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Comparison of Game Development Company Performance

Information about given companies Act Blizz (Activision + Blizzard by flip) Electronic Arts and Ubisoft. Profits, top/down lines/R&D Spendings

At the key goal of this work is to compare companies, that happen to be associates of digital entertainment industry, firstly, it is very important to get some insight about the industry itself, as well as specific companies.

The digital entertainment industry could be discovered by the creation, circulation as well as advertising of digital content and electronic devices, which are generally used to entertain their owners in the way of consumption of purchased media.

Digital interesting industry is highly segmented; hence, there are several branches of the industry, formulated with device manufacturers, such as Samsung, Nokia, etc. , circulation networks (CBS, Satellite tv), network access providers, such as AT&T, Comcast), companies of digital content (Electronic Arts, Ubisoft, Common, Activision Blizzard), and multi - business conglomerates (Sony, Microsoft).

The main idea behind the research is to investigate the performance of the digital content producing companies.

During the previous two decades, gaming industry became one of the powerful contributors to the earth overall economy. Now the gaming industry's gains overcame publication sales and music sales, and much like movie revenues in the United States.

(http://www. marketingcenter. de/lmm/research/publications/download/Marchand_Hennig-Thurau_JIM_2013_Video_Games_Industry. pdf)

The graph below shows historical data as well as forecasts of the full total revenues made in video games in three biggest marketplaces- USA, Japan and China.

(http://www. pwc. com/gx/en/global-entertainment-media-outlook/segment-insights/video-games. jhtml)

The graph confirmed the dynamics of progress for the video game industry plus some predictions about the near future growth. As it sometimes appears, the predictions, as well as the expansion are positive and average expansion for the market segments in general by 8 % annually.

Global video gaming market's development is run by the expanding of internet connection to new places on earth. Source of progress is displayed by growing quantity of folks preferring playing video games total other enjoyable activities as well as progressive total growth of internet surfers and smartphones or tablet owners. Relating to OUR COMPANY IS Social corporation (http://fr. slideshare. net/wearesocialsg), the average internet penetration on the planet exceeded 35% and constantly growing as well as mobile penetration, which already exceeded 93% global average with only 21% mobile broadband, broadband web connection on mobile devices in the world. This implies a great prospect of the video gaming industry to grow in future, covering new areas.

Consumers like and search for the interactive, digital world controlled by their actions. Moreover, this interest displays in the global growth of the industry. The global gaming industry growth, comprising online, mobile, console and Personal computer games is represented in the graph below.

(http://www. pwc. com/gx/en/global-entertainment-media-outlook/segment-insights/video-games. jhtml)

As it is seen from the graph, the overall tendency of video game market growth does not hold in the case of PC video games. The projections show the decline of the industry, while other parts of the industry will develop.

Talking about the primary consumers of such kind of leisure, the age range are different greatly, fluctuating between 5 to 45 years and will probably stretch in future. The recent studies approved that 29% of folks over 50 years old enjoyed computer, console or mobile game at least one time. Talking about the gender composition, needless to say that it's surprising, the average percentage of women who like playing video games rather than traditional ways of leisure amounts to 47% out of final number of women in the Expresses.

As it was stated before, the industry is likely to be split into two vital parts: software and hardware sub-industries. Hardware industry presents the development of the physical musical instruments of the interactive entertainment, such as PC's, video games consoles, smartphones and mobile tablets. Software industry, subsequently, presents software developing, which is used on the hardware gadgets. The primary condition of the fast and profitable progress of both sub- establishments is in their cooperation. Nevertheless, software builders will probably receive higher income than hardware companies.

Dynamic technical progress allowed people to use smartphones and mobile tablets to spend leisure using favorite video games everywhere they want. Matching to recent research, 2/3 of the total money spend using cell phones or tablets were spent on video games. Furthermore, 30 % of the entire downloads, made on the unit were video games as well. (Newzoo mobile video games trend survey)( http://www. newzoo. com/trend-reports/mobile-games-trend-report/). The desk below shows the global earnings made from retailing video gaming on mobile phones and tablets, and the talk about of mobile video gaming sales in comparison to total video games segment.

