Physical Distribution in a Digital World
A study of the gaming industryBachelor Thesis in: Business Administration Author: William Lehmus (830416-2434)
Mikaela De Young (900711-4227) Viktor Sundqvist (881204-2417) Tutor: Naveed Akhter
Bachelor’s Thesis in Business Administration
Title: Physical Distribution in a Digital World
Author: Mikaela De Young
Viktor Sundqvist William Lehmus
Tutor: Naveed Akhter
Date: 2012-05-17
Subject terms: Consumer interaction, Disintermediation, Distribution, Gaming industry Horizontal integration, Net-work theory, Strategic netNet-works, Value chain, Value creation, Value netNet-work, Vertical integration, Value constellation
Abstract
Purpose: The aim of this thesis is to explore the impact that increased availability of digital
distribution has on physical distribution. The focus is on the effects that digital distribution has on the value creating processes of game developers with regard to distribution alterna-tives, strategic networks and consumer interaction. Additionally we examine if there is a fu-ture for physical distribution of games in an increasingly digital market.
Background: It is estimated that only the online gaming market alone will turn over more
than $13 billion in 2013. In terms of market potential this means that video gaming has al-ready surpassed the movie industry and is closing in on the music industry (Jöckel, Will & Schwarzer, 2008).
Digital distribution is gaining ground in the game industry (Cook, 2012), and access to high-speed internet connectivity is also increasing at a rapid pace. This creates a choice for game developers to adapt their strategies to the new ways of distribution. The previous view of the market was a linear value chain where developers must use intermediaries to reach an end consumer (Williams, 2002). The network dynamics appear to have changed, consumers have an impact on development and there are more complex interactions be-tween the actors in order to generate better value.
Method: The thesis uses an exploratory qualitative research method by conducting
semi-structured interviews with developers on how the distribution channels have changed. Sec-ondary data concerning the value chain, networks, and value constellations and was gath-ered to support the empirical background of the market.
Conclusion: The value chain has been reconfigured from the classical value chain to a
vue constellation as increased online availability has changed the distribution possibilities al-lowing reciprocal relationships and user co-production as well as disintermedation of mid-dle-hands. Value is created for the game developers through three different paths in our own value constellation: portals, direct sales homepage, and through publisher. In all three paths consumers play an important role through user participation in the value creation through user created content and user feedback through community and fan-base activities.. Our conclusion is that the future of physical distribution in the current format is threatened by digital alternatives, and will likely be discontinued in the long run and/or radically changed to include more physical value adding content.
Table of Contents
1
Introduction ... 5
1.1 Background ... 5
1.2 Gaming industry – Actors and arenas ... 6
1.2.1 Game developer ... 6 1.2.2 Middleware ... 6 1.2.3 Hardware manufacturers ... 6 1.2.4 Publisher ... 7 1.2.5 Portal ... 7 1.2.6 Distributor ... 7 1.2.7 Retail ... 7 1.2.8 Consumer ... 8 1.2.9 Arenas ... 8
1.2.9.1 Offline sales/physical Stores ... 8
1.2.9.2 Online sales ... 8 1.3 Problem ... 8 1.4 Purpose ... 10 1.5 Research question ... 10 1.6 Delimitation ... 10 1.7 Thesis disposition ... 10
2
Frame of Reference ... 11
2.1 Value creation ... 11 2.2 Consumer value ... 11 2.3 Consumer interaction ... 12 2.4 Value chain ... 12 2.5 Value network ... 142.5.1 Value network as a service ... 14
2.6 Strategic networks ... 15
2.6.1 Networks as a mode of organization ... 16
2.6.2 The use of networks ... 16
2.6.3 Negative effects of strategic networks ... 17
2.7 Value constellations ... 17 2.8 Vertical integration ... 18 2.9 Horizontal integration ... 20 2.10 Disintermediation ... 20
3
Method ... 22
3.1 Qualitative research ... 22 3.2 Data collection: ... 23 3.2.1 Primary data ... 23 3.2.1.1 Contact method ... 23 3.2.1.2 Interview ... 24 3.2.1.3 Question types... 25 3.2.1.4 Interview table ... 25 3.2.2 Secondary data ... 25 3.2.2.1 Review of literature... 253.3 Problems & weaknesses ... 26
3.3.1 Self-reflection on the research methods used ... 26
4
Empirical findings... 27
4.1 Scope and size ... 27
4.2.1 Massive Entertainment ... 27
4.2.2 Paradox Interactive ... 28
4.2.3 Boldai ... 28
4.2.4 Anonymous interviewees ... 28
4.3 Specific overview and details of the market and its actors ... 28
4.3.1 Developers ... 28 4.3.2 Outsourcing/middleware ... 28 4.3.3 Publishers ... 29 4.3.4 Distributors ... 29 4.3.5 Retailers ... 29 4.3.6 Consumers/prosumers ... 30 4.4 Distribution strategies ... 30 4.4.1 Current distribution ... 30 4.4.2 Webpage distribution ... 31 4.4.3 Physical retailers/publishers ... 31 4.4.4 Portal distribution ... 32 4.4.5 Downloadable content ... 32
4.4.6 Benefits and drawbacks of download/ shelf copies ... 33
4.4.7 The future of distribution ... 34
5
Analysis ... 35
5.1 How value is created for game developers ... 35
5.1.1 Developer ... 35
5.1.2 Publisher ... 36
5.1.3 Portals as a value network ... 37
5.1.4 Distributor ... 37
5.1.5 Retailers ... 38
5.1.6 Consumer/prosumer ... 38
5.1.7 Disintermediation ... 39
5.2 From value chain to value constellation ... 40
5.2.1 Porters value chain ... 41
5.2.2 Our model for value adding activities ... 41
5.2.2.1 Portal distribution ... 42
5.2.2.2 Webpage distribution ... 42
5.2.2.3 Publisher distribution ... 43
5.2.3 The value constellation ... 43
6
Conclusion ... 45
7
Discussion ... 47
8
References ... 48
9
Appendix ... 53
9.1 Appendix 1- Porters value chain ... 53
9.2 Appendix 2 – Value chain of Online-Distributed Digital Games ... 53
9.3 Appendix 3 – Model of game engine ... 54
9.4 Appendix 4 – Model of a Portal ... 54
9.5 Appendix 5 – Swedish internet trend ... 55
9.6 Appendix 6 - Interview questions ... 55
9.7 Appendix 7 – Value adding physical content ... 56
9.8 Appendix 8 – The changing value chain ... 57
9.9 Appendix 9 – Linear value chain ... 57
Acknowledgements
We would like to thank the companies (Massive Entertainment, Paradox Interactive & Boldai, as well as our anonymous interviewees) and individuals who made this thesis possible by taking part in the interviews.
