Video Games and the Shaping of Industrial Transformation

Center on Japanese Economy and Business, Columbia Business School
Tuesday, February 21, 2012
Uris 301, Columbia Business School

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Micropayments
Micropayments are small transactions within a game. And they have major implications for the industry because through micropayments, the way in which you purchase games is changing completely. Until recently, when you wanted to buy a game, you had to realize that a game exists, at another point realize that you wanted to purchase it, ensure you had the money, and finally go to a different location to buy a disc. With micropayment-based purchases, you purchase as you play the game. In other words, the process of realization, purchase decision, and purchase is all in one step now. We have to design properly for this business.

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Another important thing with micropayments is that price is decided by each individual consumer's satisfaction. When a game is sold on a disc, regardless of whether or not a customer enjoys it, he pays the same price. (C)
With micropayments, a customer who only enjoys a game at a satisfaction level of 1 may pay a price of 1, while a customer who enjoys a satisfaction level of 10 can pay a price of 10. The law of one price disappears, and you can monetize everything that's of importance to a player. This is revolutionary.

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Multiple devices
These days you can play games on many devices. You can play on the TV in your living room, on your PC, and on your portables. When you have so many different windows into one content, the way we publishers think about content design and identification becomes increasingly important.

First, we have to ensure that we design the right content for the right device. The exact same game won’t necessarily play on the iPhone as well as it plays on the TV. Second, we need to be separate the process of billing from the process of identification. We need to know that it’s Jane who’s playing the content that she’s bought, but that doesn’t mean she’s tied to the same device.

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