(http://www. pwc. com/gx/en/global-entertainment-media-outlook/segment-insights/video-games. jhtml)

As ones can monitor from the graph, the income increased almost double in six years. Aswell as the mobile game titles share out of the total video gaming share boosts on 1 per cent annually normally.

Talking about gaming system video gaming, it is represented by the specially designed and created devices for the overall game experience only and the market is separated from other game marketplaces, like PC and mobile game markets do as well. The primary reason of that is based on the way, how the organizations - owners of the consoles are managing the incoming game titles on their hardware. The market is noticeably old and first era of game consoles were created in 1970s. Nowadays, the eight's technology of the consoles has been sold on the marketplace. The companies of the consoles struggle with endless technical improvement and personal preferences of gamers to be able to achieve complex benefit over their competitors. Among the leaders of this have difficulty stands Microsoft Company using its X Container One, Sony, with PlayStation 4 and Nintendo Company, with Wii U.

Console gaming profits since 2011 with forecasts for the further years are symbolized below. In addition is it ought to say that only the leading regions of the world by income from console sales were chosen for the graph.

As it sometimes appears from the graph, the income in the North America and Western European countries are much higher than in Asia Pacific region.

But at exactly the same time, industry has some problems.

One of the features of the industry is that the vast majority of the game growing companies have their revenue tightly linked to the sales of video game platforms for this games, which are manufactured by the 3rd functions, as Microsoft Xbox, Sony's Playstation and Nintendo's Wii and DS. The success of the firms business is correlated with the performance of the businesses, which are producing game consoles. Hence, the gaming programmers have to predict which game programs will have good sales on the marketplace, and develop commercially successful video games for these systems.

Another feature of the market is strong competition. The firms operating on interactive software industry meet troublesome competition from the medial side of other publishers of Laptop or computer, console or mobile amusing software. The difference in size could be great. Small companies are struggling in order to market and sell their solitary product, which they were creating for a long time, huge companies, like Microsoft or Sony have complete departments of gaming developers, focusing on different multimillion tasks at the same time. And the range of the company sometimes will not guarantee the best quality of created video gaming and the possibility of the specific product to be successful. As a lot of the gaming industry is based on the pure figure, which kind of games will have success in future. Considering the time of the growing good in conditions of quality video gaming, which sometime can last for year or two, it might be almost impossible to predict future tendencies on the marketplace. Many small companies received billions from sales with their small-scale gaming project, which was made by couple of fanatics, only because the product received success and acceptance among gaming culture. At exactly the same time, the relatively short history of video game developing is full of fails of multimillion assignments, that have been created by well-known companies.

The most important problem, related to the digital entertainment industry is growing piracy. Unauthorized copying of products impacts sales of all companies within the industry, as they are taking vast amounts of losses on their own content which was distributed by the 3rd party without obeying the laws and regulations relating to intellectual property. As the vast majority of the developers are selling their products all around the term, intellectual property regulations of other countries might not exactly protect the firm from the unauthorized copying of the products. Furthermore, the fast enlargement of the broadband internet may sharpen the piracy problem, as the transfer of data becomes more easy and fast.

Among huge variety of game producing companies, I chose three biggest & most popular ones that in my own mind will be the best representatives among others of the same industry. Within the bar chart below you can view the top 10 game developing companies, by their income of the fiscal year 2013 (in billions of US dollars).

The companies, which I've chosen for my research are coloured in red. Such specific choice that I've made could be described from the point of view of their central activities. To be more correct, companies which are present on the bar chart among the biggest by income, have a part activity.

As it is commonly known, Microsoft produces a huge amount of products, as well as own video gaming console brand, and their activity is much away from game development, marketing and retailing, which are just the excess activities of the business. Sony is another exemplory case of the huge company with only little part of activities, centered on video game development and, as well as Microsoft, Sony possesses a series of gaming consoles. Nintendo and SEGA, in turn, have their own system brands in development, and also can't be considered as real game software suppliers.

Activision Blizzard, Electronic Arts (EA) and Ubisoft are the only companies, which do not produce any consoles or any other goods, except video gaming, hence my choice was dependant on that arguments. Furthermore, the companies are big enough to make the comparison examination of the performance. However, before inspecting the companies' performance, it is crucial to get some good insight about the central activities of all three companies and their record, to make right conclusions.