We would also like to thank Naveed Ahkter for guiding us through our work!
1
Introduction
The background will first introduce the game market and how technological innovations such as digital distribution affect the market. In the next part the gaming industry and its actors will be explained in detail for a better understanding. The chapter will come to its end with the problem discussion regarding the networks and the need for physical cop-ies and the time discrepanccop-ies between market and research.
1.1
Background
Jöckel, Will & Schwarzer (2008) states that it is estimated that the online gaming mar-ket alone will turn over more than $13 billion in 2013, where about half of the revenues come from in-game advertisement, item sales, subscription fees and online sales. In terms of market potential this means that the online gaming industry has already sur-passed the movie industry and is closing in on the music industry. Just as the movie and music industry, computer and video games are suitable for online distribution since they are already in digital format and do not need to be converted (Jöckel et al. 2008).
“The removal of constraints through technological innovations creates choice” (Normann & Ramirez, 1994, pp 13). This enables choice for developers in the market to adapt their strategies as new ways of distributing become available. Game developers are not only releasing their products through retailers but they can also release games through other channels such as their own webpages or through online based distribution portals (Cook, 2012).
According to Porter (1985), the value chain model describes the different activities a company has to take to reach the end consumer (Appendix 1). Porters value chain has been criticized as being too fond of the traditional concept of industry, while not having the same fit for service oriented companies (Normann, 2001). Instead, network models are better at describing the exchanges between the actors in the market as exchanges in-clude more than just products (Stabell & Fjellstad, 1998). Networks allow input from multiple stakeholders and allow for new product/service combinations and bundling, which can effectively lead to superior product offerings for the consumers. Networks can also enable more extensive interaction between different actors (Normann, 2001). In the gaming industry, utilizing the participants of the network can include actions such as outsourcing non-core activities including minor character creation, small in-game items and environments; allowing the company to focus on their core operation such as story-line creation and producing the game engine (Jarillo, 1988).
Digital distribution has certain benefits compared to physical retailing, for example re-duced shipping costs as well as cutting out intermediary margins. However, there are some impediments to digital distribution related to user readiness such as personal ser-vice and the shopping experience (MacInnes, Kongsmak & Heckman, 2005). Digital distribution opens up certain possibilities for the game developers, for instance enabling disintermediation of the value chain, which basically means cutting out the middle-man (Berghel & Hal, 2000).
Increased access to the internet and broadband connectivity has led to that users are now easily able to produce and share content with other users, making the consumers a mix between a consumer and a producer: a prosumer (Appendix 2). In practice this means that users are actively being a part of the development and after-market-service of a game, through forum participation and even content customization and creation (Jöckel et al. 2008).
1.2
Gaming industry – Actors and arenas
1.2.1
Game developerAccording to Williams (2002) game developers are the content creators on the supplier side of the market. They create the game mechanics, graphics, story and animations among other activities needed to deliver a playable game. The game developers in turn can outsource tasks to other game studios specialized in certain parts of virtual media creation. Game developers do not only create the game but usually also supply game updates and customer service. The updates can be bug-fixes of errors in the game or even brand new content to the game. Game developers can be either independent or tied to a publisher. Independent developers have the freedom to choose how they want to distribute the game; while publisher tied developers will have to rely on the publisher to reach the end customers. Independent developers do however have to take all the risks and costs involved with game development that the publisher would otherwise cover (Ibid).
1.2.2
MiddlewareCreation of games today has become so costly that some developers choose to modulate their games. A base for the game is created and this module is called the game engine (Appendix 3). The middleware can be either the whole game engine or just some mod-ules of the game engine relating to for instance: the physics engine, artificial intelli-gence, renderers and lightning (Gamemiddleware 2012; OECD Report, 2005) The game engine is “written for a specific game but general enough to be used for a family of
sim-ilar games” (Lewis & Jacobsson, 2002, pp 28). Creating middleware and then licensing
it to others is a way for the developer to regain some of the money spent on developing the game in addition to regular sales. Similarly, other developers can license the engine and save money by not having to develop their own engine. Some developers have spe-cialized on just creating middleware that they license to other game developers (Lewis & Jacobsson, 2002)
1.2.3
Hardware manufacturersHardware manufacturers are acknowledged by the Organization for Economic Co-operation and Development (OECD) as a part of the value chain since they supply the hardware for which the games are being developed. Hardware includes all gaming con-soles and personal computers (OECD Report, 2005).
1.2.4
PublisherA publisher’s main task is to identify and market titles. Publishers often co-operate with game developers, either by having in-house production studios or by licensing games from third party developers. Third party developers are often offered funds to help with development costs and the publisher purchases the intellectual rights for their games (Williams, 2002). The publisher is involved with: marketing, funding, product man-agement, pricing and inventory management (OECD Report, 2005). According to Wil-liams (2002) publishing is a high risk, high profit business. This is because the rights to a game is purchased from the developer and then the publisher needs to market and get the game out to the end users through either digital or physical distribution channels. They take over the financial risk from the developer, expecting that the game will be successful enough to cover their expenses and generate a profit (Williams, 2002).
1.2.5
PortalAccording to Shaikh, Sahu, Rosu, Shea & Saha (2006) portals are online distribu-tors/retailers that aggregate and sell digital copies of games. Portals can either be online based or require a software client to be downloaded, and enable the user to instantly ac-cess and download all of the games purchased through the portal from any computer. Instead of a game being tied to a single computer the games are now tied to individual user accounts that can be accessed from any computer. Portals usually provide their us-ers with a wide variety of extra services such as recommendations based on previous game purchases and a virtual community where the users can interact. Portals also ena-ble the developers to have control over their material and allow them to easily update and maintain their game (Ibid). The structure of a portal is shown as a model in Appen-dix 4.
1.2.6
DistributorThe distributor is the connection between the developer/publisher and the retailer (Wil-liams, 2002). Larger publishers often have their own channels of distribution. Publishers use either in-house distribution or license distribution through other distribution firms. Distributors handle the manufacturing of physical copies and have the networks needed to reach the retailers. Distributors also handle the storage of produced games before they reach the retailers. Distributors can make alliance with retailers to become their exclu-sive distributor, forcing publishers and developers to have to go through them to reach the retailer (Ibid).
