2010

Consumer Behavior & Video Games

Kelly R Vickers
MGMT 533
8/21/2010
Contents
Contents .......................................................................................................................................... 2

Market Segments ............................................................................................................................ 4

Social Gamers .............................................................................................................................. 4

Entertainment ............................................................................................................................. 4

Immersion ................................................................................................................................... 5

Casual/Mobile Gaming ................................................................................................................ 5

Gimmick....................................................................................................................................... 5

Educational/Training ................................................................................................................... 5

Consumer Motivations ................................................................................................................... 6

Goals & Arousal ........................................................................................................................... 6

Need Fulfillment .......................................................................................................................... 7

Trio of Needs Model .................................................................................................................... 8

Consumer Learning ......................................................................................................................... 9

Pre-purchase Learning ................................................................................................................ 9

Post-purchase Learning ............................................................................................................... 9

Marketplace Attitudes .................................................................................................................. 12

The Geek.................................................................................................................................... 12

The Controversy ........................................................................................................................ 12

The Mainstream Appeal ............................................................................................................ 13

Family & Social Group Influence ................................................................................................... 14

Friends & Virtual Groups ........................................................................................................... 14

Family ........................................................................................................................................ 14

Celebrities.................................................................................................................................. 14

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Contents Continued
List of celebrity endorsed video games: ................................................................................... 15

Social Class ................................................................................................................................ 15

Culture ....................................................................................................................................... 16

Consumer Rule-Making................................................................................................................. 17

Limited Problem Solving............................................................................................................ 17

Cognitive View of Consumers ................................................................................................... 17

Decision Rules ........................................................................................................................... 17

Video Game Statistics ................................................................................................................... 19

References .................................................................................................................................... 20

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Market Segments
There are at least a couple of ways to segment the video game product category. One simple
way would be to segment by genre. However, since there are so many genres and cross-genre
subcategories, and because the focus is and always should be on the consumer, I have chosen
to segment by need fulfillment. When thought of in this way I can identify six market segments
within the video gaming community.

Social Gamers
A major segment, and one that is especially relevant to marketers in today's always-connected
world, is social networking. Like social networking segments of other products/services, this
segment is using a medium of expression. The social networking segment can be further broken
down into competitive and cooperative. A significant amount of video games target this
segment and why shouldn't they? Sixty percent of gamers are male and just less than half are
between the ages of eighteen and
forty-nine. That sure sounds like a
demographic that would be interested
in competition. The games that target
this segment vary greatly, from sports
to puzzle and even music-based games.
It seems as if every game incorporates
some competitive element. In contrast
to competitive games there are
cooperative games where people work
together to coordinate a winning
strategy.

Entertainment
The next big segment is entertainment. Unlike social gamers, this segment relies heavily on
story-telling. Peaking at over $100 million, development costs for some major releases have a
budget that would make a Hollywood producer jealous. On top of that, Hollywood actors are
increasingly lending their voices to video game characters. A sub-segment of entertainment
consists of gamers who are more interested in the licensed material contained than the game
itself. These games are basically timed to capitalize on a particular brand, and while the game
itself fits nicely into some genre, the segment is distinctively interested in the brand.

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Immersion
Yet another large segment of the video game product category is immersion.
This category is similar to entertainment, but it can be distinguished by its
focus on character development, choice and "sand-box" gameplay. Perhaps
one the largest pop-culture phenomenons in recent memory, World of
Warcraft, is marketed to this segment who uses video games as a sort of
escape from everyday life.

Casual/Mobile Gaming
Casual gaming is a segment on the rise. The popularity of the Nintendo Wii has fueled the
growth of this market segment, followed by the emergence of the iPhone and iPod Touch as
gaming devices. Games targeted at this segment require less focus, are satisfying to play for
very short periods of time and often times are electronic versions of popular puzzle games, like
crosswords or Sudoku. The demographics of this segment vary greatly, as men and women of
all ages may take part.

Gimmick
The next segment is called gimmick gaming and characterized by people who are sucked in by
the latest gaming fad or gimmicks. Such gimmicks often make use of some special type of
controller like motion-control or musical instruments. Although music based games have
enjoyed meteoric success in the last few years, as is true of fads, I would expect the current
popularity of these games to dwindle after the novelty wears off.

Educational/Training
The last segment of video gaming is quite small by comparison; it is that of educational gaming.
While most educational games are targeted towards children there is also a small market for
adults and businesses. I recently played a game for my Management Information Systems class
in which I was trained in the basics of Business Process Management. At this point however, it
appears this segment is still very small and perhaps not very well defined.

