PopCap Games, Inc. Market Analysis

Introduction

Background

PopCap Games, Inc. is an American company headquartered in Seattle that develops video games. PopCap Games is a subsidiary of Electronic Arts, a company that develops and delivers games, content, and online services for consumers using internet-connected consoles, mobile devices, and personal computers. John Vechey, Brian Fiete, and Jason Kapalka founded PopCap Games in 2000 and sold it to Electronic Arts in 2011 (Electronic Arts Inc., 2023). The company has developed over 50 games, with Bejeweled and Plants vs. Zombies being their most popular games. PopCap Games boasts of creating games that can be played on 23 devices and platforms. The video game company has over 600 employees working in Seattle, San Francisco, Dublin, Vancouver, Seoul, Shanghai, and Tokyo (Rocket Reach, 2023). PopCap Games face stiff competition due to the existence of other video game developers in the video game industry.

Target Market

The target market for PopCap Games are youthful video game enthusiasts aged between 16 and 34 years. Most video gamers are aged 25-35 years, who make up 29.5% of video gamers, followed by youngsters aged 16-24 years (28.3%) and people aged 35-44, making up 23.1% of the entire gamers (Ryzhov, 2022). Tech-savvy, young adults are the most valuable target market for PopCap Games because they have internet access and own smartphones, laptops, or personal computers.

Market Share

The value of the global video gaming industry was estimated to be $156.8 billion in 2020 and was expected to grow to $293.2 billion by 2027 (Business Wire, 2023). The US market was valued at $36.6 billion in 2020. PopCap Games is ranked among the leaders in the gaming industry, having annual revenue of over $30 million (Rocket Reach, 2023).

Main Competitors

The main competitors of PopCap Games are Big Fish Games, Kabam, and TinyCo. Big Fish Games is a 21-year-old company that develops, publishes, and distributes casual games available on PCs, Macs, mobile phones, or tablets. Kabam was founded in 2006 and specialised in AAA console-quality games for mobile devices. TinyCo is a 14-year-old company with a mission to develop high-quality, licensed free-to-play games.

PESTEL Analysis

Political Factors

Since PopCap Games has its offices distributed in the US and other countries and serve consumers worldwide, it is affected by foreign policies. The laws that regulate trade, online activities, investments, taxation, and privacy influence the operations of PopCap Games. The growth of the company’s market share globally and in each country depends on political stability (Khan et al., 2019, p. 1018). Events such as the Russia-Ukraine war and the US-China trade wars create a negative political environment for PopCap games.

Economic Factors

The operations and success of PopCap Games are dependent on economic factors such as unemployment, recession, interest and exchange rates, and inflation. These factors influence the purchasing power and willingness to buy the products sold by PopCap Games (Husnain et al., 2019, p. 92). Since the consumer of video games are spread across countries with different currencies, exchange rates influence the price of the products.

Socio-Cultural Factors

The beliefs, cultural values, and perceptions of the target market influence the business environment of any company (Aberese-Ako et al., 2019, p. 3). The target market of PopCap Games consists of consumers who are active online and embraces products of technology such as video games. The societal value assigned to video games as tools for entertainment creates a favourable business environment for PopCap Games.

Technological Factors

Technological trends such as the increasing online presence, smartphones, and the use of social media sites have increased the awareness and consumption of video games. Modern payment methods have made financial transactions of PopCap easy since they have enabled the company to receive payments from customers in different countries.

Environmental Factors

Promoting environmental sustainability by encouraging the use of green technologies creates a positive brand image in the market (Aberese-Ako et al., 2019, p. 2). Developing games that consume less power to play can positively influence the operations of PopCap Games. Manufacturing video gaming devices that are environmentally friendly can boost the sustainability of the company’s operations.

Legal Factors

The legal environment influences PopCap Games’ operations because the company must align their practices and policies to the intellectual property, business, and employment laws of the countries in which they operate. The flexibility of the policies and practices of PopCap Games enabled it to avoid legal conflicts or lawsuits.

Porter’s Five Forces

Competitive Rivalry

The video gaming industry is highly competitive because of the existence of companies such as Kabam, Big Fish Games, and TinyCo that develop similar types of games. PopCap Games also faces competition from companies that develop other niches of video games. The ability of the company to adopt different market mix enhances its competitive advantage. PopCap Games derives its competitive advantage from over 50 games it has developed to be accessed by consumers via at least 23 different platforms and devices.

