Task 1 – The Value Chain

Video game developers

First-party developer

In the video game industry, a first-party developer is part of a company which manufactures a video game console and develops exclusively for it. First-party developers may use the name of the company itself (such as Nintendo), have a specific division name (such as Sony's Polyphony Digital) or have been an independent studio before being acquired by the console manufacturer (such as Rare or Naughty Dog).

Second-party developer

Second-party developer is a colloquial term used by gaming enthusiasts and media often used to describe two different types of game development studios:

Independently owned studios who take development contracts from the platform holders and what they produce will usually be exclusive to that platform.

Studios who are partially or wholly owned by the platform holder (also known as a subsidiary) and what they produce will usually be exclusive to that platform.

In reality, the resulting game is first party (since it is funded by the platform holder who usually owns the resulting IP), but the term helps to distinguish independent studios from those directly owned by the platform holder. These studios may have exclusive publishing agreements (or other business relationships) with the platform holder, while maintaining independence. Examples are Insomniac Games (which previously developed games solely for Sony's PlayStation platforms as an independent studio) and Game Freak, (which primarily develops the Nintendo-exclusive Pokémon game series)

Third-party developers

Third-party developers are usually called upon by a video game publisher to develop a title for one (or more) systems. Both publisher and developer have considerable input in the game's design and content. However, the publisher's wishes generally override those of the developer. The business arrangement between the developer and publisher is governed by a contract, which specifies a list of milestones intended to be delivered over a period of time. the publisher pays the developer an advance on royalties. Successful developers may maintain several teams working on different games for different publishers. Generally, however, third-party developers tend to be small, close-knit team.

Independent developers

Independents are software developers which are not owned by (or dependent on) a single publisher. Some of these developers self-publish their games, relying on the Internet and word of mouth for publicity.  it is now possible for independent developers to forge agreements with console manufacturers for broad distribution of their games.

Video Game Publishers

A video game publisher is a company that publishes video games that they have either developed internally or have had developed by a video game developer.  video game publishers are responsible for their product's manufacturing and marketing, including market research and all aspects of advertising. Video game Publishers also finance the projects, Also sometimes paying the game developers, This is called external development Also game publishers sometimes  pay an internal staff of developers called a studio. The large video game publishers also distribute the games they publish, while some smaller publishers instead hire distribution companies to distribute the games they publish. Other functions usually performed by the publisher include deciding on and paying for any license that the game may utilize; paying for localization; layout, printing, and possibly the writing of the user manual; and the creation of graphic design elements such as the box design. Large publishers may also attempt to boost efficiency across all internal and external development teams by providing services such as sound design and code packages for commonly needed functionality. Because the publisher often finances development, it usually tries to manage development risk with a staff of producers or project managers to monitor the progress of the developer, critique ongoing development, and assist as necessary. Most video games created by an external video game developer are paid for with periodic advances on royalties. These advances are paid when the developer reaches certain stages of development, called milestones.

Console Manufacturers/First Party Publishers

First party publishers are the companies that make the hardware, e.g. games consoles, that games are played on –specifically Sony, Microsoft, Nintendo and, now that mobile phone games are emerging companies such as Nokia.

These companies are the ‘gatekeepers’ of the industry, as they decide whether or not to approve each game targeted for development on their respective console platforms. They have an immense amount of power and influence over what gets released and which title get priority marketing.

First part publisher provide support to developers and publishers working on their particular platforms.

Digital distribution in video games

 Digital distribution is the process of delivering video game content as digital information, without the exchange or purchase of new physical media. This process has existed since the early 1980s, but it was only with network advancements in bandwidth capabilities in the early 2000s that digital distribution became more prominent as a method of selling games. Currently, the process is dominated by online distribution over broadband internet.

To facilitate the sale of games, various game companies have created their own platforms for digital distribution. These platforms, such as Steam (software), Origin, and Xbox Live Marketplace, provide centralized services to purchase and download digital content for either specific video game consoles or PCs. Some platforms may also serve as digital rights management systems, limiting the use of purchased items to one account.

Outsourcing

n business, outsourcing involves the contracting out of a business process to another party (compare business process outsourcing). The term "outsourcing" dates back to at least 1981. Outsourcing sometimes involves transferring employees and assets from one firm to another, but not always.^[3] Outsourcing is also the practice of handing over control of public services to for-profit corporations.^[4]

Outsourcing includes both foreign and domestic contracting,and sometimes includes offshoring (relocating a business function to another country). Financial savings from lower international labor rates can provide a major motivation for outsourcing/offshoring.

The opposite of outsourcing, insourcing, entails bringing processes handled by third-party firms in-house, and is sometimes accomplished via vertical integration. However, a business can provide a contract service to another business without necessarily insourcing that business process.

Press and Media

This is a large sector, providing journalistic output, reviews and analysis for both trade and consumer. It includes magazines, websites, and television. Press and media coverage can affect the success or failure of a game, just as it does for films.