The Future of Electronic Network Gaming

The continuous development of technology has led to the innovation of modern methods of entertainment that encourage socialization among people through computer games. The gaming industry consists of disruptive technologies that seek to influence user actions online and foster interactive socialization. The invention of hardware tools such as personal computers, tablets, and smartphones has enhanced the assimilation of games into the social fabric of society such that they are now easily accessible yet mostly invisible. Since the start of interactive gaming in the 1940s, the industry has developed by taking advantage of technological advances such as social media, robust hardware tools and the virtual reality space. Consequently, the companies needed new methods of marketing and maintaining sustainability, which led to strategies such as the direct exportation of gaming products, foreign investment, mergers and globalization of businesses. Beijing is one of the cities in China with paramount gaming, especially among young people between the ages of 18 to 35 years. The identification of young people as the primary target population is the basis for the apparent shift from fun to fan culture such that studies of consumer behavior influence inventions and development in the industry. A questionnaire of the various effects of electronic network gaming on consumers has indicated that consumers are the ultimate determinants of whether a marketing strategy is effective. The different levels of satisfaction with reliability, quality, and capabilities for integration with hardware tools demonstrate that people have different opinions on electronic games and their effects on the real relationships in the society. Future projections show a change in marketing and gaming trends that could lead to the elimination of gaming console and utilization of the virtual reality space more robustly.

Keywords: electronic network gaming, marketing, Consumer Behavior, Beijing, computer games, socialization, gaming.

Chapter I: Introduction

The advancements in technology brought a myriad of innovations that changed the social and economic spectrum of the 21st-century generation. Gaming is a significant development in the modern age and a subject that requires exploration to understand the concept of electronic network games. The objective of this study is to explore the online gaming industry, with attention on the trends that enhance sustained growth. Both aspects of the study are represented by a literature review and a methodology respectively, to accurately show the tested theories on the subjects according to gaming experts in the two cities. A survey through questionnaires provides the results that inform the discussion of the gaming trends. The questions and answers to the survey will be the subject of quantitative research and participants are volunteer online users who engage in gaming in different capacities. Central to any research is connecting the results of the survey to the main topic and the consequent implications (Almalki, 2016, p.288). Some of the most critical aspects of the literature review include a review on the concept of online gaming, international marketing and sustainability, fun and fan culture, modern marketing strategies and actual differences between gaming in Beijing and other cities such as New York. Every element of the study involves the identification of trends, challenges, and gaps in research that can be the basis for future developments in gaming. The final part of the dissertation will involve the formulation of implications, recommendations, and a conclusion. Notably, the literature review and the quantitative survey are the guides to making the final remarks, which determines the contribution of the dissertation to the topic, as well as identify the future application.

Research Relevance

Toffel (2016) asserts that enhancing the relevance of research makes the finding more applicable to future academic studies and discussions. For instance, the study will show the significance of the questionnaire involving consumers to the topic of strategic marketing on an international level. There is a remarkable growing interest in the electronic network games (ENG) industry as a significant global economic driver. Marketing-related studies that focus on emergent “mass market,” otherwise known in the marketing industry as “gamification,” remain scarce despite the significant increase in online games consumption (Plum and Hassink, 2014). Some of the older adults who grew up playing puzzle games are interested in new and improved methods of gaming that not only offer leisure but provide a comfortable means of interaction. The widespread expenditure of gaming and social integration of game use into society is due to the influx of smartphones and other handheld devices, as well as the wide distribution and access to consoles, and PCs (Wei and Lu 2014; Plum and Hassink, 2014), (Jin, 2014). In consideration of this limitation, the proposed research project seeks to evaluate current markets in Beijing, and the marketing trends in both electronic network games industries. Notably, the chosen cities and countries are representative of the two regions of East and West, which are usually opposed on numerous issues including technology and marketing trends. The study can help fill the gaps in existing literature and determine the future of marketing strategies that ensure sustainability of business within the volatile and continually evolving electronic network gaming industry. In this regard, while traditional factors of culture, computer literacy, and income should remain pivotal in marketing decisions, the intended research predicts their declining collective significance in future marketing decision support systems. Therefore, advocates for an explicit value-driven social-based reverse marketing approach underpinned by the fast-growing fan culture exhibited by the next generation of gamers (Wei et al., 2012, p.2). Fundamentally, the existing gap in research is predicated on the lack of proper knowledge of the future, which is also the basis of justification for the study.

