Wednesday, June 6, 2012

Business Models - How Many Do We Have?

The game industry is in a weird spot right now when it comes to business models, weird in that there are four of them (at least) and they are all working.

  1. Free-to-Play games supported by micro transactions (both browser and mobile)
  2. App Store Purchases
  3. Console games in the retail market
  4. PC games are doing well on Steam

There is some crossover - numerous mobile games support post-purchase micro transactions and even Steam is looking to add more micro transaction capabilities (such as Portal 2 and the robot store).

Where does this leave console games though? As the current console near the end of their life cycle one has to wonder what the next generation of consoles will offer. The next logical step for consoles is to embrace the app store/micro transaction model.

I can envision a future where console games are no longer shipped to stores, only purchase cards.

Imagine the following scenario: Pick up the latest Modern Warfare card for $60 at Walmart (or get the $80 collectors edition card for $30 worth of bonus features). Scan the card with your phone right there in the store, this signals your XBox 720 to begin downloading the game. Once home your game is ready to play...after first checking out the Modern Warfare Online store and perhaps making a few small purchases: A themed wallpaper, a vanity skin and a special font for your player name.

The obvious question with the above is why involve Walmart or any physical store at all? The answer: parents and grandparents. Lots of lots of parents and grandparents buy kids and grand kids video games. If video games vanish from the Walmarts of the world many of those sales also vanish. At Walmart the games are highly visible and always there. Need a game? Go to Walmart, in the back, where all the TVs are. You will know it when you see the big Diablo IV display.