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Consumer Motivations
Now that the market for video games has been broken down into its various segments, it is
important to know what the consumers motivations are in regards to purchasing video games.
Video game consumption is clearly not a primary need. Nobody is going to die from video game
deficiency. Rather consumption of this product category fulfills acquired needs.

Goals & Arousal

Goals are a very important aspect of consumer motivation. The types of goals a consumer
might set in relation to video games can be: generic, to be socially networked with other
gamers; product-specific, to purchase Starcraft 2, for example; or substitute goals, to
compensate for a dull life. Other generic types of goals also exist which fulfill consumers needs.

Of course the consumer is not always aware of these needs. In fact most often they are not
until something arouses their motives. In this product category, motivations and needs can be
aroused through any of the following three ways: emotional arousal, cognitive arousal and
environmental arousal. Emotional arousal is especially interesting area of study in relation to
this product category. From Consumer Behavior, Schiffman and Kanuk write this:

"People who are bored or who are frustrated in trying to achieve their goals
often engage in daydreaming, in which they imagine themselves in all sorts of
desirable situations."

This is a great motivator for many gamers, but especially for the immersion segment.

Cognitive arousal is described as random thoughts that lead one to realize they have a need. In
this way a consumer who is watching a football game may suddenly realize that he wants to try
calling plays for a professional team. Because he is highly unlikely to be able to this on a
professional level, he will likely substitute this goal for coaching a little league team or buying a
video game.

Environmental arousal occurs when a person experiences something that causes them to want
or need something. On a physiological level, one might experience exhaustion from being
outside on a particularly hot day and decide to seek entertainment indoors in the form of video
games. Or on a more egoistic level, a person may experience a bad day at work and decide to
release the stress by killing some aliens in a first-person-shooter.

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Need Fulfillment
However a person is made aware of their need for consumption of video games, the needs
themselves are also worth studying. I mentioned some of these in my earlier examples, but
there are more. On the hierarchy of needs, video games make their first appearance in the
range of social needs. Earlier I made the example of the person whose physiological state of
heat exhaustion caused him to go inside and play video games. Obviously, this was a
physiological event that caused a change in behavior and in no way an actual physiological
need. However, one could make the
argument that video games can
indirectly provide peoples safety and
security needs. Some first-person-
shooter games, such as America's
Army(see right), have been used for
training purposes in the military
(cbsnews.com, 2005). In this way, one
could argue that the public need for
secure borders has led to the purchase of
video games using tax dollars. However,
it is much easier to draw the connection
between videos games and other needs.

There is a whole market segment for people who are fulfilling their social needs through
cooperative or competitive play. Gamers use online gaming networks like Xbox Live to connect
to, befriend and form clans with other gamers from around the world.

Ego needs can also be fulfilled through use of video games as anyone who has "fragged"
another gamer can attest. Fragging is a term used in online gaming referring to when a player,
using an avatar, kills another players avatar. Competing against others or gaining a skill,
however trivial, does indeed play into a person's ego, even if it is just their online persona.
Furthermore, these types of games generally have a ranking system in place, so players can
identify and improve their status among their peers. In the most extreme of circumstances, a
gamer may win cash and/or prizes for their participation in an event or tournament.

The need for self-actualization is not likely to be met for an individual through use of video
games. Although it is possible, if say, someone's highest goal is to become the champion of a
very large tournament with a cash prize, then that person very well may find self-actualization
in video games. For the vast majority of consumers however, this is not a need that is fulfilled.

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Trio of Needs Model
For those who prefer the trio of needs model over the hierarchy of needs, the use of video
games can fulfill all three of these need types. The power need relates to video games in much
the same manner as the egoistic need. A person who is seeking control over their surroundings
may settle for the control they can have over a virtual world. This is a substitute for actual
power, but it fills the void nonetheless. Likewise, affiliation can be achieved through the social
networking aspect of video games. And Lastly, achievement can be had through finishing of
games, winning an online match or successfully competing in a tournament.

A team of gamers compete in a tournament in Toronto for $100,000

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Consumer Learning

Pre-purchase Learning
There are a number of ways that people learn about games. For many games, it takes
consumers a considerable amount of exposure before they can make a proper judgment. For
others it may take but only a few brief moments. So what learning processes take place in
consumers' minds? Video games are kind of like books in that you can't judge them by their
cover. Furthermore, as with books, consumers will discriminate based on past experiences,
preferences, etc. when choosing a game. Based on these observations, it seems that both
behavior learning and cognitive learning are at work.