1.2.7
RetailWilliams (2002) describes retailers as a physical or online store that sell physical copies to the end users. The retail business is divided up between pure game stores and large retailers that also sell games. Specialized game stores usually offer in depth service for their customers, helping them with finding the correct game for them and assisting them with any inquiries they might have. General electronic retailers often compete based on prices instead of service. Online retailers are another source from which the users can obtain the game. The game is ordered and delivered to the customer. Online stores do
not have the same expenses and can offer a wider variety of games than a physical store (Ibid).
1.2.8
ConsumerThe consumer is the end user of the games. The consumers can be divided into two sep-arate groups, “the so-called ‘hard core’ or ‘avid’ gamers and the more casual gamers” (Williams, 2002, pp 50). The ‘hard core’ gamers expect the most from their games and are often frequent buyers of games. They provide the gaming companies with feedback and thoughts as well as help create new content for games. The more casual gamers spend less time with the games and tend to buy new ones less frequently (Williams, 2002).
1.2.9
Arenas1.2.9.1 Offline sales/physical Stores
Offline sales are usually physical trading of the boxed games carried out by retailers who in turn buy their products from distributors and publishers. The benefits of offline sales include: physical presence which gives the customer a sense of security since cus-tomers can talk to the people representing the company. Familiar brand names and a proven track of records also adds to the sense of security compared to online shops, who have a harder time due to not being present in the market that long. Another benefit is the shopping experience of being able to physically walk around in the store and browse for products and instantly bring them home after paying. Some of the drawbacks in-clude: high infrastructure costs, high costs to expand geographically for facilities, ware-house and transports. Other drawbacks include limited opening hours related to legisla-tion about working hours and costs of having open on little frequented evening or night hours (Enders & Jelassi, 2000).
1.2.9.2 Online sales
Online sales can be both ordering physical copies, as well as digital download, carried out by retailers, distributors, publishers or directly from game developers. The benefits of online sales through internet based shops or portals include: access to online product information, browsing for products, placing orders, payment, and in some cases instant download of the game. Internet based sales also comes with a number of benefits such as a wide geographical reach, low costs, low requirements on infrastructure, high scala-bility and the ascala-bility to take orders at all time of the day. Some of the drawbacks in-clude: no face to face contact with customers have effect on how long it takes to build up trust and brand name. Customers cannot usually get instant help or advice from sales people, and if a customer wants to return a product they will have to re-wrap and send it back to the store and wait for the refund to arrive (Enders & Jelassi, 2000).
1.3
Problem
The increased availability of digital distribution alternatives is changing the market for physical goods. In the year of 2010 above 90 percent of the population in Sweden was using the internet on a daily basis, a number that has increased exponentially since 1996
when only ten percent of the population used it (See Appendix 5 for graph). The techno-logical advancements within broadband internet connectivity have made digital distribu-tion more commercialized. Through using the internet for distribudistribu-tion it enables compa-nies to have instant access to their customers and they can keep the distribution expens-es to a minimum (MacInnexpens-es, Kongsmak & Heckman, 2005). Distributing physically is both an expensive and a time consuming activity, therefore many companies now shift their distribution methods towards digital distribution. Some prefer to have a physical copy on their bookshelf while others prefer a digital one that they can access from any-where and that cannot be lost. Retailers are losing sales to digital alternatives (Cooper, 2012; Lunden, 2012). The value consumers get from the different distribution methods differ with the individual user (Eggart & Ulaga, 2002). Retailers on the other hand can provide a customer with personal service specialized for each individual consumer which is difficult to archive online. The changes in the industry are not only because of changes in the technological platform but also in the network dynamics (Jöckel et al. 2008).
The gaming industry is growing rapidly and adapting to the changing technical envi-ronment. This makes it a good industry to study the effects that the introduction of digi-tal distribution has on the market. Retailers are no longer the developer’s only method of reaching customers, digital solutions have enabled them to cheaper reach their cus-tomers directly, either through the use of portals or directly through their homepages. This has put strain on retailers like The Game Group plc. (Game) which in March 2012 closed 277 stores in the UK and Ireland (Cooper, 2012; Lunden, 2012; MacInnes, Kongsmak & Heckman, 2005).
Because of the rapid growth and change in the gaming industry, research in this area quickly becomes obsolete (Zackariasson & Wilson, 2012). There are multiple articles and thesis that handle the topic of distribution, disintermediation in the value chain but none to go into the specifics of the implications for developers (Berman-Grutzky & Cederholm, 2010; Jöckel et al. 2008; Williams, 2002; Berghel & Hal, 2000). The OECD report from 2005 is an analysis on the following topics in the gaming industry; drivers and barriers to growth, as well as value creation and market structures. Jöckel et al. (2008) refer to participatory media where consumers/end users are in some extent, allowed to modify, reconfigure or upgrade the media beyond its original state. They show this by adding the prosumers to the original value chain model created by Porter in 1985 (Appendix 2). Normann (2001) proposes that customers should be incorporated as a part of value creating activities; the customers can save time and costs and simplify problems. There are multiple aspects within the gaming industry that are changing and retailers are having a hard time competing with the digital alternatives.
In order to understand the potential for digital distribution and physical products the networks and the actor’s positions need to be re-evaluated, furthermore we believe that an in-depth study of the gaming developers is needed in order to understand their oppor-tunities and reasons behind their choices of distribution. Understanding the developer’s choices is the key to understanding the future of the distribution of physical copies.
1.4
Purpose
The aim of this thesis is to explore the impact that increased availability of digital dis-tribution has on physical disdis-tribution. Our focus will be on the effects that digital distri-bution has on developers, distridistri-bution alternatives, networks and consumer interaction in the gaming industry. Additionally we examine if there is a future for physical distri-bution of games in an increasingly digital market.
1.5
Research questions
1. How is value created for the game developers in the contemporary gaming busi-ness?
2. How has digital distribution affected the value chain in the gaming industry? 3. What influence do digital networks have on developer’s choice of distribution?
1.6
Delimitation
In this study we will exclude the following:
- Video game consoles (Xbox, PS3, and Wii) as their online distribution is severe-ly restricted at this point. Their proprietary distribution networks are heavisevere-ly regulated for third party portals.
- The secondhand market for games, because even though the physical second hand market is large, there is virtually no second hand online download market available at this point.
- Illegal distribution of games, such as piracy, which we cannot adequately meas-ure or evaluate.
- We apply the research to the Swedish market, but the research can be applied to any market with a sophisticated enough internet infrastructure to support digital distribution.
