What is a business model?
Definition of a business model
A business model is a plan to make sure that an operation or project is completed to a high standard. This plan consists of identifying where the company's revenue comes from. The revenue comes from things such as the target audience. Other than this, they also get revenue from the product that the business is selling also, the details of financing involved.
The studio that is making the video game gets revenue first of all from their publishers. This is so they can have the budget for the employees and money for artists and animators that they may have to hire to keep their project at a good pace. They get money after the game has been released from the distributors, retailers and the consumers. If they get enough money when it is all said and done. There may be new games coming in the future from that specific developer.
The target audience for the developer's game is discussed, putting into consideration what a certain audience would like in terms of games. An example of this is, a female gamer is more of a casual gamer and plays games on the mobile phone rather than a PC or a console. They would find the main genre of game that this type of audience plays on a mobile device and try to make the best kind of game possible for their target audience. When the target audience is decided then the developer will try their best to suit the desires and hopes of the target audience for their new product.
In the business model, the product that the company is going to sell is detailed. These details include how it will be distributed to the public. Many of these ways include package game software deals this includes buying a game from a retailer with a physical disc. There are various methods to distribute a game. One of these methods is a Massively Multiplayer Online (MMO) game, where you need a subscription to play. Games that use this method include World of Warcraft, Star Wars: The Old Republic and The Elder Scrolls: Online just to name a few. These games also have expansion packs to carry on the game narrative and gives the audience the ability to discover bigger and better lands which in turn gives the game developer a lot of revenue. These are episodic expansions. An episodic expansion is a piece of downloadable content that is of a shorter length than the base game which continues and enlarges the game's life cycle. These games differ from conventional video games as they are expansions that are the same length as the base game in some cases.
There are expansions in these MMO (Massively Multiplayer Online) games that are either purely quest based such as The Dark Brotherhood expansion in the Elder Scrolls: Online or a even bigger expansion such as World of Warcraft: Legion. The Dark Brotherhood expansion only added a few more gameplay components into the game such as more quests and poison crafting. World of Warcraft: Legion (WoW) has a significantly bigger expansion pack compared to the Dark Brotherhood as it adds in a new entire land mass for the player to explore. This expansion also gives the player a higher level cap and a different hero class (unlocked at Lvl 98)
Another method mentioned in business models are micro-transactions. Micro-transactions are things that give the player functional enhancements that are also available within this game which help the customer to progress quicker through certain levels and even skip certain tasks. This requires the player to purchase certain packs that give them advantages to progress through the game faster. For example in the Sims Freeplay, there are lifestyle point packs. These can be used to skip certain tasks and reduce building times when building a new property. VIP Perk Packs can be used to purchase pets and Social point packs are used to purchase luxury items that are only available with theses specific points and are not available to purchase with Simoleons, or any other point packs. These are all available to purchase through the game itself. These Packs range from 79p to £79.99 all giving an increased amount of VIP points (VIP point increase with the value spent on certain packs available) to aid with the games.
There are also functional enhancements that are for aesthetic purposes that help the gamer improve key features of the game that they are playing, personalising it to the player’s desires. An example would be The Sims Free Play. The game itself is free to download, and in this specific game the customer can change the features of the character that he/she wants to use. Personalising the avatar to their liking with features like hair colour, eye colour, clothing, footwear etc. However, if the player wants a specific item to personalise their avatar further such as a luxury clothing. An example would be an Adidas tracksuit. They would be expected to pay for this item using real money not Simoleons (Sim Currency). This also applies to House decoration and some soft furnishing to make the property suited to the customers own personal taste. There are also additional features such as spending money to change an Avatar and username.
The details of financing shows the amount of money that the developer has received from the start of the project. The sum of money was given to them by the publisher. The money that the developer received covers the cost of the game's production as well as the employee's wages and some extra money to hire animators or voice actors. This all adds up into a total sum which is then given to the developer, if the publisher has agreed to the requested sum. The money that the publisher provided to the developer is presented in the business model. This is because if the developer were to go over budget or fail to make the game in the set deadline, the money that was given is now a debt to the publisher. In most cases, this is what puts most game developers out of business and bankrupts them.
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