Course: MF F242

Manufacturing Management

Instructor In-Charge: Dr. Abhijeet K Digalwar

ANALYSIS OF GAMING INDUSTRY

By:
Kushagra Kulshreshta(2017ABPS0996P)
Prakhar Sharma (2017ABPS0885P)
Shreyans Khandelwal(2017ABPS0342P)
Harshraj Kaushik(2017ABPS1046P)
 HISTORY OF GAMING INDUSTRY

Prior to the 1970s, there was no significant commercial aspect of the gaming industry but then
many advancements in computing had moved it from a fringe activity into the mainstream. In 1971,
the arcade game, Computer Space was released and was followed up by Atari Inc’s first
commercially successful video game. The same year saw the introduction of Pong. Games
formally with the release of an early gaming console called the Magnavox Odyssey. The market
lost momentum in 1977 and was rejuvenated in 1978 by another successful game called Space
invaders. This success inspired arcade machines to become prevalent in mainstream public
spaces such as malls, stores and restaurants. Space invaders went on to make $2 billion in
quarters by 1982. In the late 1970s, personal computer gaming also took off and the development
of computing led to a simultaneous advancement in gaming technology as well.

The industry saw another crash in 1983, down from a successful period in the early 1980s. 1982
saw the peak of the industry with a revenue of $8 billion which overtook annual revenues or pop
music and Hollywood films combined. The crash was brought about in North America because of
too many substandard games. The Nintendo Entertainment System revived the industry once
again. By the late 1980s, handheld systems such as Gameboy were also entering the market.
HISTORY OF GAMING INDUSTRY

The industry saw another crash in 1983, down from a successful period in the early 1980s. 1982
saw the peak of the industry with a revenue of $8 billion which overtook annual revenues or pop
music and Hollywood films combined. The crash was brought about in North America because of
too many substandard games. The Nintendo Entertainment System revived the industry once
again. By the late 1980s, handheld systems such as Gameboy were also entering the market.
During the 1990s, some important advancements were made in the industry including the use of
CDs to store and distribute software as well as the large-scale implementation of GUI-based
operation systems. Along with this, there were advancements in 3D graphics and these became
the standard for video game visuals. The processing speeds and sophistication for computers also
continued to develop and the size of hardware reduced significantly to herald the advancement of
mobile gaming. The popularity of the internet allowed multiplayer games and competitive gaming.
The industry continued to generate substantial revenues such as in 1994 an estimated $7 billion
from arcades and $ 6 billion from home consoles in the US alone, which was close to 2.5 times the
revenue generated by films in the country during the same time period.
The industry remained unpredictable in the 2000s as third party game developers game and went
quickly. Some managed to stay on such as casual and indie games, Braid and Limbo. Mobile
phone games began to be developed for iOS and Android devices and a new gaming platform
emerged in the form of social media sites. Following 2010, the industry continues to develop and
profit drives technological advancement which then benefits other sectors of the industry. Casual
and Indie games continue to have a presence and there continues to be development in PC,
console and mobile gaming.
TYPES OF GAMING
Evolution has led from consoles becoming more sophisticated over the decades, PC games
become multi player and more complex and an entire ecosystem of mobile games.

PC Gaming
PC games or personal computer games are played on a computer through keyboards, mouse, a
joystick or a gamepad. These games are characterized by a lack of a central controlling authority
and a greater capacity for input, processing and output. PC games lost the market to consoles
briefly in the mid-90s but resurfaced in the mid-2000s thanks to digital distribution. Games can be
played locally or online.

Console Gaming
A device that is used to play games is called a video game console. The console outputs a video
image that displays the game. Consoles include those used to play games at home, handheld
consoles, micro-consoles and dedicated consoles. The console has evolved to now be one device
that can be used as a set-top box, a web browser and a CD and DVD player.

Mobile Gaming
A video game that is played using a mobile device such as a smartphone, a tablet or even a
calculator or a smartwatch is known as a mobile game. The very first mobile game was Tetris on
the Hagenuk MT-2000 device in 1994, and was followed by Nokia’s Snake in 1997. At present,
mobile games are downloaded onto smartphone or tablets using an app store or are embedded in
the device when purchased. Games can be played on the device or over the cloud.
VALUE CHAIN
This chain consists of the following vital parts.

