2. Introduction
Electronic Arts
-Founded 1982
-PC,Console, Mobile
-Market(North America 40%)
-Sports, Action RPG, Racing
Activision Blizzard
-Founded 1979
- Animation Studio
“Dreamworks”
- Activision and Blizzard which
focus on games, covers 56% and
36% of revenue
Game Industry has a potential to grow $43 billion in next 5 years.
4. Industry Analysis - Bargaining Power of the
Suppliers/ Complementary Goods
Software Developers are at the bottom of the supply chain
Work with Hardware Developers
Both are interconnected to each other’s success
Hardware dictates what the software developers can create and do
Hardware developers need software in order to compete and appeal to
customers
Software developers sometimes contract to specific hardware
5. Competition
7692 Companies in gaming Industry
Only 4 generate revenues over 50 millions
Large differences in products sold
EX. Mobile vs Console Games: Angry Birds vs Grand Theft Auto
Cost and Price differences
Graphic and technological differences
Distribution differences
6. Industry Analysis - Threats of Entry
Economies of Scale
Product Differentiation
Capital Requirements
Access to Distribution Channels
Learning/Experience Curve
7. Industry Analysis - Threats of Substitutions
Low Cost of Switching
Substitute products are cheaper
Indoor vs Outdoor
Online and Cloud based Mobile games
8. Industry Analysis - Bargaining Power of the Buyers
Two buyers in the industry: Retailers and Final Customers
Limited Shelf space - Allows more power for retailers
Large amount of potential substitutes
Brand Loyalty
Easy Access to Relevant Information (IGN, E3)
Bargaining Power of Buyers: Strong
9. Key Success Factors
Ability to adapt to new technology
Strong presence across multiple platforms
Through retailers and digital
Distinct advertising campaign
Strong brand image
Offer a wide range of products
Different genres/consoles
10. General Environment
Somewhat risky industry
Personal Income
Very Hit and Miss
Sequels and pre determined genres hold the most profit
Goat Simulator, Dumb ways to Die
5% Growth
https://www.youtube.com/watch?v=d7lQdTgEQJ0
http://coffeestainstudios.com/sites/default/files/games/logo/goat_simulator_logo_0.jpg &
https://i.ytimg.com/vi/IJNR2EpS0jw/maxresdefault.jpg
11. General Environment - Trends
Increase in development costs as technology advances
Thus, the price or quantity sold must increase in order to make up deficit
Leads to acquisition of studios who develop games, rather than develop themselves
Rise of Women Gamers
Make up 50% of customer base
Rise of Massively Multiplayer Online Games (MMOG)
Allows people to play with others all across the world
12. Internal Analysis - Business Strategy
Electronic Arts:
Differentiation Strategy
Able to obtain competitive
advantage through licensing
agreements and distribution
strategy
Activision Blizzard:
● Focus market
● Online and Subscription Based
- World of
Warcraft,
- Diablo
● Better communication with
customers
● Digital delivery of content
13. Value Chain Analysis - Inbound Logistics
Electronic Arts:
Small portion of firm’s activities
Primarily Electronic Arts itself
that acts as a supplier to other
video game manufacturers
EA does work and negotiate with
independent contractors to
obtain ideas for new video
games
Activision Blizzard:
● supplier to other game console
manufacturers
● Console gaming generates
82.76% of total revenue for
Activision
● Game Servers
14. Value Chain Analysis - Operations
Electronic Arts:
Designing, developing, and distributing
software on both a domestic and
global scale is essentially the main
goal of EA
Model on Entertainment industry instead of
Video game industry
License Agreements
Activision Blizzard:
● Two main Segments
○ Activision (56%)
○ Blizzard (36%)
● 25+ game studios around the world.
● Dreamworks Animation Studio
● Demo Version and direct user feedback.
15. Value Chain Analysis - Outbound Logistics
Electronic Arts:
Another core capability – many firms sell
goods via a third party to retailer, while EA
sells to customers and retailers directly
The organization also invests heavily in a
digital strategy which allows them to sell
products to final consumers directly.
In 2011, EA launched Origin, which is a digital
interface that allows consumers to buy
and download video games from their
computer.
Also utilizes mobile applications
Activision Blizzard:
● Sales houses around the world
● Third party seller (Humble Bundle), Total
Interactive and many others for their distribution
channel.
● Digital game stores Steam, PSN and
Battle.net(Online Sales)
16. Value Chain Analysis - Marketing and Sales
Electronic Arts:
Moving toward digital platform
Events - E3
Television programming and
social media
In-game advertising
Activision Blizzard:
● Retail Sales
● wholly-owned European
distribution subsidiaries:
- Centresoft in the UK
- NBG in Germany
● Mobile Game (Feedback)
● Online Game forums (Gamespot)
17. Value Chain Analysis - Services
Electronic Arts:
Not surprisingly, as digital
revenues continue to rise, so
too, does service revenue. For
EA, service revenue
represents 40% of overall
sales
Activision Blizzard
● The company provides technical
supports via email or telephone.
● Activision has service team
aligned for the users of Steam or
Battle.net who help the customers
for installation and registration for
the game.
18. Value Chain Analysis - Procurement
In order to obtain the necessary resources to function successfully, EA and
Activision both generally looks toward independent contractors.
Mostly, these contractors provide ideas for new video games.