1.7
Thesis disposition
The thesis is written in a logical order of reasoning and begins with the frame of refer-ence which presents a rather extensive and in-depth dive into value creation, the value chain, and value networks. These all closely tied to each other and explain how, and for whom value is created. The different value models are linked to the theories about verti-cal and horizontal integration as well as theories related to disintermediation which to-gether attempt to explain how the value chain is changing with increased availability to new IT technology. The method used is an exploratory study where the primary sources are five semi-structured interviews with Swedish gaming companies. The findings are supported with secondary theoretical material presented in the frame of reference. Em-pirical findings are divided into three main categories: companies, the market and re-sults of the interviews. An analysis of the primary and secondary data is presented in the next chapter and compared to the value chain. The thesis ends with a conclusion that the market has changed with digital distribution. Lastly, there is the reference list and the appendix.
2
Frame of Reference
In this chapter the theoretical frame used for the research is presented. The chapter starts with the theories related to value creation which is a major part of this thesis. Theory behind value creation will be presented both from the supply as well as from the de-mand side from the market. These are then tied together with the sub-chapter ‘consumer interaction’ which introduces consumers and participants in the value creation. After that, theory on the value chain and value network models are presented as well as stra-tegic networks and value constellations, which are similar on different tiers of corporate strategy. Finally vertical and horizontal integration and disintermediation will end the chapter.
2.1
Value creation
The ultimate goal of any economic activity is to create value (Normann & Ramirez, 1994). Value is an estimate by comparing the utility benefits from acquiring a prod-uct/service less the total costs (Lancaster & Walters, 2000). The processes of creating value are often referred to as a value chain, which is a set of value adding activates that together generate value for an organization, its stakeholders and customers. By combin-ing the supply side of the organization and the demands of the market, an organization can configure value adding activities and processes which can improve the efficiency and output of the organization (Rayport & Sviolka, 1995). To clarify, information is not value adding by itself, it is rather how the information is used and gathered. What is considered value is not only monetary resources, but also knowledge and intangible as-sets such as brand name and customer loyalty (Allee, 2000). The perspectives have changed as products and services are losing their physical aspects and becoming more virtual, leading to a new interest in the concept: value network (Peppard & Rylander, 2006). A value chain has a more logistic and linear view while a value network can run parallel with other actors/activities and create more of an infrastructure consisting of multiple instances. To use Allee’s own description: “a value network generates
eco-nomic value through complex dynamic exchanges between one or more enterprises, customers, suppliers, strategic partners and the community” (Allee, 2000, pp 1).
2.2
Consumer value
The value of a product is determined by the buyer purchasing criteria (Porter, 1985). Variations in the buyer purchasing criteria are what lead to differentiation in the market; the better the match with the product and the buyer, the better price of good can be at-tained. The value of a product for a customer is an appreciation of the additional pro-duction that the product can give to the customer, or the decrease in cost. Grewal, Mon-roe, Krishnan (1998) believe’s that customer perception of value is due to the physical packaging, technical support and the services that are included. Customer perceived value is the difference between perceived benefit and the cost, it is a cognitive process and cost is not necessarily a monetary value. The perceived value changes when the customer compares it to competition or a superior alternative (Eggart & Ualga, 2002).
2.3
Consumer interaction
Companies could change their focus from relieving a customer towards enabling a cus-tomer, and seeing them as a co-producer. Enabling is expanding the scope of what the customer is able to do rather than a focus asking them what they want. Customers can form their own community constellations where their interactions and cooperation are more of barter transactions than business transactions, but they still exchange value (Normann, 2001). Value which is strategically incorporated into activities of an organi-zation though the value chain (Lancaster & Walters, 2000).
Jöckel et al. (2008) acknowledge consumers as participants in of the value creation, making them a mix between a consumer and a producer; they call this new category of participatory consumers: ‘prosumers’. In practice this means that users are actively be-ing a part of the development through beta testbe-ing, supplybe-ing suggestions and feedback as well as after-market-service through participation in social media and forums related to the game. Some users even take their participation as far as creating content for the game to personalize the game experience. Game content can come in the forms of user created modifications (mods) and add-ons (Jöckel et al. 2008).
2.4
Value chain
The value chain is an analysis tool that divides the organization into activities that are strategically important to maintain or create a competitive advantage and to understand which activities add value and cost (Lancaster & Walters, 2000). The activities that generate value generally have a strong focus on costs, cost drivers and they evaluate whether the monetary value created surpasses the monetary cost. The value chain en-compasses the organization, its suppliers and customers as part of the activities that cre-ate maximum value for the consumer and satisfies stakeholders. To utilize the value chain for competitive advantage an organization needs to identify their target custom-er’s priorities and adapt their processes according to them (Lancaster & Walters, 2000; Porter 1980).
Porter (1985) believed that the history of a company affects its processes and activities. Value chains exist everywhere: in all organizations, in consumers’ homes, in the market and industry. The linkages between the different participants are what connect the dif-ferent value chains together. Correct exploitation of linkages, both from within a firm and outside of the firm contributes to competitive advantage. Linkages within a firm are the different processes and if they are difficult to imitate, they become valuable re-sources that can greatly improve the output and competitive advantage of a firm (Porter & Millar 1985; Porter, 1985).
There are nine identified activities, though they may be independent in the organization, are tied together through linkages as one activated process affects the next, which in turn, affects the outcome.The activities of a value chain can be divided into two catego-ries, the first one is the activities that create value for the customer, the second set of ac-tivities are those that improve the performance of the first type of acac-tivities, also known as the primary and support activities (Porter & Millar 1985). The five primary activities are those involved in creating the product/service until the finished good is in customers hands, the processes are generic and can be applied to almost anything. The first activity is inbound logistics, which is about gathering and storing all parts needed to construct the product. Operations are transforming product inputs into finished products. Out-bound logistics covers everything regarding packaging and shipping the finished prod-uct. Marketing and sales enables and induces a customer to purchase a prodprod-uct. The last activity is service, which is to enhance or maintain the product/service, for example in-surance or a product warranty accompanying the product. The five primary activities are a collection of inbound logistical operations, main operations and the outbound logis-tics. The support activities encompass the entire firm, but they can also be applied spe-cifically for the primary activities, with the exception of infrastructure. With each activi-ty there are three subcategories of activities: direct activities which are involved in the production. Indirect activities which enable the direct activities and finally quality as-surance which controls the activities and products (Porter, 1985).
