Sandbox Game Industry Report

Fostering Teenagers’ Creativity

Apr, 22, 2018

Prepared by Chunxiaqiu Yang

Introduction
Computer games remain continuous growth for many years. However, with more
parents’ worrying about their children spending too much time in games, many
companies focus on exploring educational games instead of entertainment games.
Sandbox is the most excellent educational video games to meet the market demand
for promoting teenagers to play together and accomplish specific tasks. The advantage
of the Sandbox is that little character limitations allows user to easily install, roam and
play with the virtual world. Most important, such an open world game helps foster
children’s’ creativity that is expected by their parents. Without a doubt, Sandbox
Game’s educational value and widespread application will continue to please its
adoring fans all over the world in the near future.

Industry Trends
In recent years, gaming industry in the world has already huge and growing fast.
Some game companies have transformed services from traditional pay-TV into new
subscription video on-demand service with more than 50% market share (Saylor,
2012). Gaming products and services have reached to positive financial performance
in emerging market. According to the latest data, the revenues of gaming companies
in global market have been increased by 20% from 2012 to 2017 (Fig 1). The biggest
entertainment game named as Call of Duty: Black Ops III has reached to grossed $550
million in worldwide sales by the end of 2013 (Activision Blizzard Inc., 2013).

Although online gaming service has attracted more customers, to survive the rapid
transition to a direct-to-consumer future is an enormous challenge. It is because
relevant industries such as computer and cellular industry are vying to reshape their
structure with cutting date technology in order to gain more market share in the world
(Fig 2). Thus, it will bring a significant change in App-based online game service.

Fig 1: Gaming companies’ financial performance

Source from: annual report and IBISworld

Fig 2： Major players

Source from: IBISworld.com
One of the corresponding changes is that game company managers consider how to
find a new market target for the new type of game service. Kotler and Keller, (2006)
state that the particular resource endowments allow a company to be different to
enable to construct its competitive advantages in the market. The differentiation
product strategy makes a company possible to reach new market segments throughout
targeting the particular customer groups. The uniqueness of the Sandbox Game is that
it describes the differences from other online game services to make it more attractive
in a particular target market. As playing Sandbox is educational, the uniqueness of a
firm's product creates a sense of value.

Target Market

The leading gaming company Activision Blizzard Inc. has delivered a breakthrough in
the way that children play with Skylanders: Spyro’s Adventure® game in 2011 and
created net revenues increased in 2011(Learning games, 2014). However, from 2014,
game companies start producing educational games as great tool for building math
and language skills in line with the requirements of the elementary school curriculum
(Fig 4).

Fig 4: Featured educational games

Source from: https://www.learninggamesforkids.com/

A target market is defined as the particular group of customers within the serviceable
available market in certain industry (Chapman, 2011,pp. 190–196.). The current
customers in game industry are aged from children to adults. Sandbox game
determines to target the particular groups within these customers who exhibit similar
characteristics psychologically. It divides customer group into three:

 Online curriculum, P-12

 Writing classes, 3rd -12th

 Reading & writing K-2nd

It plans to deliver the biggest innovation in Sandbox throughout introducing online

learning games for kids. It will build up a great way to have the skills that kids need to
succeed in school.

The market segmentation strategy helps company divide a broad consumer aged from
children to adults into sub-groups of consumers based on common interests and
shared needs for education (Fig 3). To identify high yield segments, different
marketing strategies should be planned and developed. Middle class population who
tends to provide additional opportunity for after-school education is considered as the
target customers in the market. Their personal information such as age, location,
income, and lifestyle should be further analyzed by the company as unique selling
proposition to convey the message of Sandbox’s differentiation.

Fig 3: STP strategy

Source from:
https://upload.wikimedia.org/wikipedia/commons/thumb/c/cd/STP_approach.jpg/128
0px-STP_approach.jpg

Fig 4: Middle class population in China

 source from: Baidu.com

Fig 4 shows that income factor plays important role in targeting the market
segment. The lifestyle of this particular group is much interested in the gaming
products.

Competitors
However, the new market always attracts more new comers to produce the substitutes
to attempt to enter into the market (WesthuesLafrance., 2001). Star Trek is the initial
company to launch the new online game service that transforms from traditional pay-
TV aiming to meet the requirements of educational game market. It uses online social
media market mix strategy to emphasize its unlimited wireless data offerings in
subscriber acquisition efforts.

Roblox has developed a similar popular virtual world game among children and teens
alike and attempted to launch in the emerging market. It promotes market strategy
with the online shop to persuade parents that Roblox is an educational game. Online
social media such as Facebook has been used as communication platform which
decrease the gaps between the company and the customers.
Price Points
Facing with huge challenges in emerging market, Sandbox determines to adopt
penetration pricing strategy to gain market share in the emerging market. Penetration
pricing is the useful tool to help company enter into the new market by offering its
goods and services at prices lower than those of the competitors (White, 2014 ) . The
relative low price can help raise consumer awareness and induce buyers to try the
products with the result that the company brand expands business and establish brand
influences in the new market (Michael, 1985, p.12). Although this lower price
strategy may result in losses for the company at the beginning of the time, Sandbox
can quickly achieve a stronger market penetration that it will raise prices to a more
profitable level. The aim of strategic marketing strategy is an over-riding directional
concept to design the path how a business is going to achieve its sustainable
competitive advantages in the market (p.12). Thus, the role of marketing highlights a
link between the business and its customers.

Conclusion
In reviewing the plan, Sandbox feasibility can be examined in trail test in the market.
Marketers can take into consideration its product differentiation strategy and online
market strategy so as to decide whether this new product should go ahead, or be
redesigned.
 References
Activision Blizzard Inc. (2013), Annual Report, retrieved from:
http://files.shareholder.com/downloads/ACTI/3305760073x0x746096/2205B7
2D-1007-4DCB-A5F1-2D121D8EC95C/Activision_Blizzard_2013_AR.1.pdf

ChapmanDhall, N. (2011,pp. 190–196.). Business Studies in Action. Milton, QLD

Australia: John Wiley & Sons Australia Ltd.

Learning games, (2014), featured lesson, retrieved from:

https://www.learninggamesforkids.com/
Michael. (1985). Competitive Advantage. Free Press.p.12

SaylorMichael. (2012). The Mobile Wave: How Mobile Intelligence Will Change
Everything. p. 86. ISBN 978-1593157203. N.Y.: Perseus Books/Vanguard Press.

WhiteJ. (2014 ). Price Discrimination: A Classroom Exercise. Business Education

Innovation Journal (Volume 6), pp.100-105.

WesthuesLafrance. (2001). "A SWOT analysis of social work education in Canada".

Social Work Education. The International Journal. 20 (1):, pp.33--56.