Video game developer We[R]Interactive enacts a platform business model. A free-to-play video game is marketed towards a highly segmented target group which is leveraged as a platform for exposure to relevant brands that pay to have a presence on the platform. We[R]Interactive is inherently linked to football career simulation video game ‘I Am Playr’. I Am Playr lets the end-user emulate the life of a professional football player, both on and off the pitch. The video game’s demarcated end-user demographic of young adult males in a given geographical territory makes for a lucrative value proposition to certain brands (e.g. Nike). We[R]Interactive lets end-users enjoy the core content of the game free-of-charge in order to quickly attain a large and active installed base that is leveraged to attract paid-for product placements from brands. These product placements are, in turn, utilized as a unique selling proposition for end-users that authenticate the in-game experience.
HISTORY - THE EXEMPLAR FIRM AND OTHERS
The London-based investor-backed firm was incorporated in 2010 when its founders recognized a market opportunity for interactive entertainment with high-end production values. Fuelled by the advent of digital distribution channels (e.g. PlayStation Network, Steam, Facebook), many games developers flooded the market with low-cost and low-quality video games that were priced competitively but offered little entertainment value to the end-user. We[R]Interactive’s “I Am Playr” fuses 3D gaming with premium quality first-person video footage to offer its users high-end production values in the form of a free service. The 50-person team is looking to replicate its multisided market place business model of free-to-use games subsidized by paid-for brand advertising in their upcoming music star simulation game ‘I Am Star’.
CUSTOMERS - WHO THEY ARE
We[R]Interactive aims to court two distinct groups – end-users who play the video games for free, and the brands who pay to use the game as a platform for product placements. Without a large base of end-users that display some overlap in brand preferences and tastes, We[R]Interactive would have difficulties attracting corporate brands to embed their products on a paid-for basis in the game. It is for this reason that the firm spends heavily on marketing in order to quickly ramp up the number of end-users. Brands that advertise on I Am Playr are often companies that have a vested interest in young males with a love for football and include the likes of Nike, Red Bull and Mini Cooper.
ENGAGEMENT - VALUE CREATION PROPOSITION
At the content level, I Am Player aims to lets the end-user simulate the life of a professional footballer, and tries to create a unique game that brings football fans closer to their passion. The content is offered in a way such that end users are incentivized to constantly check back in with the game for updated player statistics, new challenges and steady progression to the virtual player’s career. In 2013, I Am Playr was played by more than 7.5 million people.
Value to the brands that choose to virtually display their products in the game is two-fold. First, brands benefit from exposure to a highly targeted group of prospect customers and insight into their accompanying demographics (age, gender, location, various football preferences). Secondly, end-users engaging with the content unintentionally teach the brand about their brand preferences. For example, at some point in the game players can (and will) win a fully customizable (color, interior, etc.) Alfa Romeo. After the player customized his car, it is his to use throughout the game. Besides mere exposure, this type of end-user engagement thus generates statistical market research for the brand.
Key to a two-sided business model’s value proposition is indirect network effects. Aspiring superstar football players stand to gain from deep levels of brand engagement as it makes their experience more authentic (since launch, over 455,000 Nike football shoes were sold through the game). Brands on the other hand gain from surges in end-user adoption of the game as it will increase their levels of exposure and the insights they gain from acquiring brand placements with We[R]Interactive.
DELIVERY - THE VALUE CHAIN
I Am Playr is offered in multiple forms via various online distribution channels. The standalone web version offers the complete experience and can be seen as the cornerstone of the value proposition. End users can go online and create a profile and start their football careers using the web version. Companion apps were later added on mobile and social platforms. Players can take their profile to the Facebook, MSN, Apple’s iOS or Google Play We[R]Interacgive apps to play a slew of mini games to hone their skills which will unlock certain items in the main game. This strategy was implemented with the intention to redirect traffic back to the standalone web version of the game.
MONETIZATION - VALUE CAPTURE
A small percentage of I Am Playr’s user base is monetized by offering the possibility of purchasing in-app purchases that will accelerate the player’s experience. For example, when a player runs out of energy he can charge his wallet to buy a can of Red Bull, or he can just wait until the virtual character’s energy replenishes. However, the majority of We[R]Interactive’s income is generated via brand integrations as mentioned above. A brand that desires to have its product placed within the game is charged contingent on the level of brand integration. This can range from pure advertising to deep levels of integration as in the case of Alfa Romeo. Given the technical costs and the cost of digitalizing and integrating brand content into the game, all brands pay an initial fixed fee.
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.