For an inexperienced gamer, the learning process is all about trial and error. These consumers
must figure out what they like in a game. Tastes can vary quite widely even within a given
demographic. Through instrumental learning these gamers will try different games and see
which ones stimulate them the most. Games that the person finds exciting will likely turn into
future purchases, not only for the game in question, but for others like it as well. Experiences
that the consumer deems boring, overly difficult, or confusing will lead to fewer purchases of
similar games. An important aspect of this learning is reinforcement. If an initial experience
leads to a game purchase, and subsequently the game fails to deliver, future purchases become
less likely.

Post-purchase Learning
So getting somebody to purchase one game might not be so difficult, but how are repeat
customers created? In studies on the addictive quality of video games, some characteristics
have been identified that keep people playing. John Hopson, a games researcher for Microsoft
sums it up thusly:

"Each contingency is an arrangement of time, activity, and reward, and there are
an infinite number of ways these elements can be combined to produce the
pattern of activity you want from your players."

Read more: http://www.cracked.com/article_18461_5-creepy-ways-video-games-are-trying-to-

get-you-addicted.html#ixzz0uvb8TcLY

This is basically saying that a gamer can be trained through stimulus and reward. This works in
much the same way as the Skinner Box. BF Skinner conducted research by putting rats in a box
with a lever; when the rats pulled the lever, food would come out. Skinner found that if a pellet

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of food was produced for each lever pull, the rats would only pull it when they were hungry;
however, if the lever was rigged to produce a pellet at random intervals, the rats would
compulsively pull the lever over and over. Successful video games work in much the same way,
require the player to perform tasks, give small reward, require task, small reward, etc. etc. etc.
Over time the small rewards grow into a large score or powerful character and the player feels
a sense of achievement.

After a gamer has experimented with different games and been rewarded and earned
achievement, the cognitive learning aspect kicks in. At this point the consumer knows what
segment they belong to and they conduct research to find appropriate games to fit their taste.
This is the point at which branding becomes important, as developers try to remind consumers
of fun times they've had with their previous titles. Also very important are opinion leaders.
These opinion leaders can be friends or often times professional reviewers employed by
magazines or websites.

Xbox live tracks players Achievements to keep them playing.

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With Bethesda, 2K Games and The Elder Scrolls, this is a great example of branding in video games.

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Marketplace Attitudes
There are widely varying attitudes towards video games in the marketplace. While video games
have their opponents today, they have become very much a part of the mainstream. The
development of video games as an entertainment medium has undergone a metamorphosis of
sorts from being an entirely niche product to becoming quite controversial and a political issue
before finally gaining acceptance of society at large.

The Geek
Everyone can remember an old movie or sit-com from the eighties in which a nerdy character
speaks enthusiastically about video games while the other characters roll their eyes. That was
reflective of one of the predominant attitudes of the time. For most people, video games were
not viewed as entertainment but rather as a badge of technological prowess at best or an
unproductive distraction at worst. Over time though, some games grabbed the attention of the
public. Pong, Pacman and Galaga were all popular arcade games. Up until this point there was
no controversy.

The Controversy
Then came along games like Mortal Kombat,
Doom and Wolfenstein. These games had
greatly improved graphics and used them to
depict violence, death and in the case of
Wolfenstein, Nazi symbolism. Suddenly,
video games were a political issue. Hilary
Clinton called for an independent rating
agency to give parents control over what
their kids were playing. Others wondered
whether such content should even be
allowed in games. Of course nobody realized
that years later they would all look back and wonder what all the fuss was about. Before that
could happen though, video games would need to be viewed as more than just toys.

If it isn't due to violence, then controversy is still sure to crop up in other forms. Sexual content
is one such form. Many games have walked a fine line, while others have been overtly
pornographic. Another, more recent controversy involves the concept of video game addiction.
World of Warcraft players have gained a reputation for lengthy gaming sessions. Anytime one
of these players gets so wrapped up in the game that they neglect work or their families, there
is certainly a problem. Perhaps, like other product categories, video games are best enjoyed in

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moderation.

The Mainstream Appeal

Negative press aside, video games are generally considered to be fun, entertaining,
competitive, amusing distractions. They are also considered for their relevance to business and
the economy. For example, any time a new console is released, the Wall Street Journal is sure
to do a story on it and analyze the potential market impact. Estimated to be a $10.5 Billion a
year industry, video games as it turns out, are to be taken seriously. Some of the world's largest
tech companies are major players in the video game industry. Microsoft, Apple and Sony are all
examples of that.