19. Value Chain Analysis - Human Resource
Management
Electronic Arts:
Culture - Hard work and Success
Values Honesty
Appointment of positions based on
merit alone
Mediocrity and lack of passion is not
tolerated
The worst thing an employee can do is
miss a deadline
Activision Blizzard:
● Fortune top 100 Companies to work for
● arrange storytelling events, visual drama
and many other activities to make the
workplace fun and effective
● They have more than 30% of minorities
● More than 20% female in top management
● College Tuition Reimbursement up to $7,500,
paid vacation, up to 90 days of maternity leave
and yearly bonuses
20. Value Chain Analysis - Technological Development
Electronic Arts:
Technology is an important aspect of EA’s
overall business, starting with the
establishment of 3DO Inc., a joint venture
whose primary purpose was to license
technological advancements to hardware
companies
Groundbreaking breakthrough in 2012 - The
organization spent $250 million on a
technology that would allow for
consumers to play the same game on
several different hardware
Activision Blizzard:
● Activision used IW game engine to develop
“Call of duty” which is recognized as best
graphics for its genre.
● Blizzard Online Network Services run in 10 data
centers around the world.
21. Value Chain Analysis - Infrastructure
Electronic Arts:
Three major parts: Corporate, Publishing
Function, and Studios/Labels
Studios responsible for production of its video
games
Prior to 2014, six studios existed: EA Games,
EA Sports, BioWare, Maxis, PopCap, and
All Play. As a result of restructuring, the
only labels that are currently in operation
are EA Studios, Maxis, and EA Mobile.
Decentralized Approach - Studios relatively
autonomous
Central Headquarters ensures that
studios/labels are following overall
vision
Activision Blizzard
● Similar to EA on Production of
games
● 25+ Studios
● New Sports division
● Ten top executives are
responsible for acquisitions,
expansions and publishing new
games to market.
22. Corporate Strategy
Electronic Arts:
Narrow Scope
Stay within gaming industry
Four Different Studios: Bioware,
EA Games, Maxis, and EA
Sports
More Focus less sharing
Activision Blizzard
● Narrow Scope of Business
● Stay within gaming Industry
● Two Studios: Activision and
Blizzard
○ Share Resources but less
focus
● Strategic Acquisitions of smaller
gaming Companies
● Candy Crush
23. Corporate Strategy(EA)
BioWare
Command & Conquer
Dragon Age
Mass Effect
Star Wars: The Old Republic
EA Games
DICE (Sweden)
Battlefield
Criterion (UK)
Burnout
Need for Speed
Visceral
Dante's Inferno
Dead Space
Various EA studios
Medal of Honor
Third-party
Crysis (Crytek)
Half-Life (Valve)
Rock Band (Harmonix)
Maxis
The Sims
Spore
EA SPORTS
FIFA
Madden NFL
NASCAR
NBA Street
NHL
Skate 3
SSX
Tiger Woods PGA Tour
Hoovers, Inc. (2015). Electronic Arts Inc & Hoovers,
Inc. (2015). Activision Blizzard, Inc
24. Corporate Strategy (Activision Blizzard)
Activision
Bakugan
Band Hero
Cabela's Big Game Hunter
Cabela's Survival: Shadows of Katmai
Call of Duty: Black Ops II
DJ Hero
GoldenEye 007: Reloaded
NASCAR Unleashed
Activision( Cont)
Prototype
Rapala for Kinect (fishing game)
Spider-Man
Skylanders Giants
Skylanders Spyro's Adventure
Tony Hawk
Transformers
True Crime
X-Men: Destiny
Blizzard
Diablo
Star Craft
World of Warcraft
Hoovers, Inc. (2015). Electronic Arts Inc & Hoovers,
Inc. (2015). Activision Blizzard, Inc
26. Financial Analysis Comparison
Annual Sales 2014 Net Profit Margin 2014
Hoovers, Inc. (2015). Electronic Arts Inc & Hoovers, Inc. (2015). Activision Blizzard, Inc
27. Financial Analysis EA
Annual Net Profit Margin Annual Revenue vs NI
Hoovers, Inc. (2015). Electronic Arts Inc & Hoovers, Inc. (2015). Activision Blizzard, Inc
28. Financial Analysis Activision Blizzard
Annual Net Profit Margin Annual Revenue vs NI
Hoovers, Inc. (2015). Electronic Arts Inc & Hoovers, Inc. (2015).
29. Implementation
Electronic Arts:
Implements strategy through
human capital
Employees are rewarded for
hard work and determination
(stock options)
Open and honest culture in
which creativity is valued
Activision Blizzard
● Independent Division
implementing different strategies.
● Different teams for different genre
of games.
30. Recommendations
Electronic Arts:
Continue licensing
system/agreements
Continue to invest in digital
platform
Stay ahead of the curve in terms
of technology
Prepare for possibility that Virtual
Reality games will take over
Activision Blizzard
● Continue developing and acquiring
mobile games
● Enter into Sports game segment
32. Recommendations
Electronic Arts:
Continue licensing
system/agreements
Continue to invest in digital
platform
Stay ahead of the curve in terms
of technology
Prepare for possibility that Virtual
Reality games will take over
Activision Blizzard
● Continue developing and acquiring
mobile games
● Enter into Sports game segment
● Augmented Reality