How to Help Gaming Company to Make a Profit in Video Games? - Paper Example

Introduction

The market research indicates that the video game industry is fast growing with new product and technology, and so is the competition. The expanding technology is expanding video content, product, special events, virtual reality, and video game tournament. Youths and adults alike are today more engaged in video games. According to the company's financial performance, the revenues and profits continue to decrease. Hence there is an urgent need to evaluate, plan and implement additional strategies to reinforce the company's efforts to monetize video games. Some of the recommendation that the business can apply to include:

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Advertisements/Sponsorship

Advertising accounts for 76% of mobile app top source of revenue. Some companies would want to pay you to access your audience. The business needs to focus on the quality of its game to make it more addictive. Addictive video games will go viral, more people will share, and the company will record a lot of downloads. The business can monetize by selling ad space. It can also identify best mobile ad networks to monetize its ads. The adverts can be display ads, interstitial ads, incentivized ads or contextualized ads. Advertising will provide the company with direct revenues and profits from downloads and advert. The video ads should be very subtle to avoid annoying the players and visible enough to enable them to click and take notice.

Sponsorship placement is a powerful app monetization model if the business can build the right app for tailored users and launch it on behalf of another company. The types of sponsorship include agreed revenue split generated by the app and monthly sponsorship fee paid by funder for app maintenance and use. Sponsorship opportunity will be lucrative for the company to generate and expand its user audience and promote an app as sponsors already have established website traffic and loyal customers.

Freemium Upsell

The freemium content constitutes direct for sale content product, funded content purchased on demand, and syndicate product opportunities. Under this strategy, the company allows customers to download the games for free but offers in-game purchases if the content is worth paying called micro-transactions. Microtransactions enable the player to purchase and gain full access to functionality via additional virtual goods like extra game play levels, loot boxes, exclusive gears, cosmetic skins. Some of these in-game purchases will enhance the player's power or speed up the progress within the game. Failure to make these purchases will make the play difficult and time-consuming. The micro-transactions are tempting to devoted players. The products under this strategy are categorized into:

• Consumable: Products that can be purchased and used once within the app. Example: virtual currency
• Non-consumable: Featuring product that is bought for permanent use that does not expire. Example: New game level
• Subscriptions: Used to unlock features and content for a limited period. Example: Monthly news subscription

In-app purchases can generate good revenues. The app should hook a leading market position and always keep users hooked. Additionally, the business should make micro-transactions affordable to the willing buyers so that players don't feel extorted.

Paid Mobile Video Games

The business can develop games and allow players to buy. The purchases can either be up-front payment or subscription. In up-front payment, games are purchased through one-time payment then downloaded directly into the user's mobile device. Under the subscription model game charge, the users are required to pay a recurring fee to continue playing. The payment is usually made on a monthly basis. The challenge with the subscription payment model is that it can only apply for massively multiplayer online games. Secondly, the players can opt for free games to avoid expenses. The business should highly differentiate its video game products from other products available in the market to increase customers switching cost. Nevertheless, a paid mobile video is a direct method that the company can use to generate the business revenue thereby fostering its growth and profitability.

Pay Attention to User Growth

Determining the business position in the industry is critical in making marketing projection. The company's low revenue and profit result from the low user base. Video games are predominantly played among the youths. While company XYZ still use traditional methods such as Television and newspaper in marketing its video game products, youths currently spend at least four hours per week, online. The Internet has, therefore, become a valuable tool that the business can use to reach out to its target customers. The company needs to focus on online marketing through sites that appeal to uses Google, eBay, iTunes, Myspace and Facebook to reach out to masses.

Secondly, the company should understand its market and users by conducting research. Company ABC should check the app store to identify apps offered by its competitors, the monetization techniques they are adopting, as well as how they are framing their applications for optical transactions and ad impressions. This information helps the company identify opportunities and weaknesses so that they can work on them and produce new strategies for monetization. Besides, the business should understand its users to determine what they need, perform demographic research and employ relevant advertising while providing suitable users and costs ideal to the gamers.

Email Marketing

Email marketing is very useful in monetizing apps. It can be the best strategy for the company when it can kindly request for the user's e-mail during sign-in. The business can them reach its target audience with email notifications. The mobile applications offer a new opportunity to collect email addresses. This makes email marketing one of the most effective strategies on the web. User's email address will help the company reach out to customers who have not been using their app for a while. It can also use email to notify the user on the interesting new features and improvement. This strategy enables the business to create a personal relationship with their clients, conduct market research on their performance and make necessary improvement. It also helps the company to encourage customers to continue using its products, hence very effective in marketing.

Physical Purchases and Merchandise

The e-commerce enterprises use free apps for selling physical goods or branded merchandise such as T-shirt, cell-phone cases, toys via email marketing or developed application. Amazon provides an ability to get revenue from merchandise by creating Merch self-service program that allows app publishers to sell custom branded t-shirts from within their app. The company needs to take this opportunity to upload and promote its artwork. Their business can use this strategy without incurring any severe expense. It will only have to upload its Artwork then Amazon will produce t-shirts, sell, and the company gets its revenue share.

Collecting and Selling Data

This can be an effective approach for the company to make profits. The company can offer a free mobile app to third parties. The usage of an app will require the user's email address, social media accounts, and personal preferences. The Company can then sell this information to researchers and make a good profit in return. Besides, the business will also use the data it collects from customers for personal gains. It will use data collected to identify its relevant audience, market its products to the appropriate audience and improve its sales and revenue that will arise from an expanded market.

Licensing

Licensing as a monetization approach will require the company to develop games, and sell licenses to individuals and companies who are interested in showing the company's games on their websites. Selling the license is a one-time deal, the company will thus avoid overhead costs of marketing or suffer any financial cost in case the purchaser makes loses.

• Exclusive licenses: the company can build a game and sell all the rights to a single entity to redistribute. There may gain the company a lot of money depending on the quality of the game.
• Non-Exclusive Licenses: Selling license to multiple entities the buyers buy the right to publish the game in their own portal.

Reforming the advertising efforts and approaches to marketing the company's video games will enable them in the industry, the business will customize and tailor its products to meets the needs and preferences of its customers, as such, the company to will experience improved strategic positioning and competitive advantage in the industry. Consequently, it will realize more revenue and profits.

References

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Tomic, N. (2017). Effects of micro transactions on video games industry. Megatrend revija, 14(3), 239-257.