The Threat of New Entrants

PopCap faces the threat of new entrants because of the few entry barriers that exist in the video gaming industry (DePersio, 2023). Additionally, minimal government regulation and manageable costs also increase the threat of new entrants. However, the massive capital investments for research and development in the console segment slightly reduce the threat of new entrants.

The Threat of Substitutes

The threat of substitutes is high because of the availability of alternative games and entertainment products that consumers can use instead of the video games developed by PopCap Games. PopCap has reduced this threat by developing app-based games that are free or cheap and can be played on smartphones, tablets, PCs, or online.

Bargaining Power of Suppliers

Since PopCap Games sources its products and materials from a wide array of suppliers and distribution channels, the bargaining power of suppliers is relatively low. Supplier diversification helps the company to reduce the impact of a supplier increasing prices on the cost of its operations (DePersio, 2023).

Bargaining Power of Consumers

The customers of PopCap Games have a high bargaining power because the purchase of video games is highly discretional (DePersio, 2023). A single disappointing aspect of a video game can cause a revolt from loyal gamers. Additionally, the existence of several video game developers and publishers exposes consumers to several alternatives they can choose from, increasing their bargaining power.

SWOT Analysis

Strengths

PopCap Games’ strengths include its focus on customer satisfaction, which is founded on the mission of its parent company, Electronic Arts. The company boasts of highly skilled employees who are subjected to regular training and learning programs to acquire new knowledge, skills, and abilities (Shastri, 2021). PopCap Games mimics Electronic Arts by using highly successful marketing strategies to expand its market. Automation of activities has enhanced the ability of the company to deliver quality products consistently and cut operation costs.

Weaknesses

Although PopCap Games has quality products and success in sales, its marketing has yet to define a unique selling proposition. Another weakness is that the company has a high attrition rate compared to other organisations in the industry and spends more to train and hire its employees.

Opportunities

The lower cost of transportation presents an opportunity to PopCap Games to reduce the cost of operation. The company can also benefit from the growing size of the video game community. The increasing number of online and internet-enabled device users is another opportunity for PopCap Games to increase its market size and sales.

Threats

PopCap Games faces multiple threats, including stiff competition, changing consumer behaviours, rising cost of raw materials, and the shortage of skilled workforce. Trade wars between the US and other countries, such as China, have created a negative business environment that can lead to the boycott of the products of American companies.

Recommendations

PopCap Games needs to embrace practices and strategies, and products that enable it to over the challenges presented by economic and political factors. Market analysis based on Porter’s five forces reveals that only the bargaining power of suppliers favours PopCap Games. Therefore, the video game developer and distributor to adopt strategies for creating additional competitive advantages and developing more high-quality and affordable games to reduce the threat of substitutes and counter the high bargaining power of consumers. The SWOT analysis identifies marketing and human resources strategies as the company’s weaknesses. PopCap Games can address these weaknesses by highlighting the unique selling points of its products and identifying and resolving the causes of the high attrition rate of its workforce.

Conclusion

PopCap Games, a 23-year-old subsidiary of Electronic Arts, has developed over 50 games. The company targets youthful video game enthusiasts aged between 16 and 34 years. Political factors such as the Russia-Ukraine war and the US-China trade wars, global economic crisis, and legal aspects pose a significant threat that can affect the operations of PopCap Games. The company faces threats from stiff competition, product substitutes, new entrants, and high customer bargaining power. However, it enjoys the low bargaining power of suppliers. SWOT analysis reveals significant weaknesses and threats that PopCap Games needs to master to increase its competitiveness and sustainability.

References

Rocket Reach. 2023. PopCap Games Information. https://rocketreach.co/popcap-games-profile_b5c65aebf42e0cae

Electronic Arts Inc. 2023. About – PopCap Games. https://www.ea.com/ea-studios/popcap/about

Ryzhov, V. 2022. Mobile gaming audience in 2022: How to reach them and boost your sales? Business of Apps. https://www.businessofapps.com/insights/mobile-gaming-sudience-in-2022-how-to-reach-them-and-boost-your-sales/

Shastri, B. 2021. Comprehensive SWOT Analysis of Electronic Arts – One of The World’s Best Video Game Company. IIDE. https://iide.co/case-studies/swot-analysis-of-electronic-arts/#SWOT_Analysis_of_Electronic_Arts

Business Wire. 2023. Global Video Games Market to 2027 – Featuring Activision Blizzard, Apple and Atari among Others. https://www.businesswire.com/news/home/20220408005243/en/Global-Video-Games-Market-to-2027—Featuring-Activision-Blizzard-Apple-and-Atari-Among-Others—ResearchAndMarkets.com

DePersio, G. 2023. Porter’s Five Forces and Electronic Arts (EA). https://www.investopedia.com/articles/markets/012716/analyzing-porters-five-forces-electronic-arts-ea.asp.