Each activity has a physical and information component. How they are integrated and what ratio of each component is integrated is individual to the businesses. The two func-tions: human resource management and information management have the greatest in-fluences on the value chain. These functions are involved in every activity in the value chain together with some sort of technology (Porter, 1985).
The model of a value chain is migrating from a physical to a virtual version. Different parts of a value chain are specific to different markets and organizations, a value chain can be individual to firms. Jöckel et al. (2008) proposed an alternate value chain for online distribution of digital games. Their basis is that consumers at the same time can
be producers making them ‘prosumers’. Consumers are allowed to alter the content but not parts of the underlying software such as the physics engine and the source code. Their reasons for modifying the content are usually for their own value adding to in-crease the experience of the game, which is often shared with the gaming community surrounding the game. That is why there is a loop between the prosumer and content and value added services. These linkages are what form a network and the value of the service that a network can provide should not be underestimated (Jöckel et al. 2008).
(Jöckel et al. 2008)
2.5
Value network
The value network like the value chain can be within an organization and an organiza-tion can be part of a value network. Therefore an organizaorganiza-tion is not a value network; however it can provide or hold a service network, linking individuals to each other. An organization however, can also be part of a value network which will from now on be referred to as value constellation (Stabell & Fjellstad, 1998).
2.5.1
Value network as a serviceA value network can be a service, like a phone, the value of the service is determinant of which the service can provide linkage to and if the customer can reach their desired end. A value network is a system of interconnected layered activities designed to medi-ate for a consumer, if faulty the system breaks down and loses its value for the consum-er. The value network functions also as mediation to other corporations, not as a suppli-er or customsuppli-er but as a tool for co-opsuppli-eration. A value network also has to work with both horizontal and vertical integration and its strategic position determines its focus. Participants in a value network need to have relationships with both their competitors and consumers; a co-operative relationship is the nature of a co-producing system (Stabell & Fjellstad, 1998).
According to Stabell & Fjellstad (1998) the three primary activities of a value network are to first; gain customers though promotion and managing the contracts to ensure re-ceived value. Secondly, service provisioning which includes maintaining, verifying and
terminating links to customers. It is important that the links are confirmed and secure for the customer. Lastly maintaining infrastructure operations which are the activities required to keep the service functioning, which vary depending on industry and service provided (Ibid)
There are two value opportunities with the service; a customer who uses a mediating service for both the opportunity of being able to link up to other services and also when using the actual service itself. Therefore it is important to have compatibility with a large proportion of the market, to ensure more users (Stabell & Fjellstad, 1998). Katz & Shapiro (1985) found a relationship between the size of a firms networks and the impact of their willingness towards compatibility, large networks tend to be against compatibil-ity while smaller networks tend to be for product compatibilcompatibil-ity as it extends their net-work. Smaller networks become more popular if they have higher compatibility, how-ever larger networks do not have the same need.
The value network treats all users as if they are customers even if they sometimes are suppliers, because all users are intermediaries of a service (Stabell & Fjellstad, 1998). A value network generates positive externalities through the amount of users it has; as the demand of the network increases it positively affects the service (Shilling, 2002; Katz & Shapiro, 1985). As the value of the network is determined through the amount of users, it is often initially setup as a free service to lure in users and then eventually it might re-quire fees, which at that point will hopefully not offset the value generated for the con-sumer due to higher transaction costs (Katz & Shapiro, 1985). Shilling (2002) further develops that a large installed base leads to a larger user network which attracts devel-opers of complementary goods which leads to a larger amount of options available to the consumer. Furthermore, a larger base of complementary goods attracts consumers to a network which is directly correlated to a networks perceived value. As Stabell and Fjellstad propose ”Size and composition of the customer base are therefore the critical
driver of value in the value network” (Stabell & Fjellstad, 1998, pp 431), indicating that
the size of the network is not the only value driver, but also the composition of the cus-tomer base emphasizing the importance of correct marketing segments and user scope. Another important aspect to consider is the relationships between the firms in a network and how they can be used to a strategic advantage.
2.6
Strategic networks
”Networks are seen as complex arrays of relationships between firms” (Jarillo, 1988 pp 32). Competition today is more about positioning a company in a network and in the market than attacking competitors. Jarillo (1988) describes strategic network as a long term arrangement between a company and other companies in the same market, which enables them to gain a comparative advantage against companies outside the network. Companies in a network are helping each other to gain an advantage but they are not completely dependent on the other companies. Essential to the strategic network theory is that one company sets up and maintains and works as a central hub in the network (Jarillo, 1988). It is difficult to place networks in the basic business models as firms are usually described as complete entities, operating in an environment usually defined as everything that is not the firm (Jarillo, 1988).
2.6.1
Networks as a mode of organizationJarrillo (1988) states that in a perfect market there would be no firms, instead the market would consist of small entities that all specialized in their own small part of a product, like workstations in a production line. By having a company focused on and specialized in producing one sub-component, the total production costs will decrese. This is howev-er not possible, as transaction costs between all parts would make the products too ex-pensive. Same goes for companies in a market, having other companies producing all the subcomponents of a product will be more expensive than producing the components on their own. Transaction costs at this stage are: “opportunism, early-mover advantages
and other strategic decisions” (Jarillo, 1988 pp 33). Companies usually avoids
subcon-tracting vital parts of their production as this would leave them too vulnerable and de-pendent of the subcontractor.
Networks arise “if an entrepreneur is able to lower the transaction costs” (Jarillo, 1988 pp 33). This lower transaction costs enables the company to outsource a component of their production to another company without making the production process more ex-pensive. The company can also focus their attention on perfecting their own production process making it more efficient and less costly. The assumption that entrepreneurs can change the transaction costs of a company is the base of the concept of strategic net-works (Jarillo, 1988).
Strategic networks are usually loose, long term agreements between a company and its suppliers. Contracts are seldom made because the cost of switching between different suppliers is usually high due to specialization of the supplier. The supplier specializes and learns what the company needs from them. This specialization is time consuming, which makes switching supplier expensive. This codependence between the companies is what links them in a strategic network even though no formal contract is written be-tween the two parts (Jarillo, 1988).
