3 Brilliant Lessons on Innovation from the Video Game Industry
In general, outside the gaming community, video games seem to have had a bad reputation. Games have largely been blamed for wasting time, impacting education negatively, obesity due to physical inactivity and even violence. But the fact cannot be denied that the video game industry is booming, and is here to stay. In fact, according to the Global Games Report 2017, video games are projected to have $128.6 Billion in revenue by 2020. To put this in perspective, that is more than the global movies and music industry combined.
So what is the reason behind the success of this industry compared to its other entertaining counterparts?
Well, as an avid gamer myself, I could go on about how games are actually beneficial and that's why they are here to stay but that is not the reason why this industry has thrived for so long. The fact that the industry is entertaining is also a huge factor but, in my personal opinion, it is the innovation in this industry that has kept it going for so long. Creators in this industry have been quietly innovating since the first gaming console came out and this innovation has never really stopped.
In an age when "innovation" is the buzz word and every company wants to get on the innovation train, we can definitely learn something from this booming industry.
And so here are 3 innovation lessons we can learn from this sector.
1. Innovate in the business / revenue model
This sector really seems to have great diversity in the revenue models. Games are big business, but gamers are not always "buying" a product. Lately, games have gotten even more creative with the way they are making money.
Here are just a few revenue models that exist in the gaming industry.
Direct sales and distribution of physical games. (These are your standard cartridges, cd's sold in brick and mortar retail stores or delivered to your home)
Pay to download games (Digital downloads of games)
Paid downloadable Content (DLC) (Players may pay a small fee to buy a game, but will need to pay extra to get more downloadable content)
Freemium Model (Play a few levels and pay to unlock the rest of the game eg. Limbo, Valiant Hearts)
Free to play, pay to win (Games where you can advance organically, but you have the option to pay for items to advance quicker and be more competitive eg. Candy Crush.)
Ad revenue model (Games have ads to generate revenue, until user pays to remove ads. Ads can also be used to advance the game, like rewarding extra lives by watching a 30 second video ad.)
Subscription models (Games are part of a platform where users get unlimited play for a monthly subscription fee)
Virtual goods model (Players buy game coins with real money to buy in-game goods and merchandise, generally in simulation games like the Sims, etc.)
More and more innovative ways are coming up to make money from video games. The core product remains the same, which is a fun, engaging art medium. However the way it is being presented or being "sold" is changing. Many games are even adopting hybrid models combining one or more revenue model and adopting further models from other industries, delving also into sales of merchandise for popular games, and episodic releases like a TV series.
Innovating on the revenue model in your business may not be as easy but it is welcoming to see that there are many possibilities, and just by thinking in an innovative way, any business can change the way they deliver their product or service to their customers.
2. Innovate in and around your product
Here we have to realize that games are a product, they are games. Just like movies are movies and music is music. However, the ways of access we have to these products is where the innovation has been happening the most. We have had handheld games before we had handheld mobile phones, portable, and rechargeable. When I was an infant, my mother was playing this Nintendo handheld game below. (I have pictures to prove it)
This was probably my first piece of technology and escape. I was playing this before I could even read. I am still in awe that this was even available in 1983. In fact the above console was released in 1980, when most households didn't even have regular telephones. Basically, we have had these handheld devices even before our smartphones.
Motion sensors, AI, VR and many other technologies have been developed in the gaming industry, all in the name of entertainment. The core product, the video game, has essentially remained the same, which is a story-based challenge of some sort given to the player, while utilizing their input using some form of button or stick.
But around the product, there has been a tremendous amount of innovation, whether it is a new form or way of input. And these innovations have been then used in other industries for numerous other applications.
When the Nintendo Wii first came out in 2006, it addressed a whole new market because of its innovative motion play and so it was targeted to a completely new demographic and marketed as a "family" console.
Pokemon Go capitalized on another technology of Augmented Reality (AR) and gained worldwide acumen and success, and yet the gameplay was still about catching Pokemon which was nothing new.
Games, therefore teach us, that even when our core product remains the same, we can innovate around it, by incorporating new technology and hardware, by targeting a different market altogether, or by changing the manner in which people are interacting with the product/ service.
When the focus shifts from creating something completely new and innovative, to creating something that compliments the experience or delivery of your already existing product, the possibilities are tremendous.
3. Innovate in the application/ use
Again, essentially the core product is the same, completing challenges, and watching a story unfold while using player input. But game creators are innovating on what games are being used for. They call it gamification.
Today, games are being used in therapy, training, education, and even promoting peace. In fact, this UNESCO report by Paul Darvasi suggests that games can support peace education and conflict resolution. It is no wonder that the UN is trying to capitalize on the popularity of games.
This opens up a whole new market for the sector, and can have great impact on not just this industry, but on other industries as well. Our whole education system could be disrupted by engaged interactive learning.
So the question is: Do you have a product or service that could serve another purpose than it already is? Think about it. If games that have been considered to induce violence, can be used for promoting peace instead, then perhaps your product or service could be used for something you never thought of too. At least not yet.
When we look at innovation, we look at all industries and sectors. In fact, we are going to be celebrating innovation and unreasonable thinking very soon. The Falak Unreasonable Thinking Summit is coming in April 2018, and we are ready to roll. Keep following us to find out when registrations are open.
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