Game theory in online game market Essay

In Chinese online game market, there are two normal price strategies, Charging and Free. The Charging means that the customers need to pay for the game. They need to buy the game client or pay for the playing time (for example: RMB30 for 4000minits or RMB90 for 1month). The Free means that the customers can play the basic game for free. And they can buy some items in the shop on the official website or directly in the game store. The two players I picked for this analysis are World of Warcraft from Blizzard Entertainment, Inc.and a new launched online game from Beijing Perfect World Network Technology Co. , Ltd. Blizzard Entertainment is one of the best game producers all over the world. And the World of Warcraft is one of the three most famous game launched by Blizzard Entertainment. In number of simultaneous online players of World of Warcraft reached its peak on 2009 at about 13million players. This number decreased to about 10million in 2012. And now, based on the financial report from Blizzard Entertainment, this number is about 8million. Perfect World is one of the most famous game producers in China. They launched more than 15 online games not only in Chinese market, but also in oversea market such as Europe, North America, Russia and Australia. My topic is about that Perfect World wants to launch a new online game in Chinese market. And then Blizzard Entertainment will decide the price strategy for World of Warcraft. Both the two company has two price strategies, Charging and Free. The World of Warcraft now using the Charging price strategy. Because that when Blizzard Entertainment launched World of Warcraft, it was the best online game in the online game market. Now some of their customers go to play free games. But the World of Warcraft still being seen as has higher quality than any â€Å"Made in China† online games. Perfect World Blizzard EntertainmentPW: Free BE: FreePW: Charging BE: Free PW: Free BE: ChargingPW: Charging BE: Charging In the left top block, both the two company choose Free. In this case, more customers will choose Blizzard Entertainment’s game. At the same price, they will naturally choose the better one. But the Blizzard Entertainment’s profits will decline as they translate from Charging to Free. In the left bottom block, Blizzard Entertainment keep Charging and Perfect World choose Free. This situation is what happened in recent years. Some of their customers go to play free games. The Blizzard Entertainment will lose their customers and profits. In the right top block, Blizzard Entertainment changes its price strategy to Free but Perfect World chooses Charging. In this case, most of customers will choose Blizzard Entertainment’s World of Warcraft. Because they can play higher quality game for free. In the right bottom block, both the two company choose Charging. In this situation, both of them will lose their profits. The customers will go to find other free games in the market. So l will evaluate the case as follow: Perfect World Blizzard EntertainmentPW: Free(4) BE: Free(5)PW: Charging(3) BE: Free(10) PW: Free(5) BE: Charging(6)PW: Charging(3) BE: Charging(3) So we can see that no matter Blizzard Entertainment choose Charging or Free, Perfect World will choose Free to get more profits. That means, in this Sequential Game, Perfect World has its domain option to choose Free. After Perfect World make its decision, Blizzard Entertainment will keep Charging to get more profits.