2.6.2
The use of networksAccording to Jarillo (1988) in order to understand the benefits of networks as a mode of organization, companies first have to be broken down into smaller pieces. As described above Porters (1985) value chain is a useful tool for this. The ability to optimize every part of the value chain is what makes networks valuable. Every part of production has its own explicit production costs also a transaction cost that adds up to the total cost of producing a product. If an entrepreneur can cut down on these explicit cost to the point where it is no longer cheaper for the company to produce the component itself, the company will subcontract out that part to the entrepreneur. The value for the company has now increased passed what they could achieve if they produced everything them-selves. As more and more companies are able to underbid the main company more parts will be subcontracted to them, resulting in a raised value of the main company. This will generate a competitive advantage for the hub company against companies that are not in the strategic network (Jarillo, 1988).
Strategic Networks allows the company to focus on those parts of the value chain in which they have a competitive advantage. Specializing on the essential parts of the
company will further increase their competitive advantage as no focus is wasted on parts that are can be done better by others. Other companies in the network specialize in producing compentents of which they have a compentitive advantage over in producing these components. Strategic networks are built upon trading terms between the compa-nies. These terms can be about price, quality, quantity, delivery times and more. As soon as these terms of trade change, both companies are free to look for better alterna-tives. This helps make the terms of trade fair and no company will want to use their po-sition in order to benefit on the others expense. Having an integrated production gives the company less flexibility and keeps them from focusing on the core parts. When comparing production made by an outside source to producing it internally, the compa-ny needs to look at not only the production cost but also how it affects the efficiency of the entire company. That cost is often why companies decide to create these strategic networks (Jarillo, 1988).
According to Jarillo (1988) to create and sustain a strategic network, the network has to; just like a successful company, be efficient and effective. A company is effective if it is able to reach its goals and efficient if it does so with less work put in than what value is generated. So in the case of Strategic network, the companies must reach their goals with less effort than the original company would have to put in. “The critical component
that makes a relationship take place of a strategic network instead of a typical market is the high degree of perceived opportunity for joint value creation between the two or-ganizations” (Jarillo, 1988 pp 36).
2.6.3
Negative effects of strategic networksStrategic networks can in some cases have negative effects on the company. If the com-pany has a niche and is proud of producing their products by themselves then subcon-tracting would then lead to a damaged image and a potential loss of costumers (Jarillo, 1988).
2.7
Value constellations
A value constellation is complex interaction among actors in an industry, where the ac-tors partake in value adding activities to in the end increase the value outcome, the rela-tionship can be reciprocal relarela-tionship and co-productive or just actors bundled together in a new way to create a value offering (Normann & Ramirez 1994).
Value constellations are partly about reconfiguring and re-organizing value creating ac-tivities into new configurations and new constellations, often much more complex and hard-to-imitate than normal value chains or networks. According to Normann (2001, pp 107), creating a value constellation is to “Identify economic actors and link them
to-gether in new patters which allow the creation of new business that did not exist previ-ously” or to “radically change the way certain types of value are created” (Normann,
2001, pp 107). A value constellation is not just about merely reconfiguring activities, but also about combining activities and actors to create a new output such as involving customers in the process (Normann, 2001). Value in such constellations become more
‘dense’ in the sense that more value is packed into the offerings and is then is more su-perior to other offerings (Normann & Ramirez, 2000).
The outcome is not necessarily a singular product, but also the services that surround the product and complementary goods which increase value for the end product. Normann & Ramirez (2000) explain how companies such as IKEA successfully have reconfigured their whole value network beyond its initial state and purpose to become more of a value constellation, involving both vertical and horizontal integration into the value creation activities. They shifted their activities from supplying the costumer a good, until they enabled the customer to create their own end product (Normann & Ramirez, 1994). The customers can buy high-quality-low-cost furniture if they are will-ing to become a part of the value chain by havwill-ing to pick up, transport and assembly the products by themselves. The value creation carried out by customers is simple, through supplying them with free pens and notepaper and tape measures as soon as they enter the shop. The shops are designed to make it easy to buy complete solutions for a whole room, and free trolleys are supplied as well as access to lend or buy automobile roof-racks at-cost for transportation. Even the suppliers have access to IKEA’s own technical center which helps their suppliers with training, contacts and even lease of modern pro-duction equipment, making them not only suppliers, but also customers (Normann & Ramirez, 2000).
The format of the product or service offering is what changes the value input from the firms. To achieve a specific end goal inputs are combined in new ways, or reviewed in new ways. IKEA changed their baseline view from production to customers which al-tered their strategy. Consumers are considered informed and place higher demands and therefore their input is important into the value creating process. A firm should review the returns that they get from consumers (Normann & Ramirez 1994). As you can see, the different actors involved co-create value together, customers take part of for exam-ple a logistical process and gain other benefits in return. This reciprocal relationship can result in value created in several ways as: a monetary way, knowledge sharing or a risk sharing change. In the gaming industry the risk changes between developers and pro-ducers when they co-produce, they move the risk from pure developers to a producer as well (Normann & Ramirez 1994).
Due to the complexity of value constellations Normann & Ramirez (2000) argues that it is the offerings themselves that compete, rather than the companies behind the activities. As the variation and complexity of the offerings increase, so does the requirements on the relationships necessary to create them. Often complex offerings are co-produced by the involvement of suppliers, business partners, allies as well as customers, creating a value-system where the final customer is the ultimate arbiter of success or failure (Normann & Ramirez, 2000; Normann 2001). A value constellation can be used through outsourcing and strategic integration of different activities for an organization.
2.8
Vertical integration
Vertical integration is the diversion of activities between an organization, its suppliers, and buyers (Porter 1980). Vertical integration is the process of make-or-buy decision, a
way to increase the value adding margins with different kinds of activities. An organiza-tion can diversify their activities and funcorganiza-tion internally or externally through merging and acquiring or outsourcing, the organization is still in control of the actions. Further-more, a firms integration should be made to suit their strategic needs (Harrigan 1985). Reasons for outsourcing may be that they are unable to do it themselves, others knowledge/production may be superior, it may be more cost efficient to let others do the activities, but the firm is still in control of activities. Vertical integration is not the same as a market exchange or a contract; it is a deeper relationship (Porter, 1980).
Firms may use vertical integration to create entry barriers by restricting trade for new entrants. Economies of scale is not the dominant reason when companies make a make-or-buy decision, it is the high transactions costs which prevent them. A firm can decided produce their own parts and reap the benefits of economic of scale as their supplier could, however, designating the resources to do so results in opportunity loss which is the high transaction cost (Argyres, 1996). In contrast vertical integration can also be ap-plied to overcome barriers of entry, joining ventures, gaining new knowledge without having to sacrifice large resources to obtain them (Harrigan, 1985).