Investments
Investments in this industry are growing as the industry itself is a popular one. Investment may
come from the platform which will feature the game or a large publishing organization.
Independent developers may also choose to fund their own games. The major challenge at this
stage is to prevent copyright infringement and piracy.

Design and Creative

This is where the game is developed creatively by artists, designers and developers. The game is
taken from a basic concept to a project plan. Documents and guidelines are created at this point to
support game development. These include treatment documents to clarify the purpose of the
game, game play, story, character descriptions and concept art. This is then translated into more
detail in the design document. An art style guide is also created to establish a uniformity across the
game for the same look and feel. Final a project plan will be created to keep everyone on track and
establish timelines.
Production and Tools
This is the hardware and software to be used during the actual production of the game. Production
tools may include those for modelling and graphic manipulation. Bigger setups may own their own
gaming engine while smaller ones may use middleware which is licensed.

Publisher/Distribution
Here, the game publisher will work on marketing tool and catalogues to get the game into the
market and ensure a return on investment.

Hardware
This part of the value chain involves the game hardware providers. These companies may be
across various platform since most games developed these days are able to be accessed
similarly. Some of these companies may pay extra or make special deals to launch a game across
their platform initially and exclusively for a limited period of time. The largest of these companies
are Microsoft, Apple, Sony and Nintendo.

End User
A key part of the value chain is the end user or the gamer. Most of these are men of all ages but
women also make up a significant part of the market especially with the advent of mobile and
online gaming.
Top 10 Companies
1. Tencent Games
2. Sony Interactive
3. Apple
4. Microsoft
5. NetEase
6. Google Play store
7. Activision Blizzard
8. EA
9. Nintendo
10. Bandai Namco
Economical Background
Global
To understand competition in the industry, it is important to understand the economics of it. The
more profitable the industry is, the more the need to gain a chunk of the pie. This need then leads
to more innovation, investment and cutthroat rivalry to lead the pack.
Early on, development costs were minimal, and video games could be quite profitable. Games
developed by a single programmer, or by a small team of programmers and artists, could sell
hundreds of thousands of copies each. As computing and graphics power increased, so too did the
size of development teams, as larger staffs were needed to address the ever-increasing technical
and design complexities. The larger teams consist of programmers, artists, game designers, and
producers. The time frame for development also increased to anywhere between one and three
years. This led to budgets of millions as marketing costs also sky rocketed.
Traditionally, the game monetization method is to sell hard copies in retail store. Now some
developers are turning to alternative production and distribution methods, such as online
distribution, to reduce costs and increase revenue.
Today, the video game industry has a major impact on the economy through the sales of major
systems and games such as Call of Duty: Black Ops bringing in $650 million in sales within the
first few days of launch. Today the global video game market is valued at over $93 billion.
The industry wide adoption of high-definition graphics during the seventh generation of consoles
greatly increased development teams' sizes and reduced the number of high budget, high quality
titles under development.
India
In the past, gaming did not gain a strong foothold in India due to its low social acceptance as well
as lack of access to PCs and gaming consoles in the country. However, India’s economic growth
has embraced it, which is driven by growing penetration of Internet and smartphones
In 2016, India accounted for a share of 0.55% of the global gaming industry and this is anticipated
to grow significantly over the next few years, on account of macroeconomic factors such as
improving demographics, rising disposable income, changing gaming preferences of the
consumers, etc.
India gaming industry was valued at USD543.08 million in 2016 and is projected to grow at a
CAGR of 6.61%, in value terms, over the next five years. The gaming industry in India has grown
rapidly, predominantly on the back of increasing smartphone and internet penetration coupled with
rising income levels of consumers in the country.
Due to increase in focus of gaming companies towards Augmented Reality (AR) and Virtual Reality
(VR) related games in the country is expected to boost India gaming market in coming years.
SOCIAL ASPECTS
For many people who like playing games, earning trophies and achievements and
sharing them with friends makes playing and beating games all the more enjoyable.
Mobile gaming apps like Words With Friends and Castleville allow you to interact with
others on a regular basis – even if you’re separated by several states or continents.
For many, being able to connect with others via the virtual world is almost as good as
the real thing.
Given the preeminence and brand power of shoot-‘em-up franchises like Call of Duty
and Borderlands, it’s hard to think of video games as potential tools for understanding.
But that is changing, as game makers diversify, bringing different goals — political and
financial — to their work. Video games are becoming catalysts for social change,
preparing players to emotionally handle heavy realities like love, bullying, and suicide,
while bridging certain gaps. The nonprofit Games for Change has been quietly
overseeing this renaissance, rewarding innovators and attempting to gin up more
interest in games with positive real-world application.
There’s also third factor: We have a generation now of young people who really believe
that they can have an impact on the world. I think there’s a natural appetite for
entertainment and engagement opportunities that have meaning and value. Using
general entertainment as a platform to raise awareness on issues is not anything new
— film, namely documentaries, has been a medium that has embraced social issues as
fodder for content and connecting people. I think now with games being as ubiquitous
as they are and the demographics of who plays expanding, that you have half the
population playing games and who are interested in more than just entertainment.
John Velez (an assistant professor of journalism and electronic media in the College of
Media & Communication) and his colleagues recently published two studies in the
journal Communication Research that examined playing violent video games in different
social contexts. In both studies, participants were given a chance after playing the
game to behave aggressively toward their partner or foe by blasting them with a loud,
undesirable noise.
In both cases, they found those who played cooperatively with a partner were less
aggressive.
Generally, people playing cooperatively seemed to really focus on and value those
relationships that are going on when they are playing. They tend to focus more on the
social aspects and focus less on the violence and aggression. It's more important to
them to think about how they're interacting with other people. Since most video games
are played this way nowadays, it's an important factor to think about when talking about
violent video games and their negative effects.
ENVIRONMENTAL ASPECTS
A few facts regarding the issues caused by the gaming industry to the
environment
Despite the decrease the of physical media in the recent times , most of the gaming
companies still release the hard copy of their games. This is mostly due to the practice
of releasing physical games (a standard which was set in the 1990s) . the major
manufacturing component of the physical games is plastic (which does not
decompose). This not only leads to high amount of toxic and rarely reused or recycled
plastic but also wasted crude oil used in plastic production.

