Overview
Video games have certainly changed over the past couple of decades, from the games and the platforms themselves to the playing medium and even the business models. And now, with the global emergence of eSports, we are on the verge of another potential paradigm shift, with more and more companies looking to figure out how this shift could benefit their business.
With competing virtual reality platforms, could there be a format war? With readily available distribution for game makers, will we shift from platforms to more closed ecosystems? With more mobile gaming and more pressure on entertainment time, will consumers continue to embrace micro-transactions?
These and other questions require a deep understanding of gamers and how their habits will evolve, a detailed analysis of the ecosystem and where different types of companies have permission to play, and a practical assessment of where we can find strong financial returns. L.E.K. Consulting is helping many clients successfully navigate this complex journey.
Key questions and opportunities
Participants in the video game business have a myriad of challenges and opportunities to address in growing their businesses:
- eSports
- How will the universe of eSports evolve? What will the ultimate structure be, and who will be the winners and losers?
- How should different types of companies think about participation in this ecosystem?
- What is the optimized level of investment for different types of participation, and how should we measure success (given how nascent the industry is)?
Given the variety of different players in the eSports ecosystem (e.g., game developers, teams/leagues, venue operators, digital distributors, etc.), the issues tend to vary greatly and are not captured in full in the questions posed here. L.E.K. consults all parts of this ecosystem, and we are happy to discuss your specific issues in more detail.
- Virtual reality
- Where are consumers engaging, and which parts of VR are just hype?
- How will usage evolve, and how long of a ramp-up should we anticipate the ramp?
- Is VR an element that will be core to our offering, and if so, how much investment does it merit?
- What other considerations (e.g., content development, platform selection, etc.) will drive our economics?
- Monetization
- How are consumer preferences changing for different types of games (e.g., subscriptions, virtual goods, etc.)?
- How are spend patterns evolving (e.g., one vs. multiple games, hardware vs. software, etc.)?
- How are the time and dollars spent on other forms of entertainment impacting video games as a whole?
- What pricing schematics can be developed in order to ensure both revenue optimization and broad audience reach?
- Distribution
- How is “retail vs. Amazon” impacting the business, and what is the optimal way to address this dynamic for our situation?
- How do we (as game developers, OEM manufacturers, plan providers, etc.) best leverage the mobile ecosystem?
Examples of our work
L.E.K. supports all players in the ecosystem. Please refer to the following case examples:
- Worked with a game publisher to evaluate the development of an eSports league
- Evaluated the library for an IP owner to determine best participation strategy in the space
- Forecast consumer spend to inform the investment strategy of a leading entertainment conglomerate
- Assessed the likely evolution of the flow of dollars in the VR industry so a leading technology conglomerate could develop its path to market
- Developed global market perspectives for a gaming hardware manufacturer, to enable a better financing event
- Quantified a potential licensing deal for a game publisher, to inform its investment strategy
- Provided a strategic revamp for a service provider that was looking to grow its video game business
