Playgen operates a typical service, or work-for-hire, business model in which the company creates a custom video game for a client and licenses use of the product to the client. Clients tend to be nonprofit organizations. Income is generated upon completion of the project. Playgen specializes in an industry segment best known as ‘serious games’. Big institutions, government bodies and other large clients that are interested in some form of behavioral change commission Playgen to develop video games to attain just that. ‘Me Tycoon’ for example is a social simulation game for young students to explore and develop their virtual life, where decisions affect prosperity, achievements and happiness. Project financiers often release the content to a targeted audience (e.g. students, employees, local land development officials) free of charge in the hopes that it will affect their behavior.
Playgen was founded in 2001 on the concept of gamification – the use of game mechanics to engage users in some type of behavioral change. The privately owned firm gets over 80 per cent of its business commissioned to by not-for-profit organizations such as municipalities, educational institutes and ideological organizations. These organizations often have a desire to engage a specific audience in a more interactive way, to make players reflect on their behavior or change their views of the world (e.g., quit smoking). Since Playgen gets all their income directly from project- based sales, choice of platforms is less crucial of an issue as it is for traditional video game companies. In recent years, Playgen has even extended their philosophy of applying game mechanics to real world games. Other firms that operate a similar business model include “advergaming” studios such as Sticky Studios (State Farm Paper Football) or serious games studios such as UK’s Capsian Learning.
Playgen’s sole customer group consists of large institutions including The University of Manchester’s Dalton Nuclear Institute, Aviva and the West Midlands Police in the United Kingdom. These customers initiate development projects on the basis of a particular need. To a lesser extent compared to other video game companies discussed here, Playgen’s activities are only partially driven by end-user demands. Behavioral change is not something that is in high demand among end-users, but rather initiated by its sole beneficiary or advocate. Satisfying customers’ need through content design is the firm’s main concern. Playgen’s customers approach the firm with a certain goal in mind (e.g. promote understanding and critical conversation on belief systems, as well as social and economic inequality). Sometimes these customers set milestones based on deliverables or external deadlines.
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A dyadic relationship where your physical good or service can only be designed and delivered after prior interactions with the customer.
Engagement — Value Creation Proposition
Playgen offers its customers engaging and interactive solutions for behavioral change. The exact content of these solutions vary across projects and customer needs – in other words, Playgen deploys a “taxi” approach to customer engagement. Take for example the firm’s project ‘Choices and Voices’. Choices and Voices is “an interactive simulation encouraging young people to explore and discuss the underlying issues and adverse influences, which can lead to divisions and tensions in communities.” The game, which was commissioned by the West Midlands Police, is currently in use with over 600 schools within Birmingham and the South West and has over 60,000 users. Part of Playgen’s value proposition for this particular customer has been to develop a training program to train school based officers on the use and moderation of the game in the classroom. The game is sold on a territory-based license where the licensee is free to distribute and install the game as many times as desired within the geographical boundaries of the agreed upon territory.
Delivery — Value Chain
Value in the form of a finished game is delivered digitally and directly to the client. The client then distributes the content to the intended end-user as it sees fit. Usually this is done through desktop computers (for example in classrooms or offices). Content could be either uploaded directly using an organization’s intranet, or be distributed on a need-basis using USB-dongles that come with the game preinstalled on it.
Monetisation — Value Capture
Playgen generates income via work-for-hire contracts. Upon project completion, Playgen receives a lump sum payment as per previously established contractual agreements. There is no game-based revenue stream as is the case with Sports Interactive and other for-profit game development projects. This is because the players of the games that Playgen develops do not pay to engage. In order to assure sustainability of the business, Playgen secures the rights to the underlying technology for all projects it develops. Ease of replicability and sustained income manifests itself in one of two ways. Playgen either has the right to resell the underlying technology applied to a different context, or to sell the content elsewhere if a project was contractually demarcated by a geographical territory. The latter applies to the aforementioned Choices and Voices, which was sold to the West Midlands Police on a territory license.
Disclaimer — Written by Joost Rietveld 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. © 2014