The future of eco-friendly gaming

One among the possible solution is cloud gaming. The requirement is a simple internet-
enabled screen or a device streaming gameplay from a single server. This method will
not only reduce the use of plastics, it will also consume way less energy than thousands
of consoles running at once. There are also some adjustments need to be done in the
industry itself, like use of video conferencing over travelling – and a move towards
remote working – that could easily remove some energy waste.
Cloud gaming

Cloud gaming (also known as “gaming on demand”) is a collective term used to define a
type of online gaming distribution. A user can access this through their computers,
consoles and mobile devices. Cloud gaming is a kind of online gaming that allows direct
and on-demand video streaming of games, a concept similar to video streaming,
through the use of a thin client.

The actual game is stored and executed on the remote operator's or game company's
servers and the videos are directly streamed to a consumer's device over the internet.
This allows access to games without the need of a console and largely makes the
processor of the user's computer unimportant, as it is the server that is running the
processing needs. The controls from the user are sent directly to the server, where they
are recorded, and the server then sends back the game's response to the input
controls. Companies that use this type of cloud gaming include NVIDIA, LOUDPLAY,
Playkey, PlayGiga, CiiNOW, Ubitus.
Gaming on demand is a game service which uses a broadband connection, large
server clusters, encryption and compression to stream game content directly to a
subscriber's device. The best part is that users can play games without downloading or
installing the actual game.
Game content is not stored on the user's device and game code execution occurs
mainly at the server cluster, so the server does the all the performance related
operations which usually would have been done by the user’s device. Hence the
subscriber can use a less powerful device to play the game than the game would
normally require. Most cloud gaming platforms are closed and proprietary; open-source
cloud gaming platform is recent advancement which was only released in April 2013.

