G322 Institutions and Audiences

Definition: The rapid increase in the amount of a product.

WHAT CAUSES PROLIFERATION
Success
If a product proves to be popular and successful then other products similar in function, genre or style will be released in order to target a similar audience.

Digital distribution
Using downloads or streaming is far cheaper than physical distribution (no retail, shipping or packaging costs) and enables institutions to target a global market far easier. This encourages more and different types of companies (independents, major studios) to produce more content.

Technological convergence
The fact that nearly all digital products (tablets, smartphones, computers) have very similar functions – specifically the ability to connect to the internet and play various types of media (games, music, film) has two effects:
1) It allows for digital distribution (see above).
2) It creates a PROLIFERATION in platforms/hardware that can play ALL types of media.
It is because of technological convergence that your phone now plays games or your games console plays films – when once there were only a few formats you could play game/watch films on, now there are many. 

EFFECTS OF PROLIFERATION - Hardware
Increases the numbers of potential consumers
The proliferation of technologically converged hardware increases the size of the potential market for media products. e.g. Due to the proliferation of smartphones a huge number of consumers – who wouldn’t have bought a specific games console – now play games.

Games developers have a choice of format to create for
No hardware manufacturer has a monopoly on the market (Nintendo did have a monopoly in the 80s and could dictate what games developer could and couldn’t do).

Audiences are fragmented and hard to target
Institutions now have to cater for numerous ways of consumption or settle for only a fraction of the potential audience. In the games industry this means creating a version of your game for DS, 3DS, PC, PS3, 360, Mac, Ipad, Facebook, Chrome, PS Vita, Wii, Wii U – which would be costly and time consuming. In the film industry there is cinema, DVD, Blu-ray, downloads, streaming etc.

EFFECTS OF PROLIFERATION – Software
Promotion can become more important than product
One way of standing out in a busy marketplace is spend more on advertising and promotion. This could mean there is less to spend on production and potentially the quality of the product is reduced.

More competition means pressure to sell
The pressure to sell could mean less innovation – don’t take risks, just give consumers what they already like (more sequels, less creativity) or dubious business practices (in-app-purchases/freemium targeted at children)

More competition drives down the price
This is better for consumers but for institutions this mean less profit which scares of potential investment and businesses could fail.

More choice
At first would be good for the consumers, but too much choice can be confusing and could cool consumers’ interest.

PROLIFERATION: Red Dead Redemption and Angry Birds

EFFECTS OF PROLIFERATION – Hardware

Only the PS3, 360 and high-spec PCs could manage to run Red Dead Redemption due to the open-world environment and HD graphics, this means Rockstar’s target audience was reduced to just the owners of these consoles and not everyone who plays games.

Rovio, however, due to the simplicity of Angry Birds, have been able to create Angry Birds for all tablets, phones, mobile game consoles allowing them to target a huge potential audience and achieve a billion downloads. Initially the proliferation of the iPhone and iPad helped their early success.
A userbase of 1 billion allows them to exploit the Freemium business model – giving the game away for free, monetize a percentage of the userbase with In-App-Purchases (e.g. Mighty Eagle 59p).

Keeping ahead of competition
Due to the success of Rockstar’s GTA series there was a proliferation of open-world games set in cities (Prototype, Infamous, Saint’s Row, Sleeping Dogs etc). To differentiate their games from the competition Rockstar were forced to create deeper more detailed experiences: RDR has countryside full of wildlife, GTA V has a far larger map than IV and much more different landscapes. This means the quality of the product increases (good for consumers), however, productions costs increase.

If production costs rise, the risk of creating games increases, which means failure may cost a company dearly. US games company Midway recently went bust when competing in the FPS market dominated by Call of Duty. Their game, Homefront, cost £20 million to make and didn’t sell enough to make back the initial investment.

If making game becomes riskier then companies will take less chances. Rather than be creative and innovative, they will rely on established brands and existing IP (films, superheroes, TV shows).

So proliferation increases competition that could improve the quality of a product in the short term BUT in the long term may have the opposite effect.

PROLIFERATION AND THE APP STORE (DIGITAL DISTRIBUTION)
As the App Store reduced the barriers of entry into the games world (no physical distribution costs, 70/30 split with Apple) a huge amount of publisher/institutions/developer began creating content.

In Autumn 2008 the App Store reached the milestone of 10,000 apps.
Today (08/05/13) there are 867,530 apps available from a total of 229,094 active publishers/developers.
The biggest category of App in Games with 145,078 games available and Apple receiving 81 submissions to the App store every day.
Here's an article on the nature of the app business world and some of reasons behind proliferation.

The problem for developers/institutions
Due to competition to be successful you have to be Free and exploit using the Freemium business model.
But Freemium only works if you have a large userbase.
To create a large userbase means promoting your game to get users.
But as there’s no revenue coming in (as the game is free) this will need investment and there’s no guarantee the product will be successful.
The best way to attract consumers is to get on the ‘Top’ Lists as that is where most users look for content.
But getting on the ‘Top’ list requires users to download the product.

So how did Angry Birds become successful?
When Angry Birds was released in Dec 2009 there were 36,356 other games to compete against. Rather spending a lot on advertising, Rovio used PR (press relations) to get key websites and games forums talking about the game. This is a time consuming strategy especially as Rovio did it territory by territory, but they knew that once the right people played Angry Birds, due to the quality of the game they would begin talking about it.

The strategy worked: first it was a hit in Finland, then Sweden, then when it was a success in the UK Apple took notice and featured it on the App Store. To capitalize on this exposure Rovio created a Youtube animation of the characters and achieved both synergy (the App store feature and video combining to increase exposure) and the promotion of the game going viral (spread by existing social networks).

Once it was established in the ‘Top’ lists the success gathered its own momentum (consumer download apps in the charts which keep them in the charts). Rovio then ensured the game was talked about by releasing new products (Halloween, Rio versions) and achieving synergy by producing numerous type of Angry Bird product (25,000 and rising).

WARNING FROM HISTORY - US GAMES CRASH OF 1983
In 1983 the US games industry was worth $3.2 billion dollars.
30 new companies entered the games market - there were 12 consoles to choose from.
This proliferation drove down price and drove down quality - big losses were made, investment dried up.
1985 the US games industry was worth $100 million and was declared official dead by some analysts. 
Search for ‘All Your History: The Video Game Crash of 1983’ on Youtube for full story.

 

REMEMBER: ALL THIS IS USEFUL IF PROLIFERATION COMES UP IN THE QUESTION. BUT YOU CAN ALSO MENTION PROLIFERATION IF A QUESTION ON (DIGITAL) DISTRIBUTION OR TECHNOLOGICAL CONVERGENCE COMES UP.