The gaming sector has shown a vast contrast in profitability between the western developers and the Chinese. It’s been identified that western gaming firms were still using traditional methods to get through to the retail channels via putting games onto DVDs. The Chinese developers have moved away from this and are now focusing on the PC market and use direct downloads rather than retail stores to get to consumers. Three factors which force the operating costs of western firms to spiral upwards include:
- Games are getting larger which mean longer development times hence more staff costs
- The console space is fragmented so developers have to work on many platforms at any one time.
- The cost of licensing intellectual property or gaining sports body endorsement has gone up.