Some of the different types of cloud gaming are

P2P cloudless gaming – a type of cloud gaming, where remote computers for game
execution represented by community of individuals. Critical difference from cloud
gaming is that game is executed on actual PC and it is streamed on one-to-one basis.
The actual game is stored and executed on the remote computer station and the video
results are streamed directly to a consumer’s computer over the internet.P2P cloudless
gaming allows closing latency gap: remote computer could be located within one
internet provider. Network Protocol in P2P cloud gaming smartly chooses the best
option between remote computer and consumer’s device.
Cloud gaming based on file streaming, also known as progressive downloading,
deploys a thin client in which the actual game is run on the user's gaming device such
as a mobile device, a PC or a console. A small part of a game, usually less than 5% of
the total game size, is downloaded initially so that the gamer can start playing quickly.
The remaining game content is downloaded to the end user's device while playing. This
allows instant access to games with low bandwidth Internet connections without lag.
The cloud is used for providing a scalable way of streaming the game content and big
data analysis. Cloud gaming based on file streaming requires a device that has the
hardware capabilities to operate the game. Often, downloaded game content is stored
on the end user's device where it is cached. Companies that use this type of cloud
gaming include Kalydo, Approxy and SpawnApps.
SWOT Analysis
The Gaming industry has already become the dominating entertainment industry in
western markets as well as in eastern markets especially in Japan and China.
In regards to the potential of the gaming industry in the Indian market , the following
SWOT analysis has been prepared keeping in mind the present states of the games
industry , India consumer tendencies and our best extrapolations as to how the industry
will evolve in the near future .
Strengths
Games are highly popular among consumers of all ages. Esports , social and other
more skill oriented genres are wildly popular in the 15 to 35 age demographic ,
while younger consumers tend to play kids oriented games and older tend to
gravitate towards mobile games .
Esports has already been highly successful in the foreign market .The industry
engaged 380 million fans in 2017 and is expected to grow to 590 million by 2020.
With a rapid increase in the professional gaming industries such as game
streaming, games journalism, etc. it is clear that games have a more interactions to
the consumers than just being playable products.
Gaming shows high potential for low budget projects due to the varied consumer
base.
Due the low barrier to entry there tend to be a lot of healthy competition.
Gaming consoles tend to function as living room entertainment systems capable of
playing music using streaming services etc. Devices such as smartphones, PCs ,
etc. also support games thereby making them cross platform and generally easy to
access .
Popular gaming hardware tends to be cheaper than most other recreational activities
due to the cross platform nature of gaming.
Gaming culture tends to be highly varied and appeals to a lot of niche online
communities.
Consumer data gathering and interpreting is relatively easier.
One time sale products and subscription models both are relatively popular in the
industry.
Weakness
Gaming culture in highly widespread franchises tends to breed an unhealthy online
social environment due to extremities bias in large online social communities.
As people are becoming more health conscious there may be social stigmatization of
gaming as a sedentary activity or the market may get limited to Augmented Reality,
Virtual Reality and Motion control products.
Development studios tend to be highly specific to genres and therefore may lack
broad market appeal.
Game development tends to be highly iterative and time consuming even if the initial
financial investment is low.
Game developers generally tend to be very specialized and this may result in a very
low number of large scale studios.
Entry level development maybe a large financial risk.
Opportunities
Due to the young population of India there is large untapped market for
games.
There is a large availability of IT engineers.
Generally, does not have a age limit (most games are designed for all age
groups).
A lot of room to explore new gameplay ideas and innovations in a relatively
forgiving market due to gaming still being a young industry.

Threats
Entertainment industries like film, music, telecommunication etc may provide
high amounts of bad publicity due to diversion of consumer spending.
Opposition from parents/moral guardians towards gaming genres they may
not understand.
Game piracy, black-market, console cracking etc. may reduce incentive to
invest in game development.
If a age restriction system is not employed in India (keeping in mind Indian
culture and social conventions) particular games may find themselves
inappropriate to some section of consumers.