Khan, S.A.R., Jian, C., Zhang, Y., Golpîra, H., Kumar, A. and Sharif, A., 2019. Environmental, social and economic growth indicators spur logistics performance: from the perspective of South Asian Association for Regional Cooperation countries. Journal of Cleaner Production, 214, pp.1011-1023.

Husnain, M., Rehman, B., Syed, F. and Akhtar, M.W., 2019. Personal and in-store factors influencing impulse buying behavior among generation Y consumers of small cities. Business Perspectives and Research, 7(1), pp.92-107.

Aberese-Ako, M., Magnussen, P., Ampofo, G.D. and Tagbor, H., 2019. Health system, socio-cultural, economic, environmental and individual factors influencing bed net use in the prevention of malaria in pregnancy in two Ghanaian regions. Malaria journal, 18(1), pp.1-13..

Appendices

Appendix 1: Research Questionnaire

Name:

Gender:

Occupation:

Age:

Questions:

1. Have you ever heard of the term adventure games?

Yes____

No ____

2. What types of video games do you prefer?

Action ___

Action-adventure games ___

Adventure games ___

Puzzle games ___

Simulation games ___

Sports games ___

Role-playing games ___

3. How often do you purchase video games?

Frequently______ Vey frequently____ Rarely______ Do not shop_____

4. Do you collect information to assess a video game before you make purchase decisions?

Yes_____ No______ Sometimes________ Rarely______

5. What factor influences you most when choosing a video game?

Family____ Ads____ Social media influencers_____ Friends/peer group____

6. Do quality ads change you perception of video games?

Yes_____ No_____ Sometime_____ Not sure______

7. What factor do you give the first priority when purchasing video games?

Brand ____ Price ____ Ads _____ Reviews ____

8. Which of the following influences your purchasing attitude video games?

Ads____ Promotion ____ Need for purchase _____ Latest trend_____

9. Does social media influencers’ endorsement change your attitude towards video games?

Yes______ No________ Sometimes________ Not sure_______

10. How much do you spend on video games in a month?

Below 50 ______ 50-100 ______ 101-300 _____ 300 and above ______

11. What is your purpose for playing adventure video games?

Entertainment ____ Socialise with friends ____ Relieve stress______ Earn Income ____

12. Can you recommend adventure video games based on your experience?

Yes_______ No______ Not sure________

Appendix 2: Research Methodology

Research Design

This research used the inductive approach to investigate the factors that influence attitudes towards purchasing video games in the UK. The inductive research approach involves making inferences and generalisation from observations. Questionnaire and extensive interviews were used to determine participants’ perceptions about video games. The recruitment of research participants began by student leaders and staff approaching and requesting their participation. The qualitative research design was used to facilitate in-depth analysis consumer attitudes toward video games.

Data Collection Method

Self-report questionnaire method was used to collect the data from participants, who included the NCUK students. The use of a questionnaire reduced the time needed for data collection and gave participants the opportunity to provide their responses at their convenient time. The interviews enabled data collectors to seek clarifications and initiate in-depth discussion and questions to improve the quality of gathered data. The face-to-face dialogue provided the opportunity to gather a more comprehensive response.

Sampling Design

Three hundred NCUK students who have played video games were recruited to participate in the research. Snowball and convenience sampling techniques were used to select the study sample. The sampling technique enabled researchers to reduce the time and resources used for selecting participants. The Google questionnaire link was sent to the participants who agreed to provide their responses. The research adhere to ethical research principles such as voluntary participation, informed consent, non-maleficence, privacy, and confidentiality.

Data Analysis

Out of the 300 questionnaires, 243 responses were sent back by the participants, yielding a response rate of 81%. Content analysis was used to analyse the collected data to determine the influence of consumers’ attitudes towards the purchase of video games.

Time Horizon

The exploratory study took will take ten weeks to complete. Figure 1 below presents the activities that will be performed during the study period.

Figure 1: Gantt Chart