Background Information

Computer gaming has a long history traceable back in 1947 in the US when Estle Ray Mann and Thomas T Goldsmith Jr. designed the first game for playing that used a cathode ray tube to play (Li, 2006, p.1). There has been a technological evolution of computer games, where changes are not only based on innovations but the variations in the social aspect of human existence. The 1960s and 1970s involved the development of primitive and straightforward games that were primarily two dimensional (2D). The development of more sophisticated computer hardware and control consoles led to remarkable growth in the industry in the 1980s (Li, 2006, p.2). However, the revolutionary changes in computer technology in the 1990s is the basis for most of the contemporary gaming trends. Concepts such as networking, three-dimensional games, sound cards, color monitors and different input and output devices became an inspiration for the global development of new gaming theories and tools. According to Casey (2015), the external and internal components of garget used in online gaming changes depending on a game. For instance, some games such as the more intensive war games require more power and cache space while others such as interactive puzzles need less internal memory. Furthermore, the internal and external equipment and software must match and complement each other for the provision of ultimate gaming experience to the users. The marketing strategies in China and the US account for the possibility of unmatched gaming devices and process to formulate the necessary technology. Addicted gamers have manipulated systems to make their own gaming consoles (Slangen, 2018, p.2). While the past may have been predicated on technological changes, contemporary nature of gaming trends depends on consumers and users.

According to technology commentator China Cities, three major online gaming companies in China control the market. First, Tencent is the largest manufacturer of gaming technology in China, with a hegemony of the market. With total earnings of more than $1.4 billion, the company has developed popular games such as Dungeon and Fighter, QQ Dancer, QQ Xunxian, and CrossFire (Scarlatelli, 2011). Tencent markets its products internationally by merging with foreign companies. Secondly, NetEase was established in 1997 and has developed games such as Westward Journey, World of Warcraft, and Fantasy Westward Journey, which ranks as the most popular MMORPG in China. The company has estimated revenues of $749 million as of 2012 (Scarlatelli, 2011). Shanda Interactive Games is the third major company with games such as Magical Land and World of Legend accounting for revenues of $680 million according to a 2010 audit. Other popular gaming companies based in Beijing are KongZhong, Perfect World, Changyou, Giant Interactive, The9, Net Dragon, and Shenzhen ZQ Games (Scarlatelli, 2011).

New York also hosts several gaming companies, with a relatively smaller market share given a large number of gaming companies in the vast US ENG industry. For example, Zynga is a gaming company that invents social games with a subscription of more than one billion people worldwide (Schroer, 2017). Since inception in 2007, the company has Words with Friends and Farmville as the most popular games. Secondly, Riot Games was established in 2006 and produces player experience-focused games and is connected to the world of eSports with games such as the League of Legends. The games Red Dead Redemption, Max Payne and Grand Theft Auto, were produced by New York-based Rockstar Games that has the highest experience of more than twenty years in modern online gaming (Schroer, 2017). The company has a large consumer percentage in the US and has marketed and sold more than 150 million copies of the game overseas. Other US-based companies are Avalanche Studios (Mad Max, Just Cause), DreamSail Games (Blade Balle) and Games for Change (Half the Sky Movement) (Schroer, 2017).

The rapid change in demand among the users is associated with the development of advanced group-based games as a result of innovative and affordable smart mobile device technologies, as well as increasing internet penetration (Rarick, 2009, p.3). Further prospect for industry growth is evident in the momentous adoption of the electronic gaming culture in both developed and developing economies (Williams and Seteroff, 2009, p.43). The development and popularization of E-sports have recently taken electronic network gaming to a phenomenal level (Pannekeet, 2017). Having a significant global audience and a growing number of stakeholders in the sector depicts the existence of stiff competition which indeed, requires the establishment of effective marketing approaches to continually improve global presence for electronic network gaming brands (Rand and Light, 2011, p.682).

Central to the study is the need to understand the consumer behavior and trends in online gaming, as a critical factor of digital marketing. Much of the research regarding consumer trends and behavior is associated with online auctions, but the entertainment industry has garnered less attention concerning consumer trends (Hsu and Lu, 2007). However, as global businesses continue to digitalize services and people become more dependent on the online platform, the gaming industry studied consumer behavior that leads to loyalty and association with a particular brand. The development has led to consumer trends such as e-commerce application of the internet in the sale and purchase of games products such as consoles and software (Okuneva and Potapov, 2014, p.3). Consequently, the common trend for consumers is opting for the most affordable games, which offer the latest technology with ease of access for all the required hardware and software equipment to actualize playing. The consumer behavior factor of online gaming has led to loyalty such that several million people currently have accounts in massively multi-player online games (Okuneva and Potapov, 2014, p.3).