Hollywood also takes gaming seriously. It is very common for popular actors and actresses to do
voice work in video games. As video games continue to focus on realism, good voice-acting will
continue to grow in importance. This is especially true for the entertainment marketing
segment. Other Hollywood players, besides actors, are also getting involved in making video
games. Even Stephen Spielberg has gotten his hands into video game production. His puzzle-
based game Boom Blox has gotten critical acclaim for its originality and difficulty (Boom Blox for
Wii Reviews, Ratings, Credits, and More at Metacritic, Metacritic.com).

Pop culture indicates that video games are not only mainstream, but also greatly influential.
Many internet memes draw upon imagery borrowed from video games or are influenced by
one. Some examples of internet memes based on video games are:

All you base are belong to us

CD-i games from The Legend of Zelda series

Giant Enemy Crab

Hotel Mario

I.M. Meen

Leeroy Jenkins

Konami Code

Pwn

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Family & Social Group Influence
There are a few different social groups that can impact an individual's purchases of video
games. These groups tend to vary quite widely, as do their respective influences. From casual
acquaintances to great old friends to people from the other side of the world known only by
their online handle, many people influence consumer behavior for this product.

Friends & Virtual Groups

The most common type of social influence for video games comes from friends and virtual
groups. Of course, in today society and especially within the gaming community, these two
groups are becoming much closer. For some, the two may even be indistinguishable. The
influence comes in the form of recommendations often times, but is not limited as such.
Professional and user reviews are especially important for video games. Influence can also
occur in a more passive way. With social networking being a key function of games today and
the tendency of this group to be always-connected, many consumers may simply notice that
others are playing a particular game. In this way, the virtual group is making a passive
recommendation.

Family
Family can also play an important role in influencing behavior, and there is no exception with
regards to the consumption of video games. This type of influence can be in the positive or the
negative. Negative influence is most likely to come from a spouse or parent, while positive
influence is more likely to come from a sibling or spouse. The driver behind ones influence is
whether or not one is a consumer of video games themselves. In the case of parental influence,
it may be more about the level of involvement the parent has with the child. While some
parents may want to manage closely what activities their children do and what content they are
exposed to, others may be content let their kids use video games however they please. Others
still may actually encourage the use of video games.

Celebrities
At first glance it may seem that video games are one product that celebrities do not have a
significant influence over. However, look a little closer and it becomes apparent that they do
indeed hold that influence. Some of the most popular games today have a celebrity's name
right in the title. Also, although there doesn't appear to be any scientific data out there, I
hypothesize that the positive portrayal of video games in the entertainment industry has a
strong correlation with their mainstream acceptance. While correlation doesn't equate to
causation, it is very plausibly a factor as opposed to a response.

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List of celebrity endorsed video games:
Michael Jackson's Moonwalker
Eddie Kidd Jump Challenge
Emlyn Hughes International Soccer
John Elway's Quarterback
50 Cent Bulletproof
Jackie Chan's Action Kung Fu
Kyle Petty's No Fear Racing
Bruce Lee
Shaq-Fu (Shaquille O'Niel)
Britney's Dance Beat (Britney Spears)
Mary-Kate and Ashley Sweet 16 (Olsen twins)
Bill Laimbeer's Combat Basketball
Home Improvement (Tim Allen)
Madden NFL
Tiger Woods Golf
Guitar Hero (Aerosmith, Metallica, Green Day)
KISS: Psycho Circus

Social Class
Another important influence over consumption is social class. Video games can appeal to
different classes, but in terms of marketing potential- video games sales are directed at middle
to upper-middle class people. Video games exist in a market that is technology driven, meaning
that there is significant advancement in the market from year to year, and it can be quite costly
to keep up with. Many games require access to broadband internet. They also require a certain
level of technical knowledge. This phenomenon has been summarized by Schiffman and Kanuk
in the Consumer Behavior textbook:

"The importance of the computer and the prominent role it now plays in our lives
has resulted in somewhat of a reversal of fortune, in that the "geek" is now often
viewed by his or her peers as "friendly and fun". The increasingly positive image
of geeks has made them and their lifestyles the target of marketers' messages

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 designed to appeal to their great appetite for novel technological products."