Activision Blizzard, Inc is an interactive entertainment company. The primary activities of the business are posting online, pc (PC), game unit, tablet, handheld and mobile games. The main regions of activity of the business are North America, European countries as well as Asia Pacific. The headquarters are located in Santa Monica, California. For 2013, the company hired 6700 people.

The company uses a long term development strategy of growth, taking part in creation of products on different programs and various geographical regions. Activision Blizzard produces and publishes games on many different consoles, handheld platform as well as on Computer. The company sales game titles that are relevant on all most popular consoles, like Ps3 3 and PlayStation 4, Nintendo Wii and Nintendo Wii U and Microsoft Xbox 360 and Xbox One. For handheld systems, it includes its products on Nintendo Dual Display and Nintendo 3DS. Furthermore, in offers mobile video games products on Apple iOS and Android devices, as well as on Computer.

Activision Blizzard has a good portfolio of the online subscription-based video games, in the category of MMORPG. The primary subsidiary which is in charge of online flash games is Blizzard. It evolves and publishes Personal computer oriented video games and maintains own online-game service, named Battle. net. You will find about 7. 8 million people, playing Blizzard's Wow, relating to recent company's record in the long run of financial year 2013.

The company has created lots of subsidiaries around the world. At the beginning of 2013, the company coordinated the activity of the 53 facilities in 18 countries. Furthermore, the net earnings from internationally conducted sales were approximately about 50 % in 2012 and 2011 respectively. The main offices of the business are found in Canada, the united kingdom, France, Germany, Ireland, Sweden, Netherlands, Spain, South Korea, China, Australia and the USA.

In order to check out the growing pattern in the interesting software, company offers online and packed software and games with this content, that was regionally fine-tuned to a particular areas. Such diverse selection of activities and geographical regions of the company helps to protect it from dangers associated with negative economic movements which are likely to appear in a single region.

(swot Ж јЅ їїє act blizz annual information)

The performance of the company instantly one can see on the graph below.

Activision Blizzard reported significant growth of profits. The net income was $1, 149 million in 2012, with a rise of 5, 9 % over the prior 2011 season. The improved profitability of the business signifies on the better cash generating process from total revenues to net earnings. Furthermore, the increase in profit margin signifies in the efficiency of the costing strategies of the company as well as the ability to control own costs and expenditures. In addition, it indicates on the power of the management to purchase the profitable ventures.

Next company is Electronic Arts - and American posting, expanding and distributing company as well among the biggest electronic digital entertainment industry companies on the globe. The business was founded in 1982 and throughout its background was creating video gaming. Since 2007, company began to get smaller game developing and publishing studios.

EA includes divisions, called labels. Among them are EA Video games, EA Sports and EA Play. In addition, there's a smaller sub-division called EA Interactive, which handles studios, creating game titles and software for mobile programs.

Some performance indications of the EA Company are provided below.

Company possessed major problems in conditions of moving its profits into net income for almost the complete period of company's observation. The main reason of it is based on a rise of the debt, take be the business for financing activity. As it is seen from your debt to Equity relationship, total liabilities of the company were little by little increasing over the time of observation and during 2012-2013 exceeded the amount of shareholder's collateral which exists in the business. Generally speaking, the business has some problems available operation and further analysis will reveal more details about the precise trends.

Ubisoft was created in 1986, starting its activity as a distributor of the video games, created by EA, Sierra and other American game-developing companies. It really is a French programmer, publisher and store of the video games on various game platforms. The company is known as third biggest 3rd party game publisher, pursuing by Activision Blizzard and Electronic Arts. Company contains 29 studios in 19 countries and all studios are focused on specific game portion or task, with the main development studio situated in Montreal, Canada.

Because of the recent global monetary tough economy and the increased competition from the mobile games, as well as recent acquisition of Red Lynx creator, company's down line was negative through the 2010-2011, as it sometimes appears from the graph.

However, the business's net revenues started to go back to normal after 2011. The company achieved the increase in its net cash by reducing R&D costs and lowering borrowings, as it sometimes appears from the decrease of debt to equity ratio.

(http://www. indeed. com/cmp/Ubisoft)

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