The trends of consumer behavior mean that companies have invested more in strategies that seek to determine to get loyalty from internet users. Therefore, gaming firms have affected the spending habits of people such that individuals are prone to getting the latest games and technology mostly for the thrill and not need. Essentially, gaming companies have made people chronic users of the internet, which may affect gamers but is an advantage for the companies. In effect, people are motivated to subscribe to gaming accounts and online communities to get the latest technology, and the cycle of consumer and company dependency continues.

Considering the example of Beijing, the gaming and consumer trends are unique and different from the United States. In essence, the Beijing population is more affected by the gaming trends such that gamers gather and tune in online at the same time to follow players of the League of Legends and other popular games. Soo (2017) reports that as many as 800000 fans tune in online games in Beijing. After every game, there are instances of analysis and betting concerning the next games and levels, which offers a chance for socialization through the online platform. From the findings of the study, most of the gaming consumers usually proceed to engage peers in finding methods of exhilarating the already existing games and finding new means of pleasure. Fundamentally, consumer trends in Beijing are more evolved, which explains the growth of the industry in China.

Research Aims

The research purpose and aims is the guiding principle when gathering and synthesizing raw data and figure into coherent information worthy of academic consideration (Thomas and Hodges, 2010). The proposed research seeks to evaluate marketing trends in the ENG industry by examining how traditional factors of marketing such income, culture, and computer literacy affect the consumers’ intention to buy or play. The study also aims to explore the feasibility of a value-driven social-based reverse marketing approach by considering ENG markets in Beijing. For example, there is a need to determine if the gaming products in China have any interested population in the US and vice versa. Furthermore, the analysis will examine the difference between local and international markets for the gaming products and equipment produced in each country. To achieve the study objectives, the research explores the emergent eSports culture, as well as the rise of Multiplayer network games and a strong “fan culture” among global gamers. The study will also seeks to determine the implications of the shift on future game invention and consumption by online users. Given the possibility of ambiguity in research, the study notes the following as the guiding objective and research questions that provide precision in analysis. The literature review is based on the study objectives while the quantitative aspect of the study seeks answers for the research questions through a survey. The discussion of results connects the literature review to the findings of the research, which collectively provide grounds for formidable recommendations and a conclusion.

Research Objectives

To evaluate and understand the development of the electronic network game market(s) in Beijing.

To examine the extent to which traditional factors of marketing, such as computer literacy, income, and culture affect marketing strategies and the intention to play in the electronic network gaming industry of Beijing.

To evaluate the significance of the “fan factor” over the “fun factor” in networked/online electronic video game marketing success.

To determine the future implication of changes in technology and fun culture as well as technological gaps of innovation by gaming companies.

To determine a possible marketing strategy that ensures sustainable growth in the competitive industry by considering changing consumer behaviours.

To understand the mechanisms of collaboration between global gaming companies from regions with different socializations.

Research Questions

Are traditional marketing factors, such as income, computer literacy, and culture becoming secondary in future marketing strategies particularly with reference to the demand and supply trends observed in the electronic network gaming industry?

Is the “fan factor” replacing the “fun factor” as the main influence in consumers’ intention to buy or play electronic network games?

What are the current marketing strategies utilized by global computer games?

How are internet users and gamers influenced by the marketing strategies employed by ENG companies?

How does China and the US differentiate between marketing locally and on the global scales?

How reliant are gamers on the various aspects of online electronic network games?

How do gaming companies sustain international growth and marketing?

Summary of Chapters

Chapter 1: Introduction – The proposed study thesis will be introduced in this section which will also include the background information, relevance and justification, problem statement, aims and objectives, and the research questions. The chapter offers the reader the invitation for further exploration of the topic.

Chapter 2: Literature Review – A collection of related literature will be systematically and thematically reviewed in this section in an attempt to answer the study questions and to fulfil the objectives. The review is subdivided into different subtopics to reduce ambiguity and enhance clarity of information presented.

Chapter 3: Methodology – The methodology section will discuss the adopted or preferred research methods, strategies, and philosophies employed in the proposed research in order to answer the research questions or test any hypotheses.

Chapter 4: Results and Findings – All the results gathered from the literature review and the online questionnaire survey will be presented in this chapter. The chapter also consists of results from other researches to collaborate the findings of the survey and the review.

Chapter 5: Discussion and Analysis – The findings and results validate or disapprove the study claims through a rigorous discussion and analysis of both qualitative and quantitative aspect of the research.

