The goal of this dissertation is to give the reader a fundamental understanding of the various risks for games publishers’ online business by identifying and examining generally affecting e-commerce risks as well as risks specific to the games industry environment. Furthermore, the author will list possible solutions to reduce negative impacts caused by these risks.
In the last decade, e-commerce transactions like the one described above became a routine. Especially in more sophisticated countries with broadband Internet access, consumers at all age levels utilize ist capabilities to purchase products online. The majority of these transactions are business-to-consumer.
During the last five to ten years, publishers of entertainment software have also targeted the Internet as a new distribution channel. Approaching gamers directly through websites or platform marketplaces is a faster and more profitable way of generating revenue than traditional retailing. Transaction costs are decreased, marketing time is reduced, and direct communication with communities, which is typical for this line of business, is improved.
Certainly there are not only advantages associated with online distribution of video games, and we will later discuss whether cost savings really occur. Several aspects of risk need to be considered before making a decision. It is a question about the strategic orientation of any company operating in the given industry.
Table of Contents
1. INTRODUCTION
2. METHODOLOGY
3. REVIEW OF LITERATURE
3.1 The international games industry
3.1.1 Major markets and companies
3.1.2 Consumers
3.2 E-Commerce: The Internet as distribution channel
3.3 General risk factors in e-commerce
3.3.1 Legal risks
3.3.2 Technology risks
3.3.3 Business risks
4. PARTICULARITIES IN RISK FOR GAMES PUBLISHERS SELLING ONLINE
4.1 Age rating of games and online age verification
4.2 Impact of games communities
5. RISK MANAGEMENT
5.1 Managing online age verification using the example of Germany
5.2 Managing games communities
6. CONCLUSION
Objectives and Core Topics
The primary goal of this dissertation is to provide a fundamental understanding of the risks associated with the online distribution of video games. By identifying and analyzing both general e-commerce challenges and specific industry-related threats, the author aims to offer practical solutions and strategies to mitigate these risks effectively.
- The evolution of the global video games market and consumer behavior.
- Evaluation of e-commerce as a strategic distribution channel for game publishers.
- Analysis of legal, technological, and business risks inherent in online sales.
- Specific challenges regarding age verification and regulatory compliance.
- Strategic management of online gaming communities to foster brand loyalty and minimize reputational damage.
Excerpt from the Book
3.3 General risk factors in e-commerce
Risk in general is the deviation of one or more results of one or more future events from their expected outcomes. The deviation can have positive (upside) or negative (downside) impacts on the original situation. The International Organization for Standardization (ISO) defines risk in its ISO guide 73 – risk vocabulary – as “the effect of uncertainty upon objectives where an effect is a deviation from the expected – positive or negative.”
In reality, most people associate risk with potential harm of a future event due to real associated costs or opportunity costs. With that said, they predominantly connect it with the potential downside of an event. In confrontation with risk, people are threatened when their ideals of safety are not satisfied, as safety is a core human need. However, in the financial sector, risky investments have a good chance to lose even though the smaller probability of winning could bring a fortune. The consequences of not investing and being wrong are far more damaging than the consequences of investing and being wrong. This implies that companies with low risk appetites are unlikely to generate high rates of return while adventuresome firms prevail when risk is successfully managed.
“Risk in our world is nothing more than uncertainty about the decisions that other human beings are going to make and how we can best respond to those decisions.” This underlines that today’s sources of uncertainty are no longer found predominantly in nature but in the individuals who make the decisions. A company’s senior management has to “examine the kinds of risks it considers acceptable, the likelihood of their materializing, and the ability to reduce their impact if they do occur.”
Summary of Chapters
1. INTRODUCTION: This chapter introduces the shift of the gaming industry toward online distribution and outlines the dissertation's focus on identifying and managing associated risks.
2. METHODOLOGY: The author explains that this work is based on desk research, utilizing secondary data from professional literature and official organizations to analyze market trends and risk factors.
3. REVIEW OF LITERATURE: This section covers the historical and current state of the global games industry, the role of the Internet as a distribution channel, and the foundational categories of risk in e-commerce.
4. PARTICULARITIES IN RISK FOR GAMES PUBLISHERS SELLING ONLINE: This chapter highlights industry-specific risks, focusing on the complexities of age verification for minors and the significant influence of gaming communities on brand success.
5. RISK MANAGEMENT: The author proposes practical management strategies, detailing specific approaches to online age verification in Germany and methods for fostering positive relationships with gaming communities.
6. CONCLUSION: The final chapter summarizes the findings, emphasizing that publishers should prioritize robust online risk management to protect assets and capitalize on new business opportunities.
Keywords
E-Commerce, Video Games Industry, Risk Management, Online Distribution, Age Verification, Consumer Behavior, Channel Conflict, Intellectual Property, Gaming Communities, Data Protection, Digital Rights, Market Strategy, Cybersecurity, Virtual Goods, Business Risks.
Frequently Asked Questions
What is the primary focus of this dissertation?
The dissertation focuses on the strategic risks that video game publishers face when adopting the Internet as a direct-to-consumer distribution channel.
What are the central themes discussed in this work?
The work explores market trends in the gaming sector, the transition from retail to online, the legal and technological vulnerabilities of e-commerce, and the management of online communities.
What is the main research objective?
The objective is to identify and analyze the various risks in the games industry and to provide a framework for publishers to mitigate these risks effectively.
Which methodology is employed in this research?
The research is based on desk research, utilizing secondary data from industry reports, official sources, and existing literature.
What does the main body of the text cover?
It covers the definition of e-commerce risk, an analysis of the games market, legal and technological challenges, and specific strategies for age verification and community management.
Which keywords best characterize this research?
Key terms include E-Commerce, Risk Management, Video Games Industry, Online Distribution, Age Verification, and Gaming Communities.
How do publishers manage the risk of selling to minors online?
Publishers utilize various age verification systems (AVS) to ensure compliance with regional laws, such as the German Jugendmedienschutz-Staatsvertrag, which involves verifying age before completing transactions.
What role do gaming communities play in the business success of a game title?
Communities act as powerful influence groups. If managed well, they support brand success; if ignored, they can cause reputational damage and negatively affect sales performance.
Why is the "channel conflict" an important issue for game publishers?
Publishers face a conflict when shifting sales from traditional retail to their own online platforms, as this disrupts long-standing relationships with retail partners who have historically driven sales volumes.
- Quote paper
- Anonym (Author), 2011, Risk Management in E-Commerce. The Case of Online Distribution of Games, Munich, GRIN Verlag, https://www.grin.com/document/312636