Harrigan (1985) proposes that there are different stages of integration and these stages are dependent on the number processes. The different stages can integrate in two differ-ent directions; backwards which is upstream integration, and forwards which is down-stream integration. Updown-stream integration is your supplier, while downdown-stream integration you supply to. The integration can also vary in breadth, which is the activities that a firm performs simultaneously, in-house during a stage of integration. Breadth integra-tion if overused can cause loss of economies of scale because there are too many differ-ent products and not enough volume of each produced to be cost effective. It can also be the loss of the opportunity from buying a product at a cheaper price from others. Further variation is the degree of integration a firm has. If a firm purchases most of its compo-nents it must have a good fit with the different activities, other units within the chain should have the same size or else they have to supply to others to fix their capacity, oth-erwise they could else excess or deficit production and be more harmful than costly in-house production for themselves. Thirdly, the form of integration can vary, a firm does not need to own or have complete control over an activity to have a functioning integra-tion. There are various methods for control to the extent that will suit a firm's strategic goals with vertical integration (Harrigan, 1985).
Typically the form and extent of integration will vary on several factors. Vertical inte-gration and the degree in which is its incorporated is affected by several economic and market factors. Firstly the phase of the industry, if it is in its infancy or mature phase af-fects the need for integration. A firm needs to decide if it will be a first mover or if it will avoid the early risks in favor of a later entry security but then with barriers. At the early stages a high degree of vertical integration can be difficult as the market can be volatile and there may be need to restructure activities for a firm. Further reasons is that the output is not high enough for a firm to specialize in a specific production which leads to that firms vertically integrate and diversify their activities rather than purchase (Argyres,1996).
Secondly, the volatility of competition will affect integration. A less competitive envi-ronment means competitive pricing which can be good for purchasing because it trans-fers your risk to others. If the environment is hostile then integration is risky due to higher possibility of price wars, a higher degree of competitiveness leads to volatility and uncertainty in the market as competition is fighting for market share (Harrigan, 1985).
Thirdly bargaining power affects the willingness to transfer activities or risk ownership as the firm is in a better position to negotiate than other firms. The firm with the power can outsource low value adding processes. The degree of bargaining power is dependent on 3 market conditions; how high the costs of switching suppliers/customers are, the availability of suppliers/customers in the market and what degree the competitors have upstream or downstream integration (Harrigan, 1985).
Fourth, the strategic objectives of the firm will naturally affect the interaction. If the market is mature, forward strategic integration will help to penetrate the market. De-pending on the strategic needs the company can be flexible or inflexible to integrate and add value activates as knowledge, integrity and quality. The level of flexibility the strat-egy has affects to effect of integrations and which integration strategies can be used (Harrigan, 1985). A different integration strategy is to horizontally integrate into new market.
2.9
Horizontal integration
Horizontal integration is when a company expands its operations with the help of the surrounding environment, either through releasing existing products in new markets or through strategic mergers with similar companies in the same industry (Adelman, 1955).
Horizontal integration in the form of mergers helps the company to gain a position of power within the market while on the same time decreases the costs by utilizing the best parts of two production networks. Being a stronger actor in the market enables the com-pany to put more pressure on its competitors and gives them the advantage of being a bigger actor in that market (Adelman, 1955).
Distribution of existing products in new markets is also a form of horizontal integration. New markets are not only different geographical markets but anywhere where the prod-uct has not been distributed before (Adelman, 1955). New prodprod-ucts in a new market can lead to disintermediation in the old market.
2.10
Disintermediation
“One of the greatest benefits of electronic commerce occurs when physical processes
and products are replaced with digital ones” (MacInnes, Kongsmak & Heckman, 2005.
Pp 1). The boundaries of organizations are becoming harder to define as technology al-lows them to create new links between them such as electronic data integration, elec-tronic markets, strategic alliances and networked organizations. As new organizations and alliances arise from these links, the value chain also transforms. These linkages
be-tween companies enables mediating roles such as distributors, retailers and wholesalers, but with increased IT-availability and broadband connectivity, producers can now reach customers directly by eliminating, or replacing intermediaries (Kling & Wigand, 1995). Today, customers and suppliers are often directly linked without agents or intermediar-ies. Value networks such as online market places utilizes common carriers such as game portals and allows for low cost, almost instant, mass distribution to large target groups (Kling & Wigand, 1997) “In its current use, it applies to any and all contexts where one
eliminates the middleman. Such environment is said to be disintermediated” (Berghel,
3
Method
The research process of this thesis will be explained in the following chapter. The method explains how the research was conducted, processed and validated. An im-portant part of the method is detailed descriptions of the steps taken to find and process the empirical material. A number of sampling methods were considered to ensure that the chosen methods would result in as accurate and relevant research as possible. Based on the research questions, we chose an exploratory research method. The exploratory method allows for deeper understanding of the problem through in-depth interviews with people involved in game- development and –publishing (Quinn, 2002).
A holistic view of how the value chain is created in the gaming industry was needed to know what data to collect, and how to gather the information. A qualitative research study was undertaken through collecting primary information in the form of interviews with people working in the business regarding their strategies. Secondary data was gathered through articles, and the homepages of both game developers and distributors. Previous academic research was also analyzed to gain information on the current status of research within the field.
3.1
Qualitative research
Qualitative research is exploratory; it is the science of observation and interpretation. Intense studying of a relatively small number of observations in depth will give a better perception of the problem. The method is used for exploratory research, when the searcher is not sure of what variables to examine. Depending on the information re-quired, the research methods can be adjusted through utilizing different methods of da-ta-mining and information gathering such as interviews, field-work and observational approaches (Quinn, 2002).
Qualitative data depends very much on the individual conducting the investigation; rel-evant background experience help prepare the minds to correctly investigate the data, as well as to make educated assumptions about the empirical material. Qualitative data is also sensitive to the objectivity of the authors. The data is then interpreted by the au-thors and Personal experiences can cause bias depending on the selection of information (Quinn, 2002).
It is necessary to have a holistic perspective when researching the video game market. This, because the value and networks of game distribution are interdependent and can-not be reduced into a few variables (Patton, 2002). In order to understand the success of different distribution methods one must understand the context in which they occur. The conditions have changed since the introduction of online distribution platforms in the early 90’s, which is why a holistic view is needed. The qualitative study will go in depth about the aspects of value chain creation as disintermediation in the gaming market as well as, examining the corporate strategy revolving around these issues.