Chapter 6: Conclusion – Key points and observations of the study will summarized in the last section of the research paper where appropriate recommendations will be made.

The following section of the study involves a critical analysis of existing literature on gaming trends. The review is divided consists of sub-sections that address answer the pertinent research questions and fulfill the study objectives. A critical note is that the review is not a conclusive mark of the subject of discussion and must be collaborated or disapproved by submissions from the subsequent chapters, primarily the results, analysis, and findings. However, the following review consists of data mainly from China and the US and also informs the implication, recommendations, and conclusion.

Chapter II: Literature Review

The existing research on electronic network games is fragmented into various parts that constitute studies that are based on both technology and social sciences. For example, while Li (2006) is inclined to discuss the development and evolution of gaming, Wei et al. (2012) are more predicated on the social impact of gaming on modern society. Evolution is important for showing the basis of modern electronic network games and possibly help project the future of the industry. For instance, although China did not have a gaming population previously, the penetration rate has soared to the millions as exemplified in research by Goryl (2003) in figure 1 below. The two studies illustrate the differences between traditional and contemporary gaming. However, both studies explain the concept of gaming, which is the subject of discussion in the first part of the literature review.

Figure 1. Chinese Internet users and penetration rate as % of total population.

Note: Adapted from “Chinese Online Gaming” by Craig Goryl, 2003. Copyright. J.P Morgan, 2003.

The Concept of Online Games

Electronic network games are the type of video games played over the internet through the use of smartphones, computers, and game consoles (Kshetri, 2009). Primarily, the industry consists of two sub-markets; the hardware and software market (Marfels, 2011, p.175). The most popular electronic games include pay to play, mobile, and free to play games. Currently, China and the US dominate both online and offline gaming industry due to advancement in technology and increasing preferences for the services by consumers. Although strategic marketing the premise for the dissertation, Dong, and Mangiron (2018) assert that companies cannot achieve the same without understanding the concept of gaming in the particular target country. For example, the concept of online gaming in China is a function of the culture of the community in most western nations (Dong and Mangiron, 2018, p.149). Therefore, companies from the US can fail in strategic marketing for using providing a product that does not complement the Chinese culture of the community in gaming. There is a need for cultural adjustments when exploring external markets, which explains the merger between US and Chinese companies in the ENG industry.

With the growing development of internet-enabled gadgets, such as personal computers and smartphones, revenue generation from the sector is rapidly increasing hence attracting stiff competition from the existing organizations (Kshetri, 2009). Besides, many companies in the industry are equipping their game consoles with embedded network adapters to enable internet access. Some of the popular social-oriented games include sports, racing games, war games such as battle royal, and adventures (Marfels, 2011, p.176). As a result, the exciting game experiences are usually provided to many users connected through diverse terminals, thus increasing its adoption.

Central to the success of online gaming is the creation of online communities mostly by young people for competition. The platforms, which have club experience and structure, provide the participants with a mixture of competition and computer-mediated encounters designed to imitate actual events (Voiskounsky, Mitina, and Avetisova, 2004, p.259). In the 1990s, the concept of online gaming involved Multi-User Dimension (MUD) that were based on text-only virtual environments. Adventure games based on novels or movies were the main online games at the time. However, as technology evolved, the terminals and platforms of gaming have tremendously developed to attract more gamers and consumers of online competition (ITU-T Technology Watch, 2011, p.1). The concept of online gaming is subject to change depending on the changes in technology and the social fabric of society. Given the globalization of networks, a fundamental question is how the companies mentioned above sustain marketing internationally.

Marketing and Sustainability

According to Mellahi et al. (2010), significant innovations in communication, financial flows, transportation, and the consistent development in technology has made the world smaller (p.3). The robust growth has allowed international organizations to reach different types of geo-dispersed consumers and compete favorably (Vahlne and Johanson, 2017; Gbadamosi, 2012). Therefore, through intensive marketing via appropriate channels, brands and products produced by various companies are accepted in both local and international markets (Goltz et al., 2015, p.23). However, according to Al-Zoubi (2017), the internationalization equally creates both opportunities and challenges, by allowing access to a substantial market share and increasing competition respectively (p.78). For sustainability in the current environment, businesses must determine effective and appropriate channel structures and strategies that create value for consumers (Casson and Park, 2014; Marchand and Hennig-Thurau, 2013). Many gamers are usually influenced by branding when determining types of games to participate (Yang, 2018, p.2).

