Change in the game : business model innovation in the video game industry across time

Abstract

Technological innovation has changed business models across multiple industries – retail (Amazon), taxi (Uber), hotel (Airbnb). Through exploratory research, using secondary data, this thesis describes changes that have occurred in video gaming industry from its creation to the current, modern era that are connected to technological innovation. Based on the current research of business models, the authors created a “Value Creation-Revenue Stream Framework” that they use to analyse the industry to point out the main changes that occurred in the video game industry’s business models. Through the framework, the authors discuss representative types of models in three eras – traditional, transitional, modern – and point out the main differences and how the industry progressed through the framework over time. In addition, an overview of other business model innovation trends in the industry is included, expanding the current insight into the industry. Key finding of the study is the industry trends of having the consumer create the value of the product; compared to the business models of the traditional era, the importance of community is more prevalent in the modern era. This study contributes to the existing literature of the video game industry by providing a comprehensive overview of the development of the business models in the industry and by exploring business model trends that are related to other areas than revenue structure. Additionally, it contributes to the overall research of business models by introducing a new framework that can be used in the further research.