Video Game Company: Massive Incorporated - Essay Example

Situational Analysis for Massive Incorporated Mission ment Massive Incorporated, which is the world's first video game company, operates with the mission of "aggregating the gaming audience to deliver advertising across a network of premier video titles and providing measured results on consumer interaction with the advertising." The company fulfills this mission by employing its patent-pending technology and its wide network of exclusive publisher and developer partnership. Massive also recognizes the importance of its stakeholders with its aim of providing developers and advertisers with incremental profits. Statement of Corporate Objectives Massive Incorporated does not mention any specific corporate objectives on its website or its publications. However, the company indirectly communicates its threefold objective of profit, customer satisfaction, and leadership. Profit. As with any business organization, Massive opts to generate profit from its products and services. This is to ensure that the business has enough funds to finance its operational costs and other projects. Clients. Being a pioneer in the market, the company aims to understand its client needs in order to deliver maximum satisfaction. Massive seeks to give a new source of revenue to developers, provide a new venue for advertisers to promote their products, and enhance the gaming experience of gamers through in-game advertisements. Leadership. As rivalry heats up in the in-game advertising industry, Massive wants to be ahead in the competition. The company seeks to become the number one choice of advertisers by gaining a strong foothold in the market. Leadership can be measured by looking at Massive's market share relative to its competitors. Statement of Marketing Objectives Based on case and on the current status of the business organization, Massive's marketing objectives can be specifically stated into three areas: 1. To continuously develop more innovative solutions for customers by expanding technological capability (Massive Network, 2006); 2. To become the market leader by increasing market share by 10% ; and 3. To aggressively compete with search rivals like Google and Yahoo (Wash, 2006). Overview of the Market Environment Massive Incorporated is a player in the in-game advertising industry. This industry is primarily responsible for the placement of ads in video games in different platforms. This industry is a response to the declining television viewing as males aged 18-34 spend more time playing games. This age group which represents a huge proportion of the global market is one of the highly sought demographic segments by advertisers. However, as they turn to video games for recreation, advertisers need to find a way to incorporate advertisements during playtime. Though Massive pioneered in-game advertising, business organizations have been very quick to realize the potential profit gain from this segment. Together with Massive, Double Fusion and IGA Worldwide captures the largest market shares. Some smaller start-ups and players in the video game industry are also taking the challenge of in-game advertising. Yankee Group reports that there are about 112 million people aged 13 and above in the United States participating in some form of electronic gaming. It is forecasted that the number will grow to 148 million in 2008. These gaming activities are being conducted on four specific platforms like consoles, personal computers, handhelds and mobile devices (Shields, 2005). Despite the rapid growth of the video gaming industry, it also faces numerous challenges. It should be noted that customers now demand the creation of video games which have more sophisticated story lines and graphic improvements. This has resulted to higher production costs as well as longer production time. On the other hand, the average commercial life of a video game has significantly dropped to less than one year. With the increasing competition among industry players, companies are launching new strategies to attract clients. For instance, Double Fusion has launched a new technology which allows them to sell custom programs to advertisers (Hyman, 2006). Market Size According to Kennish (2006), the video games industry is expected to "break the $10 million mark this year." Furthermore, as the sector has succeeded in reaching audience that the traditional media can't, advertising investment is anticipated to reach $300 million. PricewaterhouseCoopers estimates that the online gaming industry is set to grow $55 billion in 2009 (Video Games 2006). It should also be noted that the gaming industry grows at an astounding double digit rate of 25% annually. Market Trends The in-game advertising market is presently experiencing a trend of rapid growth and development. With the success of the pioneers in the industry like Massive Incorporated, more and more players opt to break in the sector. In the current circle of players, companies are leveraging on their different capabilities to provide a differentiated product. It can be seen that as Massive