PLAYING WITH THE FUTURE: DEVELOPMENT AND DIRECTIONS IN COMPUTER GAMING

ABSTRACT

European Competitors in the Video Game Industry:
Venture Creation and Enterprise Growth in France and Britain

This paper develops a comparative analysis of the organizational evolution and competitive performance of French and British video game firms. In particular, our study of the video game industry asks how European firms have developed competitive capabilities in an industry that has since the 1970s been dominated by the Japanese and Americans. We also analyze the reasons why from the mid-1990s, French companies have been more successful than their British counterparts in attaining prominent competitive positions as publishers.

First we document the competitive performance of French and British firms in the 1990s as developers and publishers. By 2000, of the world's top twenty "independent" publishers (that is, publishers not controlled by the video game console companies), eight firms were American, five were French, and four were Japanese. Only one company - Eidos, which was seriously considering an acquisition offer from Infogrames, the largest French publisher -- was British. How can we explain the "Britsoft paradox" that the French have clearly outperformed the British as publishers, notwithstanding the fact that Britain has one of the world's most productive and extensive developer bases? In the mid-1990s British publishers were at least as well positioned as the French to benefit from the recent take off of the video game industry. Yet, in comparative perspective, during the last half of the 1990s, the French publishers left the British lagging far behind.

We attempt to explain the relative performance of French and British publishers through a comparative-historical analysis of the strategic, organizational, and financial conditions that governed the creation and growth of a number of the most prominent French and British video game companies. In the French case, these companies include Infogrames, Cryo Interactive and Ubi Soft; in the British case, firms such as Eidos, Rage and Gremlin. Using an analytical framework that links strategic, organizational, and financial conditions in explaining the creation and growth of firms, we critically evaluate the current conventional wisdom among observers of the British video game industry that highlights the "short-termism" of British financial markets as the source of British competitive disadvantage.

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