CONVERGENCE - A DEFINITION

Convergence in the video gaming industry refers to the blending and integration of different technologies, platforms, business models, and industries to create more seamless, interconnected gaming experiences and business operations. It involves several forms of convergence:

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1. Technological Convergence

Definition: The merging of different technologies into a single platform or ecosystem, allowing for more unified and versatile gaming experiences.

Examples:

• Cloud Gaming:

  • Xbox Cloud Gaming allows players to stream high-quality games on mobile devices, PCs, and consoles without needing high-end hardware.
  • NVIDIA GeForce Now enables PC-quality gaming on low-spec devices through streaming.

• Multifunction Consoles:

  • The PlayStation 5 and Xbox Series X function as multimedia hubs, offering streaming apps (e.g., Netflix, Disney+), internet browsing, and social features alongside gaming.

• Virtual Reality (VR):

  • Half-Life: Alyx is a VR-exclusive title that pushes technological boundaries with realistic physics and interaction.
  • Resident Evil 4 VR adapts a popular flat-screen game into VR format.

• Animal Crossing: New Horizons Example:

  • While Animal Crossing: New Horizons (ACNH) does not feature cloud gaming or VR, it does demonstrate technological convergence by integrating social and creative features within the game, such as online multiplayer and content sharing via QR codes.

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2. Cross-Platform Convergence

Definition: The ability for games to be played across multiple platforms with shared progress and multiplayer capabilities.

Examples:

• Cross-Play and Cross-Progression:

  • Fortnite allows players to play together across PlayStation, Xbox, PC, and mobile, with progress and purchases carrying over between platforms.
  • Minecraft supports full cross-platform play and progress saving across consoles, PC, and mobile.

• Subscription Services:

  • Xbox Game Pass allows players to access a library of games across Xbox consoles, PCs, and cloud streaming.
  • PlayStation Plus includes cloud-based saves and lets players switch between consoles without losing progress.

• Animal Crossing: New Horizons Example:

  • ACNH does not support cross-platform play since it's exclusive to the Nintendo Switch. However, Nintendo Switch Online allows cloud saves for some games (though ACNH does not support this feature for technical reasons).

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3. Vertical Integration

Definition: When a company controls multiple stages of the production and distribution process within the gaming industry.

Examples:

• Sony:

  • Owns game studios like Naughty Dog and Insomniac Games → Develops hardware (PlayStation) → Distributes through the PlayStation Store.
  • The Last of Us was developed internally and distributed exclusively on PlayStation platforms.

• Microsoft:

  • Owns Bethesda (developer of Skyrim and Starfield) → Distributes through Xbox and PC → Provides access via Xbox Game Pass.
  • The acquisition of Activision Blizzard gives Microsoft control over Call of Duty and World of Warcraft.

• Nintendo:

  • Develops both hardware and software → Controls the Nintendo eShop for distribution → Manufactures proprietary consoles like the Switch.
  • Animal Crossing: New Horizons was developed by Nintendo, published exclusively on the Switch, and distributed via both the Nintendo eShop and physical sales.

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4. Horizontal Integration

Definition: When a company acquires or merges with other companies operating at the same level of the value chain to expand market share or reduce competition.

Examples:

• Microsoft:

  • Acquisition of ZeniMax Media (parent company of Bethesda) to strengthen its RPG catalogue.
  • Acquisition of Activision Blizzard to dominate in FPS and online multiplayer.

• Tencent:

  • Owns stakes in Epic Games (developer of Fortnite), Riot Games (developer of League of Legends), and Supercell (developer of Clash of Clans).

• Sony:

  • Acquired Bungie (developer of Destiny) to strengthen its live-service game portfolio.

• Animal Crossing: New Horizons Example:

  • Nintendo has not engaged in major horizontal integration in the context of ACNH, but it has acquired smaller studios (e.g., Next Level Games) to expand its development capacity.

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5. Media Convergence

Definition: The integration of gaming with other forms of media (films, TV, music, social media).

Examples:

• TV and Film:

  • The Last of Us adapted into a successful HBO series.
  • Cyberpunk 2077 gained renewed interest after the success of Cyberpunk: Edgerunners on Netflix.

• In-Game Events:

  • Fortnite hosted virtual concerts with artists like Travis Scott and Ariana Grande.
  • Rocket League featured movie tie-ins with Fast & Furious cars and themed events.

• Animal Crossing: New Horizons Example:

  • ACNH indirectly crossed over with other media through high-profile collaborations (e.g., Sanrio and Mario in-game items).
  • Celebrities and brands hosted events in ACNH during the pandemic, including virtual fashion shows and political rallies.

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6. Business Model Convergence

Definition: The blending of different revenue models within a single game or ecosystem.

Examples:

• Freemium and Microtransactions:

  • Fortnite is free-to-play but earns revenue from cosmetic microtransactions and battle passes.
  • Genshin Impact is free but relies on a gacha model for monetisation.

• Subscription and Premium Sales:

  • Game Pass and PlayStation Plus offer access to premium games through a subscription model.
  • Many games are sold at full price but also include microtransactions (e.g., Call of Duty).

• Animal Crossing: New Horizons Example:

  • ACNH follows a traditional premium sales model (single purchase).
  • However, the Happy Home Paradise DLC introduces a paid expansion model.
  • Nintendo also monetizes through Nintendo Switch Online, which enhances multiplayer and provides additional content (e.g., N64 games).

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7. Social Convergence

Definition: The integration of social features and networks directly into games.

Examples:

• In-Game Social Hubs:

  • Roblox and Second Life function as social platforms with in-game economies and player interactions.
  • Fortnite includes party features and social spaces where players can hang out.

• Streaming and Sharing:

  • Twitch and YouTube allow direct integration with games for live streaming and interaction.
  • Minecraft has a strong streaming and modding community.

• Animal Crossing: New Horizons Example:

  • ACNH emphasises social play through online visits to other players' islands.
  • The game became a virtual social platform during the COVID-19 pandemic, with weddings, birthdays, and even business meetings held in-game.

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