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Global marketing of leisure software: a case study of Asian countries
Introduction
The difficult task for effective global marketing is to devise a competitive
product to be marketed at the right time, with the best feature benefits, that are
produced at a profitable manufacturing cost. Day-to-day practical problems of
such activities were isolated by Myers (1995) in his review of R.L. Sandhusen's
1994 book on Global Marketing. Bermingham (1996) also referred to the added
global complexity of marketing, R&D, and manufacturing not being located in
the same place. However, global marketing is being increasingly affected by
changes in populations and, according to United Nations statistics, significant
demographic changes in Asia.
Leisure software can be characterised into three main categories: computer
games, video games and multi-player games. They consist of such interactive
multimedia based products as: adventure, arcade, flight simulation, strategy,
sports, shoot-em-up, fighting, and kids' games. Software is written to run on
personal computers such as the IBM PC and compatibles, the Apple
Macintosh and Amiga among others. Microsoft Windows is the major
environment for which a large number of games are being developed. In
Western Europe games titles accounted for 65 percent of all consumer CDROM
software revenues in 1997 with 25 million titles being sold and this is
expected to grow (Table I).
The video games market is considerably larger than that of the PC and
targets a younger audience. There are several major platforms competing for
dominance with the Sony PSX Playstation and Nintendo64 being undoubtedly
the front runners. Following its December 1998 release in Japan, Sega's new
games console called Dreamcast could have a significant impact.
Multi-player Games are divided into three sub-categories which support a
minimum of two players at any one time: Peer-to-peer Modem Games allow two
players to participate in a game over telephone lines playing against each other
or as a team against the computer; PC Networked Games will typically allow 4-
16 players to participate in the same game environment and will require an
equal number of PCs on a Local Area Network (LAN); and Server Based Games
that consist of a powerful central PC workstation serving any client machines
that log into the system. The server may be on the Internet and allow its clients
connection at local phone charges irrespective of where the server and client are
based around the world. According to Datamonitor there are currently 500,000
on-line gamers and by 2002 the figure would reach the 3.6 million mark
contributing to a global on-line market worth $1.4 billion (Tables II and III).
Popular games like DOOM, Duke-Nuke-Em 3D and Quake have made online
use very popular with PC users. Microsoft's DirectPlay supports the
development of client/server games running under Windows by providing a
powerful and efficient development tool via its API. On-line PC game providers
include BT Wireplay, Battle.Net, Interactive magic, MPlayer and MSN Gaming
Zone among others. On-line gaming at least in the UK has not taken off and this
is attributed to the on-line player having to pay for local calls (EDGE, 1998,
p. 65).
The newly launched Sega Dreamcast is seen by many as more than another
games console. It is heralded as a new concept offering console game players
on-line gaming that up to now was enjoyed only by a relatively small number
of PC gamers. The importance of the console on-line concept should not be
underestimated and can be seen as the first serious attempt in bringing on-line
gaming to the mass-market. Heat.net has been set-up by Sega to provide the
required on-line service at least in the USA and Japan.
Leisure software industry
The leisure software industry is 25 years old. Many of the original companies
have grown into multinational concerns with annual sales of up to $800 million
as in the case of Electronic Arts with a net income of $73 million ranking
seventh in the world list of top software companies (The World in Figures:
Industries, 1998). The IDSA 1998 report states that out of the 65 companies
taking part in their survey more than 60 percent were just seven years old or
younger with two thirds of these businesses having reached profitability
compared to just 14 percent of young, venture-backed companies in other hitech
areas.
The industry is still growing at a considerable pace and the expansion of its
workforce has topped 18 percent compared to an average decline of 2.5 percent
among the Fortune 500 companies. During 1997 20,000 new jobs were created
in various American businesses and the amount of money the interactive
games industry invested in Research and Development (R&D) increased by 20
percent over the average R&D company spending nearing a total of $2 billion.
Additionally the rate of productivity of these companies measured in revenuesper-
employee ratio, a measurement of how effectively an industry utilises its
employee base to generate sales, was more than double that of the average
Fortune 500 company during 1997.
According to the NPD Group/Video Software Dealers Association, in 1997
annual sales of entertainment software in the USA rose by 38 percent to $5.1
billion, excluding video games rental figures, when compared to 1996 levels
expected to grow to $6-$7 billion in 1998. According to data from NPD's TRST
and SoftTrends retail sales tracking services, first quarter sales in 1998 were
already up 30 percent over the same period last year. During the same period
Datamonitor reported that overall games/interactive entertainment consumer
spending in Europe was around $5 billion and it is expected to rise to $6.1
million by the year 2002.
Current 1998 trends point to the fact that for the first time in the history of
leisure software, sales of computer and video games may equal or surpass total
box office receipts generated by the US motion picture industry. Mario Kart 64
for example at $131 million sales has surpassed top ten box office hits such as
As Good as it Gets ($130 million), My Best Friend's Wedding ($127 million), and
Good Will Hunting ($130 million).
To compete more effectively in the market place company mergers are seen
as a way of combining and consolidating companies into a larger, more
powerful entities that can more effectively compete in the market. The
Infogrames Group, Europe's biggest video games publisher that incorporates
Infogrames, Ocean and Phillips Media among others is a good example of a
company with a global vision having grown enough to be able to become a
major global force in world games. The concept of globalisation in a world of
change and opportunity, meets new pressures as the market becomes larger,
the competition tougher, and the consumer becomes ever more sophisticated.
The result can be aggressive broadening of distribution around the world and
improved marketing approaches in terms of quality products and customer
focus. In many cases these strategies generate and exploit new market
segments; a market with greater new potential is likely to be in Asia.
حسن عبدی