Number of Pages : 129 leaves
Adviser : Atty Emma Cariño Francisco
Abstract
The game industry experiences constant change through technological changes, evolving market preferences and segments, and game phenomena. Studios and teams are driven to create by executing their ideals because of how the industry is also inherently creative. Thus, this study identifies and analyzes the challenges encountered by an outsourcing studio when it transitions to doing both outsourcing and original IP development in parallel. Strategies are then formed to address these challenges.
The study starts by analyzing the foundation of a company, which is its business model, using the Business Model Canvas. An investigation of the existing outsourcing business model of Company A and a general product-based business model shows that they are fundamentally different. These differences are apparent in the following :
1. customer segment, where outsourcing is B2B and product-based is B2C.
2. the value proposition, where outsourcing's primary offering is its services, and product-based is a product,
3. the key activities and key partners, where outsourcing and product-based overlap with game design and development activities and having technology partners, but product-based expands this by involving marketing, sales, live operations and community management, and having publishers.
4. the IP policies governing outsourcing and product development are also different, where clients primarily own the the majority of the IP that goes into the project in outsourcing, and product-based involves a more active IP rights engagement from the developers as IP becomes a key asset or resource.
The obligations are different, and the requirements to fulfill them shift how the company works.
Through a quick business process management of Company A, the serious issue in this transition was the balancing of resources, especially human resources. The resource issue is apparent production concern experienced by team members. Moreover, filling the business focused-gaps in terms of resources, partners and activities, and developing required know-how for product development are the struggles for the internal clients. Company A is not alone in this situation as similar studios who start as work for hire also experience the difficulty in allocating time and effort toward the development of their original IP. Related studies in business model innovation share the same experience and challenges in introducing new business models where there is a strong tendency to allocate resources to profitable activities.
After investigating the internal workings of Company A, and how other companies have handled such transitions, an environmental scan is conducted using the PEST, industry, market analysis (Porter's Five Forces). Internal and external analyses were conducted for a holistic approach in the development of the strategies. From these, driving forces were derived and used to develop potential scenarios the business models will possibly be competing in. The driving forces lean toward the technological and market forces, specifically the introduction and adoption of new technology, and the dynamic and growth of the market. Industry and technology cycles can be described using the S-curve. The start of the curve is the introduction of new technology, and by evolution can potentially replace existing technology. Any advancement in technology can impact how games are delivered, interacted with, and made. These changes will require studios to adapt by learning through consistent technology and knowledge transfer. The market, on the other hand, can be competitive, dynamic and unpredictable at times. With player numbers increasing year on year since the dawn of mobile gaming in 2007. It has been over a decade since this boom, and the market is maturing and may plateau several years from now. From these driving forces, one of the scenarios developed is Gradual Gaming Growth, where new technology finds success with early adopters. In this scenario, developing games for new technology becomes accessible because of early success. The accessibility is also due to the democratization of games and game development in the last decade. Gaining mass market growth for the new technologies will be a challenge despite some success with early adopters.
The strategies are developed based on the selected scenario and the identified issues. One of the recommended plans is to conduct a phased separation approach. Phased separation is recommended when the business models have low market relatedness and minor conflict between the established business model and new business model or innovation. Successful companies always seek to find and exploit synergies in managing multiple business models. The goal in this process is to find or create synergies by starting with a phased separation approach to provide autonomy to the new business unit. Developing a structure for IP selection and new product development processes, such as Discovery-Driven Planning and the Stage-Gate approach, can support the separated functions of the unit. For IP selection, internal clients expect the fulfillment and alignment to business goals and capacity of specific requirements when proposing a product or game. These requirements included cost and time to market, and competitive advantage, and revenue models. To address this and to add structure, utilization of the game project and design canvases can guide teams in developing and evaluating the product from various angles.
