choice.
- Guillaume de FONDAUMIERE, Co-CEO of Quantic Dream, Susan O’CONNOR, a writer whose script credits include the games BioShock 1 & 2, Far Cry 2, Tomb Raider and Star Wars 1313, along with Charles CECIL, co-founder of Revolution Software, creator of Broken Sword, are among our video game Oracles.
- Meng LI, Director of China Telecom’s Mobile Business Department Europe, will talk to us about the development outlook for mobile in its various forms in the world’s biggest market.
- Jean-Ludovic SILICANI will talk about his time as Chairman of France’s telecoms and postal regulator, ARCEP, and share his insights into key issues going forward.
- Vincent LE STRADIC, Managing Director of Lazard, will provide a financier’s perspective on the health of Europe’s digital economy. And…
- Axelle LEMAIRE, French Ministry of State for Digital Affairs will deliver the Summit’s closing remarks.
Published in COMMUNICATIONS & STRATEGIES No. 94, 2nd Quarter 2014
Video game business models and monetization
Daniel KAPLAN, Business Developer at Mojang
Conducted by Peter ZACKARIASSON, University of Gothenburg, Sweden
C&S: Minecraft is, by any standard, a very successful game. How much of this success do you ascribe to your business model?
Daniel KAPLAN: I think it played quite a big role since it was discounted for quite a long time. The game was discounted from day one, since it was “released” during very early development. The whole idea was to release it early to see if there was an interest and to see if the project could bear fruit. A lot of people who bought it initially, I think, felt that they had somewhat invested into the project and the ones who were on from the beginning made quite a good deal.
C&S: Do Minecraft exploit any specific previous business model, or has it paved its way with a unique model to generate profit?
D.K.: There are other games that were the inspiration for this model, Mount and Blade from TaleWorlds for instance. They also released their game before it was finished for a discounted price and continued the development with the community.
C&S: Today Minecraft has become a phenomenon that is not only tied to the game itself, but there are many physical product spin-offs. How important is this brand extension for Mojang?
D.K.:We are still a game company but it definitely helps. I think there is a fine line in between how much you can do with a brand before it feels too stretched. We try to create merch/products that we would like to have ourselves, rather than try to fill gaps with our brand with various products. It is sure a fine line and I think a brand can be too exposed and become too stretched.
C&S: Is it possible to become too successful? That is, having produced Minecraft – is it possible to repeat that success? What about the next game of Mojang?
D.K.: I think the problem with becoming too successful is that you will always be compared with your success, regardless of what you produce after that. It is important to not lose focus and continue to deliver things regardless of what they are so you don’t stagnate.
I think that it is almost impossible to create a success like Minecraft again. A lof of the “cred” Mojang got was because it was an up and coming company/person during the initial development of Minecraft, and the whole story around Notch (the founder of Mojang) was a classic David and Goliath story, which we can’t reproduce anymore. We have a whole different starting point now in comparison from where we started.
The next game we are working on, Scrolls, is already profitable and was released in a similar manner to Minecraft. We are super happy about the game being profitable even though it is not close to the success of Minecraft. It is a bit silly to try to compete/compare our projects with Minecraft to be honest.
C&S: What directions do you see the video games industry taking when it comes to generating sustainable business models? Last year Minecraft was one of the two pay per play games in the US top 20 mobile games. Not adopting a free to play business model, is it a conviction or the best way to be different within a serious competitive framework?
D.K.:I don’t know what will happen in the future. You see different trends all the time and you see companies not following the trends and they are successful. I think that the mobile business will continue growing and will continue to have different business models for various types of games or apps. I think it is hard to say that everything will be x or y. Considering the widespread presence of mobile devices, it allows for more niche products too which will let you create products that don’t follow the trends and can still be successful.
Daniel KAPLAN is Mojang's business developer since October 2010. He was born and raised in Skövde, Sweden. He founded ludiosity.com
For more information about our activities: www.comstrat.org
COMMUNICATIONS & STRATEGIES
Discover our issue Video Game business models and monetization on this subject.
Published in COMMUNICATIONS & STRATEGIES No. 94, 2nd Quarter 2014
Video game business models and monetization
Interview with Yves GUILLEMOT Co-Founder and CEO UBISOFT
Conducted by Philippe CHANTEPIE
French Ministry of Culture and Communication;
Associate researcher, Innovation & Regulation Chair, Paris
C&S: We have entered the 8th generation of consoles. Do you consider it likely that this will upset the market positions of publishers and console manufacturers?
Yves Guillemot: This new generation of consoles brings many changes, incorporating all the innovations from parallel markets and multiplying their potential through technological power. These platforms reach an unparalleled high level of performance, immersion and opportunities which allow us to create even more powerful game experiences. Each generation of consoles has large implications for publishers who need to invest heavily to maximize power and be able to seize the great opportunities that arise.
