iTZKooPA Rambles: Make or Buy and Supply Chain Management in a Digital Environment

F2P browser-based game Shakes & Fidget

iTZKooPA Rambles is a column dedicated to the shelled one talking about Internet, gaming or nerd culture. Extensions include anything he feels relevant to those microcosms. Oh, he also loves expressing his opinion, so that’s kinda why this column exists too. Sorry about that.

Put on your thinking caps folks, because we’re diving into where the video game industry, and likely entertainment industry at large, is headed in the near future. That’d be the realm of digital distribution as opposed to physical goods. PC titles have long embraced the digital model, from Steam to Impluse, and the console realm is adopting it to now. Heck, even Nintendo, long fearful to fully embrace connectivity, is releasing first-party titles digitally.

A precursor to the business topics mentioned, supply chain management deals with making sure you’ve enough product to meet demand, but not too much that it sits on shelves forever (think console shortages). Make or Buy is the decision to create necessary business acumen from scratch or purchase the item or service if it’s available and suitable to your needs on the market (think outsourcing).

At any rate, a professor posited the following discussion questions to our class. My kneejerk reaction was that this had nothing to do with my industries of interest. After taking a few seconds to actually think about it I realized how incorrect I was.

  1. Explain how a properly managed vendor supply system for a firm can deliver value for the firm’s customers?

  2. In purchasing the decision to MAKE OR BUY IS AN IMPORTANT ONE. Many firms today are opting to outsource a lot of their buying decisions, rather than making the components they need internally. Thinking strategically, what in your opinion is the best route for a company to take?

My response (after the cut):

Currently, I work in industries that are heavily into the growing digital side of the world and thought I was going to have to think back to my IT career for this discussion. Pondering further, I realized that this is simply not the case. At all. Sure, the products from a video game company, especially a browser-based F2P company, can be completely digital, not existing in any physical form, but there are plenty of make or buy decisions. We could make the engine to base the game upon, create the middleware for network code or develop our own website.

However, none of this really makes sense for a small – <10 people – independent video game company. So much of this legwork has been completed by other companies with far more expertise that there’s simply no point in reinventing the wheel. Especially when we factor in the time to market if everything was developed in house. By opting to buy from others, we’re able to focus (specialize) on developing interesting gameplay. This decision has enabled the company to create four games (working on a fifth) and release multiple content updates since being founded in 2009.

Supply chain digitally, well that’s still stumping me…Our games are supported by in-game currency that you purchase with real money or earn by watching ads and such. We literally make the currency up. There’s a variable exchange rate due to constant (monthly at least) sales. Rather than bail and resort back to my physical past in IT, I think the most relatable experience in supply chain management for a digital RPG would be the valuation of gear (armor, weapons, etc), epic items and random chance at in-game currency drops. It’s more about keeping customers happy with an acceptable rate of this facsimile supply chain while balancing with prompting customers to purchase in-game currency to guarantee further development.

What do you think? How would you relate a game like Shakes & Fidget to supply chain management?