On the other side, it also appears that video games are not necessarily an upper-class persons
product. Since many games require large investments of time, the most successful people in life
might not have the time available. All of these factors paint a picture of product whose
consumer-base is very much effected by socio-economic standing.

Culture
The last type of influence is that of culture. Culture can not only affect the popularity of the
product category as a whole, but also which elements and or content is desirable. The most
prevalent examples of this are in Japan and Taiwan. In Japan, video games are extremely
popular and when compared to the US, they feature much more cartoony graphics and eastern
influence in style. Many games that are successful in Japan have disappointing sales in the U.S.
and vice versa. In Taiwan, Starcraft has become a cultural symbol. Massive tournaments are
held on a regular basis. These tournaments are very well attended by spectators and actually
three television stations' entire programming are dedicated to covering them (Starcraft II:
What's the Big Deal?, videogames.yahoo.com, retrieved July 19, 2010).

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Consumer Rule-Making

Limited Problem Solving

This particular product category falls under the limited problem solving decision making model.
There is definitely more research done for video game purchases than for routinized-decision
items. In contrast to extended problem solving, both the cost of the games, anywhere from free
to sixty dollars, and the tendency for consumers of games to know what they like, prevent the
process from going that far. The limited problem solving nature of the purchase process leads
consumers to form rules for their purchases. Not surprisingly most professional reviewers judge
games based on many if not all of the attributes effecting these rules. Some example of such
rules include:

The game must receive critical praise.

The game must by multiplayer

The game must(not) be a certain ESRB rating.

The game must have cutting-edge graphics.

The game must have high replay value.

The game must have controls that feel "natural".

Cognitive vs. Passive View of Consumers

This model of limited problem solving fits in nicely with a cognitive view of video game
consumers, but it is worth mentioning that some developers seem to have a passive view. As
any gamer can attest, a bad game can really ruin an evening. Such experience is sure to deter
the consumer from purchasing another of the developers titles, so why does this happen so
frequently? One possibility is that certain parties hold a passive view of gamers. They believe
they can capitalize on the latest trend or copy-cat a successful game to make a quick profit.
Ostensibly, they are correct because it continues to happen. These purchases are very likely the
result of impulse purchases or failed gifts. Either way they are a real part of the market.

Decision Rules
In evaluating several titles to come to a decision on a single purchase, consumers may use a
number of methods including conjunctive, disjunctive, compensatory, lexicographic and affect
referral. Rule formulation may vary from person to person or situation to situation. A person
may purchase one game using a compensatory rule; "This has low replay value, but is fun to
play with friends"; only to use a lexicographic rule the next time; "These games all have

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excellent graphics, but only one is rated M". The reasons one might change rule types could be
because of change in preferences or because they use different criteria in judging different
genres. This is an important concept because certain market segments tend to be strongly
associated with certain attributes. For example, the immersive segment is strongly associated
with games with high replay value, and the entertainment segment with cutting-edge graphics.

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Video Game Statistics

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References
Video Game Statistics, 2010 OnlineEducation.net http://www.onlineeducation.net/videogame

Uncle Sam Wants Video Gamers, Jamie Holguin, CBS Evening News,
http://www.cbsnews.com/stories/2005/02/08/eveningnews/main672455.shtml

What makes video games 'addictive'?, Kristin Kaining, msnbc.com,

http://www.msnbc.msn.com/id/24245196/wid/11915829?GT1=40006

5 Creepy Ways Video Games Are Trying to Get You Addicted, David Wong, Cracked.com,
http://www.cracked.com/article_18461_5-creepy-ways-video-games-are-trying-to-get-you-
addicted.html

Video game culture, Wikipedia,

http://en.wikipedia.org/wiki/Video_game_culture#Interactive_engagement_between_players_
and_digital_games

Video Games in the 21st Century, Entertainment Software Association,

http://www.theesa.com/facts/pdfs/VideoGames21stCentury_2010.pdf

Schiffman, Leon; Kanuk, Leslie; Consumer Behavior 9th Edition, Copyright 2007, Pearson
Education, Inc.

Starcraft II: What's the Big Deal?, videogames.yahoo.com,

http://videogames.yahoo.com/events/plugged-in/starcraft-ii-what-s-the-big-deal-/1405352

Boom Blox for Wii Reviews, Ratings, Credits, and More at Metacritic, Metacritic.com,
http://www.metacritic.com/game/wii/boom-blox

Video game memes, Wikipedia, http://en.wikipedia.org/wiki/Category:Video_game_memes

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