On the other hand, the strong growth in mobile and PC markets, driven by social games, permanently connected and free access, is a challenge for traditional industry players, with new economic and editorial models that differ from more traditional games. These models started being introduced at the end of the previous generation of consoles. New platforms like the Playstation 4 or Xbox One have fully integrated these developments and allow us to put the player at the center - before, during and after the game experience - and to give him/her an increasingly active role in changing content.
C&S: Casual gaming has grown rapidly and has already started occupying a predominant position. Do you think it is likely that this will continue to increase?
Y.G.: Casual gaming is not a new phenomenon. In 2006 the Nintendo Wii had taken a big step towards attracting video games and a new audience, part of which is now plays more traditional games. The rise of social networks, mobile games and online greatly amplified this phenomenon and globalised the supply and the audience to which it is intended. The video game market today encompasses nearly 2.5 billion players, compared to 500 million previously. This is a pool of significant growth for our industry. For example, one of our flagship brands Just Dance is a dance game first released on the Wii, which has sold 49 million copies since 2009. It was particularly popular during the Christmas season.
C&S: We are witnessing significant changes in revenue models. Are these new models mature enough and able to renew the game console segment?
Y.G.: These new models are growing dynamically and also continue to evolve. Some examples or experiences have shown us the difficulty of maintaining high market shares and good consistent results. Without a miracle, renewal is necessary to adapt to a changing marketplace. Ubisoft deploys and uses these models, while consolidating and diversifying a portfolio of original brands for which we control the entire creative and commercial process. Beyond the video game, our goal is to increase the visibility and attractiveness of our franchises by being increasingly present on new media such as television, with the Raving Rabbids TV series, and soon the cinema with the adaptation of franchises like Assassin's Creed or Splinter Cell. The Raving Rabbids Futuroscope theme park attraction, open for several months, is also a success.
C&S: Do you consider that the development of competition in the video game industry will lead to transform the production system of game publishing and how?
Y.G.: In recent years, production of video games has become considerably more professional. Our industry is constantly evolving: our businesses, the technologies we use, as well as the habits and customs of the consumers, such as being permanently connected with their phones. These changes are revolutionizing the way we design our games. We must constantly renew and adapt to propose the most innovative and immersive creative experiences. For example, a game like Watch Dogs allows our players via mobile applications connected to the game console, to play anywhere and anytime; it also allows their friends who do not have game consoles to help them progress in the game. Our mission is to provide our players ever stronger and enriching experiences while finding technical solutions allowing us to reduce our costs and therefore our risk. To remain agile and ready to face these challenges, we actively invest in R & D in France and abroad.
C&S: Which factors do you think are the most disruptive of the game economy factors present or future: free to play, an actor like Steam, etc.?
Y.G.: The free-to-play model was born in Asia to circumvent the problems of piracy of the PC game business model. This model has experienced significant growth in recent years in Western markets. By removing entry barriers, it allows players to experience games and be free to invite their friends and invest if they like the content. This model has now gone beyond the sphere of casual games in which it was previously embedded to move towards more traditional experiences and platforms such as consoles. Ubisoft has been present in this segment for some years with games like Settlers Online, Howrse, and more recently with Trials Frontier, and The Mighty Quest for Epic Loot.
C&S: The Montreal studio set-up seems to be a supporting model of this industry. What elements of this support do you consider are the most strategic to strengthen the ecosystem of this sector?
Y.G.: Canada, but also other territories around the world, has been able to highlight craft, creativity and innovation as a driver of economic development. These territories were able to discern the many benefits that the digital creation industry and jobs with high added value could bring. In addition to the direct incentives, education is also specialized in these areas to form a diverse pool of talents. Two key factors in this success that are important in the eyes of the gaming industry are the unique efforts and the simplicity of public procedures.
Yves Guillemot founded Ubisoft in 1986 with his four brothers, and was named CEO of the company in 1988. Starting off by importing and translating video games from England, Yves and his brothers immediately used the distribution business to fund the creation of games, starting with Zombie in 1990 for Atari ST. Yves has overseen the phenomenal growth of Ubisoft into an internationally renowned and respected creator of quality video games with 29 studios, distribution in 55 countries and with more than 9,200 employees around the globe. For the 2013-2014 fiscal year it generated sales of 1.007 billion euros.
Born in Brittany of France's west coast, Yves grew up in a family of entrepreneurs. All five Guillemot brothers worked summers in the family agriculture supply business. Later, Yves attended business school in Paris, formalizing his education in the creation and sustenance of an enterprise. Yves is married and enjoys playing video games with his three children.
Published in COMMUNICATIONS & STRATEGIES No. 94, 2nd Quarter 2014
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COMMUNICATIONS & STRATEGIES