According to Johnson (1997) there are three ways to ensure validation to the data. De-scriptive validation, which is witnessing deDe-scriptive events, observations, which implies that if more witnesses are present it will lead to a more accurate representation of the
ac-tual occurrence. To ensure that our primary information is correct, we intend to conduct several different interviews based on the same questions.
Interpretative validity refers to the interpretation of the descriptive events; the partici-pant’s reactions to your interpretation can function as a measure of accuracy. To im-prove the accuracy of an interpretation outside sources can read though the interviews and confirm events, however as we three people are collaborating we already have three different points of view from different backgrounds and this should result in a non-bias interpretation (Johnson, 1997).
Theoretical validity, concerns the fit of the theories and the gathered data. There is a risk that a researcher eager to confirm their own theories can select or ignore important information to be able to confirm their hypothesis. To counter that peer reviewed litera-ture and negative case studies will challenge our research so that there is an actual fit between the theories and the collected information, rather than in an imaginary or forced fit. To counteract that, the process of data collection will also be described in detail in the following part, this ensures so others can replicate and validate the research (John-son, 1997).
3.2
Data collection:
Primarily text analysis is derived from the sources through interviews and the research is supported by secondary theoretical and empirical data.
3.2.1
Primary dataThe primary data was collected from direct sources of people who make decisions con-cerning game distribution in companies. These people have the relevant insight to give appropriate responses. The first step was to establish a criterion for our selection of companies. They should be Swedish game developers; they should develop games for PC and not flash games, or free games. After establishing the criteria we found a few lists, gamedev.se, and ‘Swedish Publicly listed Game Companies’ from Nymission.se. Following the list, every company was evaluated through a visit to their homepages to see if they fit the profile of the established criteria, through this a new list was created. The first version of the complied list had 18 optimal companies varying from firms of 1-3 employees to large organizations such as EA, DICE and Valve. Our own previous ex-perience has shown a strong reluctance from large corporations to participate in thesis projects. Re-evaluating to a more realistic point of view, there is a low probability of some companies to become engaged and help out, and the list changed into more ap-proachable 14 company list.
3.2.1.1
Contact methodContact was initiated through a standardized email which informed the receiver of the purpose of our research, our background and how the research will contribute to them. The information would be gathered though interviews. Some contacts required several e-mails and some phone calls, but once a reply was received either we sent the questions beforehand for them to examine or we just set up a time for an interview. E-mailing the
questions in advance allowed the participants to prepare themselves to supply better formulated and thought out answers and also allowed them to redirect us to somebody of better knowledge of the subject, if necessary. Emailing them the questions before-hand did however lead to that some interviewees decided to answer the questions and email them back to us instead of going through with the interview.
3.2.1.2 Interview
The difference between quantitative interviews and for example a survey, is that the par-ticipant is considered to be a meaning maker, a person with significant input (Jaber, Gubrium & Holstein, 2001). The purpose of the interview is to gain a personal interpre-tation and not simply a list of facts. Qualitative interviews are intended to be explorato-ry and open ended questions are better suited for the purpose of simultaneously guiding the subject but also to let the interviewee interpret the questions as they see fit (Jaber et.al 2001). The questions are based on a relevant theoretical background ensure suitable results. They are also varied to cover all relevant aspects such as disinter-mediation and different distribution methods. The questions are to be simple and easy to understand but still accurate and informative to help us reach a conclusion. The interviews were semi-structured with open ended questions allowing for the interviewee to freely elabo-rate on the questions while being pointed in the right direction through the questions. Examples of open questions asked were: -How do you distribute your games today? With the follow up question, -Why? Questions were grouped into three different catego-ries regarding; strategy, value creation and disintermediation (see Appendix 6 for the questions). Furthermore, it is also important for the interviewer to remain flexible dur-ing the process as new information may change the questions and render some obsolete. Some interview questions might have to be explained further and then it’s important to do so without forcing an answer onto the interviewee (Jaber et.al 2001). Interview may bring up sensitive information of a personal or professional matter, it is important that all parties are informed concerning what the interview will involve, so that there is no confusion later. A consent form may be needed also anonymity agreements to protect the interviewees and the delicate information.
The interviews were carried out through phone or Skype which allowed a broader inter-pretation of their tone of voice. The tone of voice can give away clues as: confusion, hesitance, reluctance, uncertainty and also positive tones. The tone of voice helps de-termine whether or not the interviewee needs a further explanation of the question or if they have more to add. It also helps avoid invalid answers that can occur when the in-terviewee decides to answer a question without fully understanding the question. Unfor-tunately some two of the interviewees didnot have time for phone interviews, but in-stead answered the questions through e-mail.
Since all the interviewees were native Swedes, the interviews were carried out in Swe-dish and their answers were then translated to English. Caution was taken during the translation to avoid distorting the information.
3.2.1.3 Question types
Except for the questions categories of strategic, value creation and disintermediation the questions can be categorized by hard or soft questions. Some questions start with the phrase ‘what do you think’ and are categorized as soft questions, meaning that there is no definitive answer to those, but rather requires the respondent to freely elaborate on the answer based on his or her Personal experience and beliefs. While the hard ques-tions consists of answers such as ‘how many people are working in the company’ and ‘has your distribution strategies changed with the availability of online distribution channels’, which can easily be answered by most representatives interviewed. A soft question can result in a broad scope of answers which are more of a personal opinion. Moreover, a soft question can result in an insight from a professional within the industry rather than an insight of a professional concerning their firm’s activities in the industry, one can observe their unrelated Personal opinion detached from that of their firms.
3.2.1.4 Interview table
Name Company Title Date Method
Dura-tion
Martin Hultberg Massive Entertainment Head of communications
and user research
2012-04-19 Email -
Suzana Meza Paradox Head of public
commu-nication and marketing
2012-04-24 Phone 32 min
Thomas Ahlström Boldai Chairman in charge of
business and marketing strategy
2012-04-23 Skype 26 min
Person Y - - 2012-04-17 Personal
Com-munication
54 min
Person X - Executive in the gaming
business
2012-05-02 Email -
3.2.2
Secondary dataThe observations made from the primary data achieve validity through the secondary data, while the theoretical background of the thesis gains validity from peer reviews on the articles used. The secondary data is the empirical study background; it is the evi-dence of the problem which is viewed through magazines and gaming websites and ac-ademically viewed through literature concerning value chains and strategic networks.
3.2.2.1
Review of literatureThe literature was chosen based on what will contribute to answering the research ques-tion. Literature found in academic journals and books function as a basis for the theoret-ical framework which purpose is to support and challenge the qualitative information.