boasts and strongly utilizes its network to provide in-game advertising, other competitors like Double Fusion are ban king on enhancing customer value by customizing their products and services according to customers needs. Some players are also trying to capture specific niches like Nightlife Interactive which solely caters to video game featuring night clubs. This intense competition has a great impact on the operation of Massive. First, it challenges the company to battle head on with current and prospective rivals. In order to remain in the battle ground, Massive is required to build its presence in the industry by capitalizing in its strengths. As industry players are establishing their own image and capture their own niches within the sector, Massive should also emphasize its competitive advantage and clearly define its target market. The wide acceptance and popularity of electronic gaming is seen to be the new trend in the entertainment industry. In fact, the audience of video games now goes beyond the 18-34 male group originally sought for. There is also the emergence of other groups such as lapsed gamers, women, and even seniors. The government's promotion of video games as educational tools further highlights positive acceptance. This trend poses new opportunities and challenges to the industry players. There is also a growing preference for new games. This was proven by the Nintendogs which reports that individuals have this appetite for new games in new formats. It shows the people are tired of playing the same thing over and over again. Thus, people want to be entertained in new ways. For Massive, the proliferation of video gamers posts means that more market can be served. However, with this huge potential, the company is also burdened with the dilemma of tailoring and coming up with the right products and services to suit the needs of the emerging groups. This will entail higher market research cost in order to fully understand the market. Competitor Analysis Based on the length of existence, it is irrefutable that the in game advertising market is relatively young. However, it should be noted that business organizations have realized the potential of capturing customers through the use of video games. With Massive Incorporated as the first mover, companies are now on the competitive landscape to battle head on with their own marketing strategies. Massive Incorporated directly competes with the following business organizations: 1. Double Fusion is an Israeli in-game advertising company established in the summer of 2004. The business model of Double Fusion is very much similar to that of Massive. The company targets advertisers and media buyers as well as game developers and publishers. The product line of Double Fusion ranges from dynamic advertisements1, integrated advertising2, and "around game" inventory (Double Fusion 2006). 2. Exent Technologies (Exent) is a provider of digital distribution video games, in-game advertising, game enables, turnkey solutions, content facilitation and aggregation services, and other professional services related to video gaming. With this extensive product line, it can be see that it goes beyond the product offering of Massive. In terms of in-game advertising, Exent "enables the embedding of advertising into new and existing back catalog games, without the need to access any of the games' source code, and without the need for implementing a development stage integration or asset/ad-spots designation" (Exent 2006). With this, advertisements can be placed in any stage of the production and post-production process. 3. In Game Advertising (IGA) seeks t o provide advertising services with its global computer video game media and advertising network. As opposed to Massive and other aforementioned competitors, IGA's network encompasses multiple platforms including PC, console and mobile gaming and offer both static and dynamic advertising. Aside from these direct competitors, Massive also battles indirectly with companies including: Nightlife Interactive, LLC which encompasses game development featuring worlds of music and nightclubs, marketing, and management (NightLife 2006); Greystripe which provides in-game advertising to mobile subscribers (GreyStripe 2006); and Gameasure which is an independent third party solution for measuring in-game advertising (Gameasure 2006). Marketing Mix Product. Currently, Massive have developed and offers five primary products namely internet advertising, Massive ad server, Massive lightning, test box, and MMOG solutions storm. In terms of internet advertising, the company was able to build partnerships with 700 websites which uses its technology to audit website traffics, users and ad campaigns. On the other hand, Massive Lightning is a technology which allows developers to "add online multiplayer functionality and build on that functionality to add scalability, security, and persistent data storage for multiplayer online games." The newest addition to the product line of Massive Incorporated is the ad server which directly incorporates advertisements in online-PC