Green Man Gaming
Green Man Gaming is an example of a matchmaking business model. It operates a web-based market for PC video games that brings together buyers of video games and video game publishers. The company differentiates itself from the incumbents by allowing gamers to trade-in used games for credit towards their next purchase through Green Man Gaming’s marketplace, a familiar concept from physical retail that had hitherto been utterly alien to the digital market. As of 2015, Green Man Gaming had over 350 video game publishers participating in its market, with a total of over 5,200 games available to consumers.
Green Man Gaming was founded by Paul Sulyok and Lee Packham in 2009. It is backed by the London-based venture capital firm Eden Ventures, and operates in a market with strong incumbents such as Steam, the widely recognised “king” of digital distribution for PC games. In 2015, Green Man Gaming was ranked by the Sunday Times at #23 in the 15th annual Sunday Times Hiscox Tech Track 100.
CUSTOMERS – WHO THEY ARE:
Green Man Gaming operates a multi-sided platform business model. It stand in the middle of a triadic relationship, with gamers (customers) on one side, and game producers & publishers on the other.
ENGAGEMENT – VALUE CREATION PROPOSITION:
The “core” of Green Man Gaming works exactly like any highly-scalable, bus-model digital distribution marketplace: the producers & publishers make their wares (i.e. PC video games) available to customers via the Green Man Gaming platform. Customers do not purchase the games directly from the video game producers, however, but instead purchase them through Green Man Gaming. Users can also trade in their “used” digital video games for credit towards their next purchase.
For a trade-in market to exist in the digital space, Green Man Gaming must convince video game producers & publishers that they can benefit from a digital trade-in model, which – in its traditional retail incarnation – benefits the reseller but not the original producer/publisher. Such partnerships are essential because, otherwise, said producers & publishers could easily enforce Digital Rights Management systems that allow gamers to only purchase new digital games and shut down the grey market.
DELIVERY – THE VALUE CHAIN:
Green Man Gaming does not own any of the inventory that passes through its marketplaces. Buyers and sellers sign up to the company’s website and trade directly with each other once they are connected via Green Man Gaming’s marketplace. The unique interaction that Green Man Gaming offers comes from allowing customers to trade-in used games for in-store “credits”. These credits can, of course, be redeemed for new games, thus opening the market to more price-sensitive customers who would otherwise only be comfortable with grey market prices. When such a trade-in happens, both Green Man Gaming and the game’s producers/publishers enjoy a portion of the resell value. The company has a proprietary algorithm that allows the platform to calculate the ever-changing value of a traded-in game.
Green Man Gaming not only has the buy-in of video game producers & publishers, but also the buy-in of several of its direct competitors, including Steam. Currently, it is possible to purchase a game on Green Man Gaming and then “activate” it on the widely-adopted Steam platform, and later sell the Steam-activated game back on Green Man Gaming. This allows customers to experience the “best of both worlds”, enjoying the various features and complements on both platforms, thus reducing some of the barriers to adoption.
MONETIZATION – VALUE CAPTURE:
Green Man Gaming sits in the middle, taking a cut from each transaction that occurs, happily, with near-zero marginal costs.
Brice, K. (2010). Green Man's Gian Luzio & Paul Sulyok. [online] GamesIndustry.biz. Available at: http://www.gamesindustry.biz/articles/green-man-ho...
Greenmangaming.com, (2015). About. [online] Available at: http://www.greenmangaming.com/about/
Green Man Gaming Wikipedia Entry: Accessed November 2015. https://en.wikipedia.org/wiki/Green_Man_Gaming
Sulyok, P. (2014). The Not-So-Secret Science of Social Commerce. [online] The Huffington Post UK. Available at: http://www.huffingtonpost.co.uk/paul-sulyok/the-no...
White, A. (2014). Green Man Gaming marches towards an IPO. [online] Telegraph.co.uk. Available at: http://www.telegraph.co.uk/finance/festival-of-bus...
Written by Shaun Noordin and edited by James Knuckles under the direction of Prof Charles Baden-Fuller, Cass Business School. This case is designed to illustrate a business model category. It leverages public sources and is written to further management understanding, and it is not meant to suggest individuals made either correct or incorrect decisions. © 2016
Published 20 April 2016