In the current age of consumerism, building brand equity for any computer game is one of the strategic moves for Chinese and US companies. Regardless of the value of the gaming consoles, equipment, and software on sale, the commercial value that the organization derives from the consumers’ perception of the merchandise is enough security for the longevity of the game on the market, even after the invention of new electronic networking platforms. Brand equity is a concept of marketing that focuses on the value of products and services to increase the possibility of purchases from customers (Grewal, Roggeveen & Nordfält, 2017, p.2).

Despite the seemingly direct advocacy for online marketing in search of sustainability, international internet marketing for games and modern social network products require a different approach. Eid and Trueman (2002) note that since most online game developers do not have the accompanying hardware, they must cooperate and consult with PC and other gadget companies to determine the most suitable markets (p.54). The internationalization of gaming mostly depends on the geographical scope of computer manufacturers such as Motorola, Intel, IBM, and Xerox, as the world’s leading mobile technology companies (Canny and Hartmann, 2010). For instance, the extent of reach for the games developed in the US depends on whether the software is compatible with the devices in the country of the intended consumers. Considering IBM as one of the major technology companies for proving gaming solutions, marketing and sustainability cannot occur unless the structural and infrastructural make of the network game is coded to work on IBM machines. IBM provides recruitment, teaming and user experiences that simulate environments, which become like real worlds of engaging in battles or run, according to the specifics of the game (Andrews and Hamilton, 2006, p.1). International marketing and sustainability for both gaming companies and consumers are enhanced when IBM machines provide the necessary platforms for effective and user-friendly gaming experiences online.

The virtual gaming and social space have resulted in the development of a variety of internationally recognized collaborative projects, networking sites, and content communities. The new media available all over the world enables the gaming companies in both China and the USA to develop targeted campaigns that reach specific segments of the global population (Pawar, 2014, p.36). The need for sustainability in international marketing is evident in trends in the US and China. For example, the entire industry in China seeks to reduce the hegemony of the US in the ENG industry through the creation of new Massively Multiplayer Online Role –Playing games (MMORPGs) and marketing campaigns that reach the neutral regions such as Africa, Europe and the Middle East (McGraw and Hoglund, 2007, p.76). Such consumer-focused strategies are the reasons why gaming has shifted from fun to a fan culture, which requires detailed analysis.

From Fun Culture to Fan Culture

Games are webbed into society’s cultural meaning, politics, social connection and the economy (Lindtner and Dourish, 2011, p.453). When the basic tenet of computer gaming is socializing and providing opportunities for contact, then the industry is based on fun culture. However, when players are central to the entire process of design, manufacturing, and marketing, the concept is known as fan culture. Wolf (2017) notes that video games have become part of the American culture, which explains the shift from fun to fan culture. The extent of change is depicted by research studies indicating that networking games have surpassed movies and other forms of entertainment in the US to become the first preference, especially among young people. The US-based research by Wolf (2016) collaborates findings in China concerning the fan culture. According to Liang and Shen (2017), the Chinese fan culture has been the primary method of propelling creative industries and contributing to the national revenue from the electronic network game industry. The fan economy in the US and China is not just a phenomenon of study but a concept of business where consumers, who never meet the producers of commodities, have a formidable bond with the companies (Liang and Shen, 2016; Wolf, 2017). Such developments are evidence that the gaming industry has sufficiently shifted from fun to fan culture.

Players prefer socially engaging environment characterized by offline or online interactions among new and existing friends as opposed to playing alone which contradicts the previous perceptions of “video game induced introvercy”(Kaye and Bryce, 2012). Other E-sports titles competing on the same level include CS-GO, League of Legends, and Call of Duty. The heightened competitiveness of electronic network gaming is responsible for the social aspect of gaming, or collaborative game-play, as a critical experiential and motivational influence and psychological arousal which enhances engagement among the current generation of gamers (Kaye and Bryce, 2012). Therefore, these views are consistent with the research proposal’s assertions and study focus in marketing trends within this sector.

A fundamental question is a reason for the shift from the technical aspect to the humanistic perspective of gaming. King, Delfabbro, and Griffiths (2009) attribute the heightened interest in online games to increased psychological studies of consumer behavior and addiction. Furthermore, online social networks have enabled children and young adults to use web-based communication that is more comfortable, than physical interaction. The shift into fan culture, as opposed to fun objective, is also majorly due to changes in global marketing that are inclined to studies of consumer behavior. The fundamental tenet of consumer behavior is answering questions such as, why young people prefer certain games, how they decide on the particular network and competitor, where individuals like to shop for new software and hardware and how they influence friends and family (Consumer Behavior, 2009). Game developers consider many factors that are social, psychological, personal and situati