based video games. There are four specific products within this line which are generally referred to as standard ad units: sign which is a billboard, poster, or other form of static sign regardless of its location in the game; storefront which includes branded storefront of a fast food, retail store, or other location; packaging which refers to products within the game such as cans, wrappers, bags, etc.; and logo which is a symbol for a company usually placed on clothing or on the things interacted within the game context. Price. The company charges $30,000 to hundreds of thousand for a sale of its software licenses for the full product suite. Based on the license fee, the company charges 20% annually for software maintenance. The company also generates revenue from charging $25,000.month on its web auditing services. Massive's consultancy services are often priced according to the nature of the client and the consultant. As we can see, the prices charged by Massive are competitive and in line with the current range in the industry. Promotion. In the industry where Masssive operates in, promotion is often done through word of mouth. Often, business organizations also gain publicity based on the credibility and the prestige of customers. Currently, Massive's promotion is positive affected by the recent acquisition of Microsoft. The company now enjoys the strong brand equity of the information technology player. The company's virtual presence also aids in the promotion of its products and services. Place. In its quest to promote global citizenship, Massive locates six offices in major continents. The company is headquartered in New York but also has operations in: Santa Monica, California; Ontario, Canada; London; Paris, France; Paddington, Australia; and Kln, Germany. More than these locations, it can be seen that Massive also tries to conquer the global market by establishing its own website. The advancement in technology enables customers and prospective clients the products and services of Massive. Inquiries can also be sent online. SWOT Analysis Strengths. Being the pioneer in the in-game advertising industry, Massive has already established a strong image. With its being a subsidiary of Microsoft, this brand equity is further enhanced while also increasing its reach and scope. Massive is also capitalizes on the capability and experience of its management team, wide network, innovative ideas, and technological capability. Weaknesses. Prior to the acquisition by Microsoft, the major weakness of Massive Incorporated lies in its financial capability. With its quest to introduce new products in the market, the company should be backed with a sufficient fund. Opportunities. With the increase of the popularity of video games in all demographic segments, Massive is assured of a larger market for its product offerings. The rapid technological advancement and innovation further helps the company in coming up with new services. Meanwhile, its being a Microsoft subsidiary promises a brighter future for it as it now becomes the sole provider of ads for Xbox Live and MSN games and even all Microsoft platforms. Threats. It is irrefutable that video games have long been criticized for their promotion of violence. This is an underlying threat to in-game advertisers as they are fully dependent on the public acceptance of this entertainment. Massive also faces the threat of legal issues which can arise from the use of copyrighted materials in video games (Christ and Viscounty 2006). References Christ, Roxanne & Viscounty, Perry, 2006, Burgening in-game ad market raises interesting legal issues, Adweek: Vol 47, Issue 31, pp.1 Double Fusion, 2006, Retrieved 25 September 2006, from http://www.doublefusion.com/in-game-advertising/in-game-advertising- explained.php Exent Technologies, 2006, Retrieved 25 September 2006, from http://www.exent.com/products_and_services/In_Game_Advertising.asp Gameasure, 2006, Retrieved 25 September 2006, from http://www.gameasure.com/ Greystripe, 2006, Retrieved 25 September 2006, from http://www.greystripe.com/ Hyman, Paul, 2006, State of the Industry: In-Game Advertising, Game Developer: June 1, 2006, pp. 11 In-Game Advertising, 2006, Retrieved 25 September 2006, from http://www.ingameadvertising.com/ Kennish, Fran, 2006, In Game Advertising Dos and Don'ts, Retrieved 25 September 2006, from http://www.imediaconnection.com/content/8489.asp Massive Network Launches Groundbreaking Interactive In-Video-Game Advertising Unit; Toyota Is Debut Advertiser With Innovative Campaign for New 2007 Yaris Sedan; New ad element drives increased consumer engagement with brands, leveraging video games' inherent interactive nature, 2006, PR Newswire US, July 24, 2006 NightLife Interactive, LLC, 2006, Retrieved 25 September 2006, from http://www.nightlifeinteractive.net/ Shields, Mike, 2005, A New Dynamic, Brandweek: Vol. 46, Issue 20, pp.4 Video Games: Gaming Begins to Prove its Worth as an Effective Medium, 2006, Marketing Week: London, May 4, 2006, pp.41 Wash, Redmond , 2006, Microsoft Acquires Massive, Associated Press Online: May 4, 2006 Read More