Business Model Stretching as a Response to Changes in the Industry Value Chain – Evidence from the Games Industry
Compendium of Business Model Innovation: Foundations, recent Concepts and Cases Studies for Successful Business Model Innovation (2014)
29 Pages Posted: 2 Jun 2014 Last revised: 17 Oct 2014
Date Written: May 31, 2014
The interrelation and dependencies between the business model and its environmental context has until now rarely been the object of systematic and empirical study. By means of a case study, we analyze a disruptively changed industry value chain and its effect on the business model of non-trivial products (technological, aesthetic and entertainment components). Therefore, we examine the business model changes of an established games developer in a transition phase. The games industry is an interesting example, because there is no other industry that has emancipated itself over such a short period of time from a niche market with the cliché of producing only products for teenagers and "nerds" into a mass market which itself has become a crucial direct or indirect success factor for the largest IT companies in the world. The technological and non-technological innovations as a result of the digitalization have led to an explosion of new business model types in the games market, which in turn led to new user behavior, new devices, new tastes and new target groups - and no end to this (r)evolution is yet to be seen. We identify the new industry value chain in the games sector and describe the interaction of industry and business model changes in order to develop the concept of business model stretching. The analysis will outline how sectoral changes from a company’s perspective effect its operations, and how to gradually adapt the business model through expansion (stretching) to new levels of the industry value chain.
Keywords: Dynamic Business Models, Games Industry, Industry Value Chain, Supply Chain, Value Creation
JEL Classification: O3, M1
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