I've been thinking a lot about video games, partly because we have a lot of them in the house (yes, we purchased Call of Duty 2 the day it came out) and partly because I am intrigued by data indicating that sales of video games, an $11b industry, are down 12% year on year (BusinessWeek, November 23, 2009). The BusinessWeek article outlined the extraordinary efforts marketers are going to in order to get new games noticed when launched. The article also questioned whether sales would recover once the recession ends.
A couple of weeks earlier, Fortune ran an article about Gamemaker Zynga, who makes FarmViille, Mafia Wars and Café World for Facebook. (Fortune, November 9). What caught my attention is that Zynga is only two years old and already has revenue of more that $100m per year - it seems that players spend real money to eventually buy virtual goods such as tractors.
But there is something else that links these two articles together - in both cases they fulfill two basic human needs: (1) playfulness - the basic human need to relax, to amuse oneself, to have fun; (2) affiliation - the basic human need to form friendships and associations with others. In 1938, Henry Murray provided what he considered to be a complete list of human needs; playfulness and affiliation were just two of Murray's 28 human needs.
It might be that sales of video games have taken a dip because of the recession or it might be that sales of video games have taken a dip because consumers are finding other means to relax and have fun, either alone or with others. If you follow this logic then soon FarmVille players will move onto something else. The problem is that for most of us, the "something else" is beyond our comprehension.
The need to have fun and socialize has not changed; all that has changed is the way in which we achieve these needs. In 1964, Peter Drucker wrote: "What to the manufacturer is one market or one category of products is to the customer often a number of unrelated markets and a number of different satisfactions and values".
Or: "Because the customer buys satisfaction, all goods and services compete intensively with goods are services that ... are all alternative means for the customer to obtain the same satisfaction."
To me, the gaming market provides a great example of how we should not see only similar products as potential competitors but to step back and think about the basic need that games are trying to satisfy. On this basis, all products that satisfy the same human needs are competitors. Now, if only I had a crystal ball ...
Jenny Darroch is on the faculty at the Drucker School of Management. She is an expert on marketing strategies that generate growth. See www.MarketingThroughTurbulentTimes.com