Moreover, the company can create a set of criteria for the type of games it will develop and publish to aid in the selection process. IP policies and strategies should also be evaluated and acted upon for alignment and benefit of the company, its partners and employees. For production processes, project management methodologies must adjust to fit original IP production. Lastly, quality management processes must be set in place by formalizing UX design and user testing processes.
The study starts by analyzing the foundation of a company, which is its business model, using the Business Model Canvas. An investigation of the existing outsourcing business model of Company A and a general product-based business model shows that they are fundamentally different. These differences are apparent in the following :
1. customer segment, where outsourcing is B2B and product-based is B2C.
2. the value proposition, where outsourcing's primary offering is its services, and product-based is a product,
3. the key activities and key partners, where outsourcing and product-based overlap with game design and development activities and having technology partners, but product-based expands this by involving marketing, sales, live operations and community management, and having publishers.
4. the IP policies governing outsourcing and product development are also different, where clients primarily own the the majority of the IP that goes into the project in outsourcing, and product-based involves a more active IP rights engagement from the developers as IP becomes a key asset or resource.
The obligations are different, and the requirements to fulfill them shift how the company works.
Through a quick business process management of Company A, the serious issue in this transition was the balancing of resources, especially human resources. The resource issue is apparent production concern experienced by team members. Moreover, filling the business focused-gaps in terms of resources, partners and activities, and developing required know-how for product development are the struggles for the internal clients. Company A is not alone in this situation as similar studios who start as work for hire also experience the difficulty in allocating time and effort toward the development of their original IP. Related studies in business model innovation share the same experience and challenges in introducing new business models where there is a strong tendency to allocate resources to profitable activities.
After investigating the internal workings of Company A, and how other companies have handled such transitions, an environmental scan is conducted using the PEST, industry, market analysis (Porter's Five Forces). Internal and external analyses were conducted for a holistic approach in the development of the strategies. From these, driving forces were derived and used to develop potential scenarios the business models will possibly be competing in. The driving forces lean toward the technological and market forces, specifically the introduction and adoption of new technology, and the dynamic and growth of the market. Industry and technology cycles can be described using the S-curve. The start of the curve is the introduction of new technology, and by evolution can potentially replace existing technology. Any advancement in technology can impact how games are delivered, interacted with, and made. These changes will require studios to adapt by learning through consistent technology and knowledge transfer. The market, on the other hand, can be competitive, dynamic and unpredictable at times. With player numbers increasing year on year since the dawn of mobile gaming in 2007. It has been over a decade since this boom, and the market is maturing and may plateau several years from now. From these driving forces, one of the scenarios developed is Gradual Gaming Growth, where new technology finds success with early adopters. In this scenario, developing games for new technology becomes accessible because of early success. The accessibility is also due to the democratization of games and game development in the last decade. Gaining mass market growth for the new technologies will be a challenge despite some success with early adopters.
The strategies are developed based on the selected scenario and the identified issues. One of the recommended plans is to conduct a phased separation approach. Phased separation is recommended when the business models have low market relatedness and minor conflict between the established business model and new business model or innovation. Successful companies always seek to find and exploit synergies in managing multiple business models. The goal in this process is to find or create synergies by starting with a phased separation approach to provide autonomy to the new business unit. Developing a structure for IP selection and new product development processes, such as Discovery-Driven Planning and the Stage-Gate approach, can support the separated functions of the unit. For IP selection, internal clients expect the fulfillment and alignment to business goals and capacity of specific requirements when proposing a product or game. These requirements included cost and time to market, and competitive advantage, and revenue models. To address this and to add structure, utilization of the game project and design canvases can guide teams in developing and evaluating the product from various angles.
Moreover, the company can create a set of criteria for the type of games it will develop and publish to aid in the selection process. IP policies and strategies should also be evaluated and acted upon for alignment and benefit of the company, its partners and employees. For production processes, project management methodologies must adjust to fit original IP production. Lastly, quality management processes must be set in place by formalizing UX design and user testing processes.
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